How Bull Markets Work

It has been some time since I have had to deal with an overbought Bull Market, so I thought it would be a good time to revisit this opportunity. The grand super-cycle Bull Market lasted from 1974 to 2000, and the only remembrance is how wonderful those years were with less stress. That is a misconception, as glorious as it was in hind-sight it was filled with stress and fear. In fact there were many times during this period that like today the investor bought bonds or gold or whatever seemed risk-free. Investors did not even become convinced that stocks were a good investment until sometime after 1994-95.

Since I started in this business, I soon realized by that my so called experts were always going to be part of the problem citing worries at market bottoms and rewards at market tops. Being an amateur market historian I figured very early in my career that buying when the public is most depressed and sell when they are the most euphoric. It soon became very clear that market bottoms were formed by psychology and is the most reliable measure. So as we worry about taxes, debt payments, U.S treasury downgrades budgets, politics, fiscal cliff, etc, BULL MARKETS DON’T END UNTIL MONETARY CONDITIONS MOVE TO THAT STAGE WHERE THE BULL MATKET LOSES ITS NEEDED FUEL.

Therefore, even if the market is a little overbought here markets can stay overbought for a long time and trying to market time an entry point reminds me of the old saying “a fool and his money are soon separated”. Valuations of stock prices are still cheap and our analysis produced a 22% undervaluation based on historic conditions.


About billriley

Chief Executive Officer, Chief Compliance Officer A co-founder and shareholder, William Riley is a 33 year industry veteran, who observed, many years ago, that over time institutional investors typically outperform individual investors while accepting less risk. In his role as Chief Executive Officer, Bill works tirelessly to make the wealth management strategies used by the world’s wealthiest families and largest institutions available to our firm’s individual clients. Bill combines fundamental and technical analysis to minimize investment portfolio risk and maximize potential returns. He uses a variety of non-correlated asset classes, including alternative investments, to minimize portfolio volatility and seek absolute returns in down or flat markets. Finally, Bill believes in a comprehensive approach to wealth management that fully coordinates and seamlessly integrates portfolio management, risk management and asset protection, trust, estate, tax and charitable planning. Prior to co-founding Riley Wealth Management ,LLC, Bill held management positions at Merrill Lynch, UBS, Raymond James, Paine Webber and J.C. Bradford. Bill founded Fort Worth branches for Raymond James and J.C. Bradford. Prior to entering the financial services industry, Bill ran his families closely held businesses. Bill’s experience operating family businesses combined with his wealth management experience makes him uniquely qualified to advise entrepreneurs and business owners on a variety of matters including complex and sensitive issues relating to business succession. Bill’s degrees and designations included a Masters Degree in Business Administration (MBA), the Chartered Financial Consultant designation (ChFC), the Chartered Life Underwriter designation (CLU) and the Wealth Management Specialist designation (WMS). A Fort Worth native, Bill is a TCU alum and active in many civic and charitable organizations. Bill and his wife, Marsha, now reside in Colleyville, and they have four grown children and four grandchildren. When he is not working on portfolios or studying financial markets, Bill can be found on the golf courses of Ridglea Country Club.
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