Are we entering a bear market?
Lots of people think so.
Here are the 3 reasons we’re NOT heading into a bear market:
Everyone’s bearish right now.
Stocks, real estate, and crypto are all down.
The Fear & Greed index even indicates extreme fear.
This level of fear doesn’t surprise me.
There’s a lot of uncertainty surrounding Trump’s tariffs.
Not to mention other geopolitical uncertainties around the globe.
Plus, we’ve been in a bull market for nearly 2.5 years now.
The bull market has to end eventually – right?
But the truth is, bull markets don’t die of old age.
They die thanks to:
- Outrageous valuations
- Euphoria
- Monetary policies
Let’s break each of these down:
1 – Sky-high Valuations
Bull markets classically end when an asset class has illogical valuations.
In other words, prices become detached from the assets underlying fundamentals.
You could argue we’ve seen this with certain AI stocks.
But it’s mostly been short-lived and only certain stocks in particular.
Such as Palantir in February.
2 – Euphoria
Bull markets die of euphoria.
Such as dotcom stocks in 1999, homes in 2007, or NFTs in 2021.
People were buying blind thinking they’d get rich.
All for it to come crashing down.
Are we seeing this today?
As previously discussed, the fear & greed index is at extreme fear.
There’s nothing euphoric occurring in the markets across the board.
3 – Monetary Policy
Are we seeing any bearish indicators from central banks?
In the US, we have high inflation and paused interest rates.
You could argue that’s relatively bearish.
But globally, governments are printing, and rates are lowering.
The US hasn’t even started QE yet.
Which they eventually have to do.
Plus, Trump and Bessent are adamant about lowering rates.
Aside from a terrible geopolitical situation out of left field…
Bull markets don’t end under these conditions.
If anything, we’re in a correction before prices go higher.
Most of 2025 will be a year of green candles.
Bookmark it.
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