All good things must come to an end, even bear markets. Of course, nobody knows when this bear market ends; we want to believe we are much closer to the end than the beginning, but this remains unknown. Some past bear markets have lasted a few months, some a few years. Maybe this one could end when inflation begins to improve, or after the economic data worsens, or when stock prices are so cheap that investors can’t resist. Or it will simply end, and many months afterwards, the ‘consensus’ will slap a reason or narrative why it ended when it did. Hell, maybe the bottom was mid-October – the markets have certainly managed to rally of late.
When this bear does end, it will birth the next bull cycle, which will not look much like the last bull cycle, given how much has changed. The last bull cycle, which was great and kind to investors, had a lot of help. Disinflation and low yields enabled central banks to stimulate whenever the economy or markets wobbled. Until near the end, geopolitical risks were low. Globalization trends remained strong, with steady gains in supply chain logistics encouraging outsourcing.
We would not dare say it will be different this time, but the list of changes in the economy, market, politics, and behaviours is significant. Looking at the last decade and the next – quantitative easing to quantitative tightening, globalization to isolationism, disinflation to inflation, office to hybrid, growth to value, large to small, monetary excess to fiscal excess, borrows to lenders, low yields to ‘normal’ yields…