Secular Bear

We are still in a secular bear market. It is hard to know how long it will last, but so far we have been in one for around 12 years as it started in 2000. A lot of economists feel that it has another 5 years at least to run. A secular bear market is one where the stock market goes nowhere for a long period of time.

We are in a cyclical bull market at present, but this will change again in to a cyclical bear market. We will probably have a cyclical bear market before we pull out of the current secular bear market. (You have cyclical bull and bear markets within secular bull and bear markets.)

We are not going to get out of this secular bear until we, in the western world, do something about our high debt levels. We do not have to solve the debt problem completely, but people will have to believe that we are on our way to solving it.

So far we haven't solved the debt problem, as we have really not got our deficits under control. (Deficits are the new debt we add to our debt because governments are spending more than they are taking in.)

Part of the problem with our current deficit is that when times are rough, countries tend to run deficits because their payouts in social programs get higher and tax money collected gets lower because more people are out of work. However, when times were good, we run up deficits and so now we are in real problems when times are bad.

What countries should do is pay down debt in good times so that we have some room to run up deficits in bad times.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.