FTDS - What Is The Likelihood We Have A Bear Market This Year?
2024-06-21 09:00:00 ET
Summary
- I reflect on past bear markets caused by unsustainable debt levels and valuations, but do not see similar circumstances today.
- Current concerns about a looming bear market are addressed, with a focus on overbought conditions in the technology sector and the need for a pause to refresh the bull market.
- I discuss the need for a rotation into other sectors due to extreme valuations in technology stocks, predicting a potential pullback but maintaining a bullish long-term outlook.
I experienced the worst of the technology bubble bursting in 2000, as well as the collapse of the housing market in 2008, and both led to nasty bear markets. Both were also instigated by unsustainable levels of debt and ridiculous valuations. The corporate debt that plagued our economy and markets in 2000 reemerged on consumer balance sheets in 2008 until it was ultimately transferred to the balance sheet of the federal government, which is where it sits now. Some view our exorbitant government debt and record deficits in the same vein as the corporate and consumer debt levels that led to bear markets and recessions, but there is a major difference. The government can print money to inflate its way out of the problem through inflation. Those who are fiscally responsible take issue with that, which is understandable, but will it work? It could, unless the rest of the world decides to stop lending us money. That is also a possibility at some point. Regardless, we will not have an answer to that question any time soon, especially during the current business cycle, which is my primary focus....
What Is The Likelihood We Have A Bear Market This Year?