We are close to touching a new high in Indian equities. But do you know that more than half of worlds stock market are currently in bull market. How do we define a bull market, one rule of thumb is that a bull market is when the price is up more than 20% v/s 52 week low,and a bear market is when the price is down more than 20%.Looking at the chart, you may notice a few things.
First is the indicator really fires up at the start of a bull market e.g. 2003, 2009, and again around the start of the QE rally. Second, it goes low, like almost to zero, at a major market bottom (e.g. at the end of 2015). Third and final – the MSCI ACWI (All Countries World Index) in local currency terms just made a new all time high last week. What does that add up to? In opinion of Callus Thomas, the new bull market for global equities.
I agree that equities is the best asset to invest for next couple of years but i see excessive bullishness and compacency currently across markets as measured by VIX and explained in this article http://worldoutofwhack.com/2017/02/20/volatility-to-hit-back-with-vengeance/, if you are patient investor keep your powder dry and you will get better levels to invest.
Sir
Thanks for an insightful article.. Going by rationale all factors are pointing towards a risk return trade off in favor of safer positions ie moving money from equities to UST… But when something looks so obvious doesn’t it continues that way for longer than expected. Also if oil is overbought then it should also correct sharply and going by historical trends longer term bullish trend shouldn’t sustain… as during periods of low oil prices economies are in a bad shape..
i agree with you on this, but if it were a reflation trade then why 10 over 30 US treasuries curve is flattening instead of steepening. Bonds are not buying this euphoria and i find bond market more rational than equities market. i think the big reason why oil might not collapse is saudi aramco listing. saudi arabia needs this listing to be succesfull for surviving so they will do all in thier power to stop oil going below 45 dollars.