The Aging Bull

Let’s understand ‘ The Aging Bull’

While I may be tagged as ‘bearish’ due to my analysis of economic and fundamental data for ‘what it is’ rather than ‘what I hope it to be,’ I am actually neither bullish or bearish. I follow a very simple set of rules which are the core of portfolio management philosophy which focuses on capital preservation and long-term ‘risk-adjusted’ return.”

As a long-term investor, You don’t need to worry about short-term rallies. You only need to worry about the direction of the overall market trends and focus on capturing the positive and avoiding the negative.


as the bullish trend does show on the indices today it’s imperative to rebalance exposures to the market in portfolios recently, , as there is mounting evidence of “cracks” appearing.

The bull market is understandably aged and the weaker fundamental and economic backdrop has a more decisive impact on an “aging bull.”

Therefore, it is extremely important to remember that whatever increase in equity risk you take, could very well be reversed in short order due to the following reasons:

1.We are in the late stages of the bull market.
2.Economic data is weakening
3.Volume is weak
4.Longer-term valuations are extremely stretched.
5.Complacency remains high
6.Share buybacks are set to slow (which have comprised about 80% of the markets bid.)
7.The yield curve continues to flatten, and invert, which applies economic pressure.

We will see what happens over the next couple of weeks.

However, the longer-term dynamics are turning more bearish. When those negative price dynamics are combined with the fundamental and economic backdrop, the “risk” of having excessive exposure to the markets greatly outweighs the potential “reward. “

So what does an Investor do in an Aging Bull Market?

1.Rebalance when volatility strikes. Take steps to maintain the long-term target allocation designed to help achieve your long-term goals. As markets rise, the positions may need to be trimmed and the cash held or reallocated to markets where valuations are better. As markets fall, the opportunity may arise to restore the target allocation.
2.Help reduce price volatility with income-generating assets. Income is a sometimes overlooked component of portfolio returns. To potentially improve the income-generating ability of a portfolio, you can lengthen the duration of your high-quality bonds. Dividend-paying stocks and REITs offer additional streams of portfolio income.
3.Use cash to your advantage. If your portfolio already holds a sizable amount of cash consider investing your cash in case markets correct in the coming months. Another potential strategy is cost averaging, which involves investing cash over time to take advantage of market fluctuations.*
4.Add strategies that can benefit from various market conditions. A bear market can occur with little warning. Adding assets that can profit in both up and down markets may help prepare your portfolio for possible downturns.

We are in volatile times and trending carefully should be the mantra.

Disclaimer : All the information shared is already available in the public domain and has only been compiled as per the topic of discussion.