When will this bull market end? Because it will end. The market is simply a collection of people’s emotions. How stable can that be?
Over the weekend I re-read The Dow Theory Today by the late Richard Russell. It’s a collection of twelve articles which were written and published in Barron’s during the period of December, 1958, through December, 1960. This is not a history lesson because the articles were written, much like writing about today’s markets, while taking on live fire. The future was not known. That’s the life of an analyst. In the article “Bull or Bear Markets” from March 23, 1959 Russell writes:
A primary bull market is a broad upward movement of stocks interrupted by frequent secondary reactions. There are three phases in a bull market. The first it the return to known values following the depressed conditions of the previous bear market. The second and usually the longest phase is caused by the response of stocks to bettering business conditions and improved corporate profits. The third phase is characterized by feverish speculation, rampant inflation, and a highly promising economic outlook. Here, as Rhea tells us, “stocks are advanced on hopes and expectations.”