Every body's nervous around the office, and my friends of retirement age are starting to panic. Are they diversified enough? Can they wait out a bear market if one shows up? Maybe it's time to check their investments to see if their portfolios match their appetite for risk, but is the five-year-old bull close to the end of his road?
Another article in Money Magazine says that there is a pattern that shows up before the end of a bull market.
The first indicator is higher oil prices. We're seeing those, but not nearly as much of a trend as before the bear market of the '90's.
Then there is a "run up" of Treasury yields...none that are significant.
Before a bear market, consumer spending sometimes slows, and this is starting to happen. Corporate earnings growth often slows, but we'll have to wait for the 2007 numbers. However, estimates by market strategists expect only a 7% increase this year, as opposed to more than 17% in the years 2003 to 2006.
Rather than watch the variations of the S&P 500, a better indicator is if the number of rising stocks starts to shrink. Before the crash of 2000, the overall index kept going up, but these were fueled by only a handful of mostly Internet-related companies.
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