Whilst there is no doubt that markets have performed well due to easy monetary conditions from central banks we are now heading into a much more important phase. This secular bull market is now being driven by earnings growth and we are very excited about this new progression towards fundamentals. US companies have now come out of a two year earnings recession and European companies are producing the best earnings season in over ten years.
Two very beautiful things are happening which we have been waiting almost a decade for –
Global synchronized earnings growth and global synchronized economic growth. Combined with the Goldilocks (not too hot or too cold) policies we are expecting from Central banks; this builds a type of nirvana for equity investors. We know that this is not a consensus view but are quite comfortable to be in a minority. Never in 30 years have I seen a bull market so loathed as this one. Investors who remain nervous, sceptical and cash rich are likely to be wrong footed by this secular bull market once again.
Looking at previous bull and bear market cycles we can clearly see that in terms of duration this current bull market is definitely not the shortest, however, its gains are somewhat pathetic when compared to previous cycles. In fact when measuring a secular rather the cyclical bull market (you only know for certain which one it is after it is over) it is normal to start measuring it when the previous cycle’s highs have been broken which was in 2013 for the S&P500 . In this case that would mean that this secular bull market is about a third of the way through its course with the best gains still yet to come. We will not worry about what comes after it just yet as that is a long way in the future!
Your Wealth at a Glance.
