By Adam Hamilton – Re-Blogged From Zeal
The US stock markets spectacularly defied the odds in 2016, soaring after both the UK’s Brexit vote and US presidential election. Both actual outcomes were universally feared as very bearish for stocks before the events. These contrary stock rallies have left traders feeling euphoric, convinced stock markets are impregnable. But with stock valuations hitting bubble levels in an exceedingly-old bull, a major bear still looms.
Though you wouldn’t know it in recent years, stock markets are forever cyclical. They rise and fall, flow and ebb, in great valuation-driven cycles. Bull markets always eventually give way to bears, and vice versa. Stocks can’t and don’t rise or fall forever, extreme popular greed or fear never last for long. The history of stock markets looks like a great sine wave, an endlessly-alternating series of bulls and bears.