Is it time to protect your investments?
There is a long list of concerns, starting with tariffs, to the possibility of stagflation (when you have inflation and a recession at the same time) to unemployment issues, to record margin debt, to the lowest readings on record for home sales, a stock market bubble, a real estate bubble that has a slow leak, high interest rates, etc.
Now, there are always many reasons for a bull market to end and a bear market to start. Ironically, the reason is oftentimes something that we don't see coming. Having said that, the risk level for stocks is very high.
Below is what you need to know. This is a picture of a circle we will refer to as a cycle. The cycle goes clockwise. On that cycle, you can see four numbers representing the clock's time.
The clock is easy to read. The times on the clock represent the beginning and ending of bull and bear markets. Let me make sure that you understand what a bull market is versus a bear market.
A bull market is an excellent opportunity for investors to make money in the stock market. Between 6 and 9 o'clock, the bull market is recovering from a bear market and starting its climb. Between 9 and 12, it can gain an enormous amount of money for investors. The 12 o'clock hour is as far as it will go. Then, it starts to turn into a bear market.
A bear market is a horrible time to be in the stock market. A bear market goes down between 12 o'clock and all the way down to 6 o'clock, where it turns back into a bull market.
The cycle from 12 to 12 goes round and round in a clockwise circle. It has been doing this since the Dow Jones Industrial Average started during the late 1800s. Bear markets are shorter but way more destructive to investors' accounts. Bull markets last, for the most part, much longer. Some cycles are bigger than others. Our current cycle is very large! Why is this important to know? The bear market cycle is usually as large as the bull market cycle.
So, now that you know, there is a big question that you have to ask: Where are we on the cycle? Are we about to enter a new bear market or continue with the bull market?
I would suggest we are at 12 o'clock transitioning from a bull to a bear. The best-case scenario would be that the cycle is between 11 and 12 o'clock.
So, there are two things you need to do:
Know your risk level – get help from a financial advisor or take this risk survey, and we will help you.
Make sure you are comfortable with the risk you are taking.
Obviously, no one can predict the beginnings and endings of bulls and bears. However, there are too many red flags and sirens going off that would suggest we start having this conversation.
Keep the Faith
Bob
Bob Brooks is the host of the Prudent Money Radio Show, heard every weekday from 3:00 PM - 3:30 PM on FM Radio 91.3 KDKR
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