Is it safe to invest in the current stock market?
With the stock market DJIA over 21,000 it makes one wonder - how long can this bull market go on? Most bull markets or bear markets last from two to five years. This current bull market is eight years old, so it should be coming to an end. Or will it?
To answer that question, you need to consider the business cycle and relate that to how and when you should make investment decisions. The current business cycle is eight years into a nine-year cycle. Since the last recession occurred in 2009, I would expect the next major recession by 2018 and, since the stock market leads the economy by about six months, I would expect a bear market by the end of 2017. When two major economic cycles are in-phase and bottoming out at the same time, it has an amplifying effect. This is why I believe it is a very dangerous time for stocks.
We had seen prior Dow high points (before the Great Recession) of almost 14,000 in June of 2007, and as the Dow rises above 21,000 in 2017, it makes you wonder how high it can go. However, it is very risky at these higher levels and difficult to predict when the peak will be. So it would be wise to watch very carefully how the market is responding to economic and political conditions. Remember: When it comes to the stock market, bad things usually happen in October.