Secular Bull & Bear Markets
Since inception the stock market has been in either a secular (long term) bull or a secular bear phase. Markets become significantly overvalued in the late stages of a Secular Bull Market and significantly undervalued in the late stages of a secular bear market.
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A secular market is a market driven by a macro trend which can remain in place for many years, resulting in the stock market going up or down for a long period of time. In a secular bull market low interest rates and strong corporate earnings push stocks prices higher. In a secular bear market slowing economic growth, declining corporate earnings and rising interest rates cause selling pressure which pushes stocks lower for an extended period. Cyclical bull or bear trends which have peak-to-troughs that are shorter in duration occur during secular bull and bear markets.