Bull Market                                    

Photo: Wsj.com

By Isaac Cohen*

Stock markets in the United States closed the third quarter with the worst monthly performance since the slump caused by the pandemic in March 2020. Even so, despite the loss of 4.8 percent in September, for this year the S&P500 index is up 15 percent and it reached six consecutive quarters of positive results. As Nobel laureate and Yale professor Robert J. Schiller said, in The New York Times 10/03/21), all major asset classes, including stocks, bonds and real estate, in the United States “have never been this overpriced simultaneously in modern history.”

For this reason, there are several concerns. Starting with the new variant of the virus, complex negotiations in Congress, inflationary pressures and the central bank’s dismantling of accommodative measures, together with supply-chain bottlenecks and hiring difficulties.

Unfortunately, nobody knows with certainty when a bull market comes to an end. Except for abrupt crashes, such as those of September 11, or last year’s pandemic slump, not all sectors decline simultaneously. As pointed by the columnist Mark Hulbert, in the Wall Street Journal (10/05/21), “not all sectors…hit their bull-market highs at the same time.” Therefore, Hulbert says, “in most cases it’s more accurate to view a bull-market top as a process rather than a single event.” Be it as it may, Professor Schiller concluded, “clearly, this is a time for investors to be cautious.”

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.   

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