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Should the second longest stock boom in history end soon?

Dr. Steve Sjuggerud, DailyWealth
0 Comments| May 8, 2015

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The current stock market boom is 2,280 days long – the second-longest stock market boom in history.
 
It will certainly end someday. But when?
 
Stocks have gone up for six years in a row so far. Stocks have never gone up seven years in a row. However, if stocks finish up in 2015, that would set a new record for consecutive years of stock market gains.
 
This stock boom has to be living on borrowed time... right?
 
After all, it's the second-longest stock boom in history... and we could set a consecutive-year record this year. So it has to end soon, right?
 
Not so fast...
 
The stock market is not a person. It doesn't have a life expectancy.
 
I learned this lesson from watching one of my early investing heroes – Vic Sperandeo – start to falter. He believed in a stock market boom's life expectancy – and he got burned. The non-stop stock boom of the 1990s blew away any historical records of life expectancy.
 
The lesson I took away from seeing his life-expectancy system blown apart is that a stock market boom doesn't have a life expectancy in terms of years.
 
In the stock market, each new day is like flipping a coin – just because it came up "heads" yesterday doesn't mean it will come up "tails" today. Similarly, the stock market doesn't have to go down this year because it went up last year.
 
Don't get me wrong... There is a "life cycle" to a stock market boom...
 
The stock market bottoms amid deep despair among investors when nobody is in the markets. The stock market works its way through your emotions, and eventually peaks when investors are giddy and everyone is in the markets.
 
I've said in the past that we're in the eighth inning of this bull market, approaching the ninth inning. But investors have not reached that point of extreme optimism yet, where nearly everyone is in stocks. We will get there.
 
So yes, stocks are up six years in a row. And yes, this is the second-longest stock market boom in 100 years.
 
But no, stocks don't have to go down, yet. Age is not the primary reason stock market booms end.
 
Investor euphoria is the primary reason stock markets peak. And we are not there yet. So don't bail out of the stock market now... it's not quite time, yet...
 


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