Lim Jeahy

We're in year 13 of a secular bull market and most people have no idea what that even means. Let me explain why this matters more than anything else you'll read about markets this year. A secular cycle is the season. A cyclical cycle is the weather. Secular trends last 15-20 years and are driven by massive forces like technology waves, credit expansion, and generational shifts in how we live and work. Cyclical trends last a couple years and get moved around by earnings reports, Fed meetings, and whether people are scared or greedy that week. Here's why you should care: The same event can have completely different outcomes depending on which secular cycle we're in. 2008 happened 7 years into a secular bear market. Largest recession since the Great Depression hit and it took 5 years to get back to all-time highs. 2020 happened 7 years into a secular bull market. Global pandemic shut down the entire world and it took 6 months to get back to all-time highs. Same type of catastrophic event. Different secular environment. Wildly different recovery. So what makes a secular bull market? Three things have been present at the start of every single one: A generational technology wave that lifts productivity across the entire economy. Not one product but hundreds or thousands of innovations changing how everything gets done. A starting point where stocks are hated and cheap. Secular bulls are born when everyone has given up on markets. Remember how bad it felt to buy stocks in 2010? Easy money and expanding credit. Banks lending, money flowing into businesses and projects, the whole system greased up and ready to run. Look at the history of secular bull markets: 1950-1966: Postwar rebuild, highways, suburbs, television, booming middle class. Started dirt cheap because everyone who lived through 1929 wanted nothing to do with stocks. Dow went from 200 to nearly 1,000. 1980-2000: Inflation falling from double digits to 3 percent, credit expanding for two decades straight, then the PC and internet revolution. S&P went from 100 to over 1,500. 2013-today: Mobile, cloud, now AI, plus a financial system repaired with the cheapest money in history after 2008. S&P has gone from 1,500 to 7,750. Each secular bull kicked off the same way. Not with a good year or a Fed cut but with a breakout above the previous secular bear market highs. 1950 broke the 1937 highs. 1980 broke the 1966 highs. 2013 broke the 2000 and 2007 highs. So what ends a secular bull market? Not age. Not scary headlines. They die when euphoria meets a catalyst that ends the monetary regime. The 60s cycle ended when two decades of postwar spending showed up as inflation and rates rose for 15 years straight. Easy money was over. The 00s cycle bubbled into a blowup. The internet was real but the market paid for 30 years of future growth in 5-10 years. Valuations went nuts and the whole thing collapsed under its own weight. Fun pattern: every seven years within a secular bull market has marked a time to buy. 1957, 1987, 2020. Each was a cyclical bear in the seventh year of a secular bull. Recession, Black Monday, global pandemic. Three different disasters. But here's what happened next: 1957 saw new all-time highs by 1958. 1987 saw new highs within 2 years. 2020 saw new highs within 6 months. Cyclical bears are for buying when you're in a secular bull. The market kicks everyone in the face, shakes out speculators, resets leverage, forces policy to ease, then just keeps heading higher. Why does this always work? Liquidity. Cash rules everything. Every single one of these cyclical bears ended the same way.. money became easy again. The Fed cut rates in half in 1958. Flooded the system with liquidity in under 24 hours in 1987. Launched the largest QE measure ever in 2020. Cyclical trends are set by the flow of money over months. Secular trends are set by the direction of money over years and decades. So where are we now? Year 13. Almost year 14. Not early but not particularly late by historical standards. The last two secular bulls ran 16 and 20 years which gives this cycle room to run into the late 2020s or early 2030s. Ask yourself these questions: Do we have generational euphoria with valuations that make every prior peak look quaint? Not yet. Just look at the AAII investor survey every Thursday! Is inflation taking off or credit drying up for years at a time the way it did in 1966 or 2000? Not yet. Just look at credit spreads and easing financial conditions! Until those conditions are met we're probably not at the top. Here's the part most people miss: The final years of a secular bull market have historically been the best years of the entire cycle. From 1995 to 2000 the S&P nearly tripled. The NASDAQ gained 1,000 percent in the last five years of that secular bull. I'm not calling for a straight line up. There will continue to be pullbacks, corrections, maybe even another cyclical bear before this ends. But if the historical pattern holds we have a lot more upside before this is over. The updated roadmap points to S&P at 18,000 to 20,000 by the early 2030s if we run hot into the end of this cycle. A more conservative approach puts us at 12,000 to 13,000. Another 50-60% higher from here. Now you know what drives these cycles, what ends them, and where we might be headed. How are you positioning for the rest of this secular bull? Or is the scary guy on FinTwit telling you it's all over before checking the facts? :)