MarketCycle has a contact tab at the top of our website and I frequently receive questions from readers.  Below are a few of my responses (paraphrased).  A couple of people that pre-read this particular posting stated that this month’s article is actually both good and educational, which was good to hear.  Please note that if you right click on your computer mouse, you will be offered a PRINT function in the pop-up.  The old print function broke.  I will eventually put a new print function in the body of the blog, when I get “around to it.”

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“You say that because of the non-stop (flood-the-zone) turmoil of the past 14 months, caused by tariffs and threats and pulling back from united global involvement while seeking one-sided global conflict, foreigners and foreign governments are no longer offering to loan the U.S. money via the buying of Treasuries and they are rapidly dumping the Treasury-bonds that they already own.  Why is this a problem?” 

Our current U.S. Government debt level is $39-Trillion ($39,000,000,000,000).  This is DEBT; we’re deep in the red.  If this were a corporation, it would have declared bankruptcy long ago.  Debt has increased by almost $4-Trillion in just the past 14 months all while eliminating or cutting costs in social programs, environmental programs, watchdog groups, etc.  Massive military and ICE expansion and grift-styled gifts to wealthy corporations and billionaires adds up quickly.

Old debt comes due and then has to be paid back; over the coming 12 months, the government will have to pay back debt at the pace of $830,000,000,000 per MONTH.  Brand spankin’ new U.S. Government debt will increase by more than $292,000,000,000 per MONTH going forward and that will eventually have to be repaid too.  Imagine that; what a mess.

This cannot continue.  And if it can not continue, then it will not continue.  As I so often repeat, I foresee the most profitable global bull market in history lasting for another (roughly) three years… and then global financial ruin.  (My personality is to be “optimistic, but not blind.”)  We do not have the guts or the will or the smarts to intervene.  We probably don’t even have the ability to intervene at this late stage.  A politician’s only goal in life is to get re-elected, so nobody in a position of power will voluntarily help.  To survive any coming debt crash, investors better delay gratification now and invest every penny that they have into something LIQUID that expands their personal wealth.  Every imaginable economic condition, both good and bad, can be fully survivable and thrivable… and this is why I created MarketCycle Wealth Management, so that I could help others.

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DEBT (the flat areas are government shutdowns):

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“But tariffs are bringing in additional money and reducing the trade deficit, aren’t they?”

First, tariffs are bringing in 90% less total money than we are being told… AND they are were almost entirely paid for by U.S. corporations… but corporations started pushing the price increases off onto customers starting in the summer of 2025.

And despite what Washington tells us, the trade deficit has gone UP in 2025, not down.

A snippet that I created via AI about recent and important Federal Reserve research:

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As MarketCycle has been stating, tariffs cause inflation.  In a recent private client update I stated that Friday’s PPI would show rising inflation, and it most certainly did.

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Below is MarketCycle’s proprietary in-house inflation indicator that shows the trend of inflation 3 months in advance of actual inflation… we figured out how to accelerate economic data (easier said than done).  This indicator does not show the strength of inflation, it just shows the trend-direction of inflation (see the purple circle).  The Federal Reserve’s interest rate direction is shown in pale-gray.  This gray line shows how the Fed started raising rates 2 years too late when inflation started rising and how they then started lowering rates 3 years too late when inflation started falling, and this is partly why inflation got out of control.  Inflation is now rising again because tariffs are causing corporations to pass the tax costs onto their customers… on to you and me.  With the Supreme Court’s recent decision on tariffs having to immediately stop and be re-paid, this may help reduce the price of consumer goods (barring new permanent tariffs)… but any “payback” will further increase the government’s debt level.

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As MarketCycle has been stating, tariffs are paid for by you and me:

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The trade deficit is going UP, not down (below is a snippet taken off of a recent white paper):

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No, haphazard and volatile tariffs do not fix a trade deficit.  Below is a snippet from a January 2026 Yahoo Finance, Reuters article.  (It is surprising how good Yahoo Finance articles are, and they are free and they come from a wide variety of very reputable sources.):

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“You say that we are in a bubble.  Don’t you want to avoid bubbles?”

Absolutely not.  Again, absolutely not.  Bubbles can be HIGHLY profitable.  Nobody avoids investing in a bubble, everyone eventually invests because you will likely see some of your friends getting rich and the fear-of-missing-out (FOMO) will drive you into the markets… but many investors, including many famous and older professional investors, will only go in at the top and then feel obligated to hang on as the market then drops.

Right now we are in the early stage of an AI and innovative technology bubble formation.  You do not run from something like this no matter what your “instinct” tells you; you buy with both hands and then hang on.  One should only worry about one thing: Catching the top in a bubble.  The top is likely a few years away and tops ALWAYS give advance warning, months in advance, if you know what you are doing and if you have lived through a few bubbles, as I have.  This is why I monitor objective risk, of all types, every single day.

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“Aren’t stocks over-valued right now?”

First, overheated stocks always find a way to let off pent up steam by temporarily pulling back or by gyrating sideways for a more prolonged period.  A bull market does not move in a straight line from lower left to upper right… it always zig-zags higher and sometimes it just takes a breather.

Second, we are very likely in the early stages of a bubble formation.  Bubbles occur at the end of a rare period when an overlapping cyclical bull-market-cycle and secular bull-market-cycle are both coming to a head at the same time.  In layman’s terms, the good & bullish times continue until they reach a peak, just like they did in 1929, 1987, 2000, 2008 and in a few periods in between.  During periods such as the coming three years(?) one ignores traditional valuation models and invests based on watching other investor’s uncontrolled emotions.  We will move beyond “euphoria” and into a mental state where we start saying that “things are different this time” and “we have entered a new and eternal paradigm where markets can ONLY go up!”  Investors will start to take out second mortgages on their homes and will use the money to invest in the stock market.  Similarly, the use of borrowed “margin” money from brokerage houses will be way, way, way beyond historic highs.  And then the doubly bubbly bullish period will disappear.

And here I “jawbone” a bit:

So regarding the market, “time’s a-wastin'” as they say locally here in the (actually blue) Blue Ridge Mountains of Virginia.  Of course, some of the older folks also tell me that we live in a “holler,” which is a relatively flat valley between high-ish mountains… or that we just had a “frog strangler,” which is a heavy rain downpour… sometimes, just before it rains, they say that “they’re callin’ for it” which means that the pigs are squealing (which they actually do just before it rains) and even my wife has used this expression frequently.  Some folks are “fixin’ to eat a mushmellon,” which means that they are, right now, sitting down to eat a cantaloupe.  Even my dentist says “might could” when he is actually saying that he “can” do something.  Sometimes the local sayings make me feel a bit “cumfluttered” which is the problematic local word for “confused”… so, there’s all of that to deal with… or delight in.  My “Ma-maw” (what I called my grandmother who lived on the top of a West Virginia mountain) often used such words.  Now, much of this is lost on the younger TV, computer and phone raised generation… and that makes me feel a bit “tore up.”

Below, Blue Ridge Mountains taken from the Blue Ridge Parkway in Shenandoah National Park, just above my property.  The Blue Ridge Parkway is 469 miles of mountaintop views and without a single stop sign… it is spectacular.  The mountains are actually blue because of the high release of organic “isoprene” from the local trees.  These are the oldest mountains on earth; while some mountains like the Himalaya Mountains are still rising, the Blue Ridge is falling, which makes it loaded with wildlife (including a lot of bears, bobcats and even elk that were recently re-introduced), giant tumbled granite boulders, streams, springs, waterfalls and unexplored caves… and some decent folks with regional slang sayings.

The Blue Ridge Mountains:

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And Appalachian mountain folk don’t actually look like this (because the shotguns are missing in the photo):

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And now, back to reality.

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“Why do you like corporate bonds more than Treasury-bonds?  And what allocation do you give to corporate bonds?”

Corporations are flush with cash and are currently low in debt, making corporate bonds low risk.  As implied above, Treasuries are like bombs about to go off, which is making Treasury-bonds high risk for the first time in 25 years.

MarketCycle holds a (roughly) 8% position in quality corporate bonds.  We also hold some data center REITs.  (A REIT is a Real Estate Investment Trust and it is a bundle of rental properties that pay you interest each month but with none of the headaches of owning rental properties directly.  The problem with data centers is not their size, it is their energy usage, and this will have to be worked out.)

Data center REITs (yellow line) are strengthening; commercial business building REITs (blue/green line) are weakening:

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Corporate bonds are trending sideways in preparation for a potential move higher.

 

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“Gold has gone up too far and too fast; why do you hold a 15-20% position in gold in your portfolios?”

From 2001 to 2011 I held gold bullion 2x leveraged and gained a 1000% profit.  I then sold at the top, in 2011, but repurchased again in early 2019 and we still hold today for a 250% gain.  I have to keep rebalancing the allocation back down.

The high U.S. debt is reason enough to hold gold, but the coming money printing that will allow the United States to “buy” its own Treasury debt will cause gold to go quite high; we will likely see $10,000 per ounce by 2029, a 100% additional gain.  If/when the debt collapses (by the mid-to-late 2030’s?), then gold may suddenly be worth $30,000 per ounce because gold is unprintable money.  Call me a fool, but I’m not selling.

Added benefit:  Gold almost always goes up when stocks drop and it also goes up during inflationary periods caused by money printing, so it offers genuine account protection.

I had expected gold to gyrate sideways for the next 4-ish months (shown below) before heading higher again.  HOWEVER, with the stock market pullback centered around oil disruption from our war against Iran, gold sold off as investors needed to raise cash from profitable positions.  This will soon end and gold will likely hit $10,000 within 2.5 years.  A charging bull is hard to sideline.

Gold is UNDER-OWNED in the majority of global investing portfolios.  Gold profits substantially beat stock profits in 2025.  In my opinion, the current big stock bull market may end in 3 years; the secular gold bull market may not end for another 20 years… perhaps even longer.  So, we hold some gold.

Near-term profit taking is driving gold back toward its long-term trend line:

 

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“Bitcoin is dead.  It was a Ponzi scheme.”

Any asset generating profits (over time) for all holders of that asset, in no way makes it a Ponzi scheme!

Yes, bitcoin has pulled back, but it was overbought and it has only pulled back toward its long-term trendline and I do not foresee it breaking below that line… so it remains bullish despite the temporary and unpopular pullback.

Bitcoin, just like all other assets, gyrates while moving higher… it is just that the dips and volatility are bigger with crypto and this is why allocations should be very small.  Bitcoin is digital-gold and ethereum is the basis for the blockchain.  They are not dead; they are just volatile.  Like gold, they are both going to go quite high over the next few years.  Similar to commodities, crypto drops, bases sideways for months, heads higher rapidly, peaks at a new much higher high, and then suddenly drops again, where it eventually bases sideways for many months (which is what it is doing right now)… and then the cycle repeats.  It looks like crypto will be heading higher sooner rather than later.  Slow motion higher-highs.

I should note that, after years of testing, I have recently developed an objective method of selling crypto near high points and buying again near low points… and it works. 

Importantly, the upside with crypto is so big that the temporary downside is something that becomes tolerable in the grand scheme of things.

And finally, crypto and gold are not Ponzi schemes.  Printable, unbacked, fiat currencies are actually the Ponzi scheme… and because of inflation, the only direction for these paper currencies over time is DOWN.  Disregarding any market related fluctuations, the actual value of the USDollar has decreased by 86% during the past 50 years!  Cash-in-hand is the worst of all possible “investments.”  If your parents hid one U.S. Dollar in a closet 50 years ago, that hidden treasure is now worth 14 cents.  An ounce of gold has gone up 35X (note, not 35%) during those same 50 years.  It is possible that bitcoin might, someday, even surpass gold.  But I still, over time, prefer gold, so I hold a larger amount of gold and a much lesser amount of bitcoin.

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“You say that after having held only U.S. stocks for 13 years, in 2025 you rapidly began to diversify global positioning so that you are roughly 1/2 U.S. and 1/2 global and hard assets.  Why?”

The “Trump-trade” (a popular term on Wall Street) implies that angry foreign investors will pull away from U.S. assets.  This causes a (slight) strengthening of foreign currencies against the USDollar.  So, the strengthening of foreign currencies further increases the profits in overseas markets, including China.  If you hold 1/2 of your portfolio in overseas assets, then you do not have to worry about currency strength or weakness or fluctuations since it all balances out.  Ultimately, I expect the USDollar to gyrate sideways for the coming years and I show this below.

So, U.S. corporations trade in USDollars.  Foreign corporations normally trade in their local currency.  IE, Japanese stocks trade in the Yen and French corporations trade in Euros.  In an investing portfolio, the trading currency is almost as important as are the company’s profits.

While the U.S. economy will remain stronger than developed economies for the next few years, I do believe that there will be a lot of near-term strength in developed markets (Europe, Japan, etc.) but that emerging markets will not gain obvious outperformance until the 2030’s, which will likely be a period of “stagflation” (global stagnant economies combined with inflation).  In the 2030’s, China and India (and other emerging markets) may become stronger economies than the United States.

Relative Strength shows us that, after 20 years, developed foreign stocks are suddenly beating U.S. stocks (see the two circles showing recent breakouts… the orange line is developed market strength breaking higher and the blue line is U.S. market strength breaking lower):

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The USDollar should gyrate sideways over the coming years, between the two green dashed lines.

 

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“Will AI lead the market higher for the coming few years?  

The stock market follows earnings; sectors showing the highest probable corporate earnings over the coming 2-3 years are:

1. Technology, particularly innovative & disruptive technology (which includes AI, robotics, gene therapy, quantum computing, space, etc).  Technology, and in particular AI and robotics, will have the highest future earnings of all sectors.
2. Materials, especially those used in technology.
3. Utilities, especially mid-cap and small-cap that supply electricity to technology.
4. Banks and private equity companies that fund technology and tech startups.
5. Data center REITs
6. Global clean energy (despite the efforts of the current U.S. administration, clean energy growth is unstoppable)
7. Precious metals & crypto because of continued “money printing”… the miners will show high earnings.

By contrast, the lowest corporate earning sectors are likely to be:

1. Traditional energy companies.
2. Traditional healthcare.
3. Traditional industrials, partly because the “build-back-America” trade is a fantasy.
4. Traditional (non-data-center) REITs
5. Software (AI will replace this sector)
6. Cyber-security (AI will replace this sector)
7. Consumer staples will lag more and more as technology bubble conditions manifest.

Beyond a period of a few days, stocks do not trade based on news events; longer-term, stocks mostly trade based on corporate earnings’ profit levels.  Oil disruptions are the only type of news that can cause problems for weeks to months rather than just days.  But stocks are partial ownership in a corporation and if the corporation generates higher earnings, then patient stock-holders, like you, will benefit.  End of story.

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SUMMARY:  Bullish… but near-term risk has increased and I’ve sent repeated private updates to clients over the past weeks.  Almost everything that MarketCycle uses was created in-house (requiring decades of testing) and it is innovative and proprietary.  Our “SEVERE RISK” indicators (I call them “End Times” indicators) are not even close to giving a risk signal.  This means that a temporary and tolerable 10-15%(?) pullback may be on the horizon and we have already taken on a few protective assets for client accounts.

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So after all of that, let me repeat:  I’m still bullish, but with near-term caution.

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Thanks for reading!

Consider allowing MarketCycle Wealth Management to manage your investment account.  We try hard to earn our keep.  There is a “Contact” tab at top of website.

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MARKET CYCLE  —  DUAL MOMENTUM  —  TREND FOLLOWING  —  RELATIVE STRENGTH  —  HEDGE FUNDS

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This blog will contain a dozen charts with simple text.  Charts are visual proof of what’s happening in the investing world.

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U.S stocks are currently UNDERVALUED… chart via Morningstar Analytics:

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Stocks move higher primarily based on good corporate earnings.  Earnings just keep marching higher.  You can see how earnings dipped during 2020 Covid and during the 2022 bear market:

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The market began a brief correction on Friday January 30th, concentrated in metal commodities and primarily in silver, because these assets had rapidly become parabolically overvalued over the past couple of weeks… metals will soon recover and move higher at a realistic rate (MarketCycle does NOT hold silver and you can see the note to myself written directly on my chart, and updated after the drop):

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Despite the recent pullback, GOLD is not overbought and gold holdings are still tiny compared to the stock and bond holdings in most investment accounts (chart courtesy of Bank of America Research):

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The future (trend channel) path of GOLD according to the highly respected Yardeni Research (to which I subscribe):

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MarketCycle’s thesis on the possible movement of gold over the coming year:

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MarketCycle’s thesis on the possible movement of bitcoin over the coming 6 months…  the straight down bar on the right side of the chart is a “margin call” and true to form, a 14% capitulation happened almost immediately, on the Thursday night futures market.  If the market has not now yet bottomed, then it will likely be “sooner rather than later”… gold and bitcoin usually take turns leading higher:

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The normal path of bitcoin after it reaches oversold levels of below 30 on RSI, which it has now done, is shown below…  Chart courtesy of Global Macro Investor via Daily Chartbook, to which I subscribe:

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The really big crypto players are already starting to accumulate more:

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Gold and crypto have been moving higher as protection against weakening global currencies, it’s not just the USDollar that I worry about, although the USD has now broken below a 12-year support line (see far right green bar that is now below its blue bullish support line).  Likely worst case scenario?  I would expect the USDollar to very slowly gyrate up and down within the new dashed orange walls of the below sideways trend channel for the next few years.  It is possible that the coming new Federal Reserve Chairman (Warsh) may be more hawkish than expected and this would help prop up the USDollar.

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MarketCycle has moved part of our portfolio to protect against USDollar weakness… one of these holdings is China technology as China moves above both its 20-year and its 8-year overhead resistance lines at nearly the same time:  

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Some end-of-year-2026 projections… all up (Yardeni Research just raised to 8000, as did Tom Lee of Fundstrat… I subscribe to both services):

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SUMMARY:  STILL bullish on global stocks (despite news caused volatility) and bullish on quality corporate bonds, gold and metals, select sectors and themes.  We are generally avoiding silver and Treasuries and a few select sectors.  I expect at least one bigger bump in 2026, but for the year to end on a high.

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Thanks for reading!

MarketCycle Wealth Management does one thing… we manage investment accounts and we try hard to earn our keep via using our decades of experience in the markets.  We are affordable and it is simple to become part of our family.

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MARKET CYCLE  —  TREND FOLLOWING  —  RELATIVE STRENGTH  — HEDGE FUNDS  — CYCLES

All charts were posted on October 28th and published on November 1st.  This posting is mostly pictures and charts, so it is shorter than it seems.  There is a PDF and print function at the bottom of this posting, on the website.

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It is an exciting time in the markets… well, at least for me it is.  I feel as if I have an inside peek at what will happen during the coming years, although I treat each day’s and each week’s analysis as if I could be entirely wrong.

I’ve been watching a particular chart of the Chinese stock market, shown below, for the past 10 years.  I created the chart in 2015 and drew the suspected trendlines out into the future.  On October 27, 2025, China FINALLY shattered through its extreme long-term bear market trendline (see the purple circle below, middle-right) and the breakout has held.  Chinese stocks are extremely undervalued considering the extreme size of its economy and the giant monetary stimulus that they are planning to release, plus the most recent Trump-Xi trade negotiations are behind us for the next 6 months (next planned meeting is in April of 2026).

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The below Performance Chart shows the gains of the S&P-500 (in red) compared to the Chinese stock market (in blue) since the beginning of this current Secular stock bull market in late-2008.  Obviously, until now, the U.S. stock market was the only place to be invested.  What we need to understand is that the investable market is now broadening out to include developed markets and China.

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I have created around 200 (all similar) relative strength charts, covering all assets, that I can rapidly scroll through that show relative strength based on the trend direction of just one line on the chart (as shown below).  Relative strength tells us how strong one asset is as compared relative to another.  In the case below, we see how strong China is as compared to the S&P-500.  When the line is moving DOWN, as it is currently doing, then the China stock market is projected to be stronger than is the U.S. stock market over the intermediate term (several months or possibly longer).  I have to admit that a year ago I did not expect to see this much positive momentum in China, but it partly has to do with the weakening of the U.S. economy over the past 10 months while China’s economy is strengthening. 

On this chart… line down = China up.

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In the United States, the S&P-500 will very likely reach more than 7000 before year’s end.  There might be some near-term volatility and chop… the shown blue dashed trendline channel is too narrow to be of much longer-term importance.  The true trend channel cannot be seen on this one-year long chart.

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Originally released on January 1, 2025, these are the end-of-year S&P-500 “projected targets” given by the major U.S. institutions; most will likely be wildly wrong.  FundStrat Research and Ned Davis Research, both of which I subscribe to, projected 6600 but we are already over 6900 as I post this article.

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The USDollar is still holding within the walls of its BULLISH 12-year trend channel, but it warrants careful watching.  The USD is slow moving; it ultimately may just gyrate sideways within a range of 89 to 115 for several more years into the future.

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October 31st Bloomberg headline quoting Bank of America’s head strategist, Michael Hartnett:

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Gold is also suddenly taking a breather; it might gyrate sideways over the coming months, creating a series of higher lows within a fairly tight range as it did earlier this same year.  It tends to jump higher and then slide sideways and then jump higher and then… But over the long-term, it will likely churn much higher.  [Goldman Sachs projects that gold will move higher to hit $4900 by year’s end.]  When we look back ten years from now, gold might be seen as the strongest and safest long-term asset.  It is moving generally higher under activity that will remain favorable for gold… debasing the USDollar, increasing government debt, increasing market volatility, deregulation of assets and slowly increasing general inflation.

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Gradually and over time, there are a lot of retail buyers (red line below) and Central Bank buyers of gold (gold = blue line below) that will be forced to play catch-up, possibly driving gold prices higher for many years.  Over the coming decade, I expect gold to eventually go much higher than most people could even imagine.  The U.S. Government is the one Central Bank that is not buying more gold, we hold a lot already.  Instead, the U.S. is buying (and seizing) crypto currency.

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Whenever gold temporarily weakens, bitcoin often takes the lead and moves higher; bitcoin and gold are sort of like a tag team.  One does well while the other one rests and then they switch.  Like gold, bitcoin also tends to move higher, then sideways, then higher, then…

After a bit more near-term turmoil, bitcoin may soon head higher again, perhaps to $150,000(??).  MarketCycle’s client accounts hold twice as much gold as we do crypto and this is because crypto is twice as volatile as is gold. 

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Bonds have also recently shattered through their 6-year long bear market trendline and bond volatility is finally back in the low-risk area.  This allows us to add bonds back into portfolios, with high-quality corporate bonds being (unusually) less risky than are government bonds.  Again, see the purple circle:

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Most professional investors now believe that the Fed will not lower interest rates at its next announcement meeting in December, but they may be forced to do so if the employment situation worsens.  It is not just tariffs; even though AI is still at its beginning stages, it is adding to job losses at a more rapid rate than most people anticipated and Federal Reserve Chairman Powell fully understands this.

Headline from this week’s Fortune:

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The all-important corporate earnings are still climbing higher.  Stronger corporate earnings = stronger corporate stocks = stronger stock market. 

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And finally, MarketCycle’s sensitive inflation indicator, that turns a ton of data into one simple line on a chart, is now turning higher again (blue line below).  It is designed to make early calls about the path of inflation, before other investors see what’s happening.  Inflation is generally caused by tariffs, debt and money printing; we have all three in abundance.

Gray line = Fed…  blue line = inflation… they should almost be running in sync, and they are not because the Fed is always late to respond.  The purple circle shows the recent turn-up in inflation.  This means that the Fed should actually stop lowering rates unless the jobs numbers worsen… but they won’t ask for my opinion.

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SUMMARY:  I remain a broken record… I am still bullish… I am still bullish… I am still bullish!

That’s it and thanks for reading!

MarketCycle Wealth Management does this:  We use our decades long experience to navigate your investment account through rough waters while following secular macro themes.  Over the longer term, the stock market ultimately moves on themes, trends, momentum and factors… not on individual stock selection. 

The great Peter Lynch didn’t “buy stocks,” he bought one factor:  momentum.

And Warren Buffett didn’t “buy stocks,” he actually bought one factor:  large-cap quality-value.

MarketCycle is affordable and we try hard to earn our keep.  We often know things ahead of the crowd that most others simply miss.  MarketCycle listens to a lot of smart people and we subscribe to some of the most elite research advisories, but we ultimately make decisions based on our own clear and accurate indicators coupled with an experienced understanding of global-macro and market-cycles… and a lot of common sense.

Yes, we are accepting new clients, and you will never see a better time to invest than right now.

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MARKET CYCLE  —  TREND FOLLOWIING  —  RELATIVE STRENGTH  —  DUAL MOMENTUM  —  HEDGE FUNDS

In the Fall of 1996, Federal Reserve Chairman Alan Greenspan unwittingly announced the start of the first “Technology Bubble” by saying that we were entering: “A period of irrational exuberance.”  That highly profitable Dot.com bubble inflated for another three years before popping… subsequently sending the market (slow-motion) crashing for two years.

And now, in the Fall of 2025, Federal Reserve Chairman Jerome Powell has just unwittingly announced the start of our second (AI) “Technology Bubble” by saying:  “By many measures, equity prices are highly valued.”  My prediction is that this new highly profitable bubble will also inflate for another three years before popping.  That “pop” will also send the stock market “slow motion” crashing over a two-year(?) period.

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Who made the most money during the Dot.com bubble? (It will be the same in the coming AI bubble.)  Numerous studies show that it was the buyers of mutual funds ETFs; the buyers of individual stocks generally lagged even the S&P-500 because the market moved higher on “themes,” not individual stock earnings and hype.

When an individual invests using individual stocks, once they reach a total of 5 or more stocks, they make (only) the same amount of profits as does the S&P-500… they normally do not outperform.  And if they hold less than 5 stocks, then their risk of ruin increases dramatically.  It isn’t that unusual for an individual stock to lose 25% or more in a single day, but an ETF could never, ever lose money like that; watching the downside is every bit as important as is watching the upside.

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We are currently in an overlapping Secular stock bull market and a Cyclical stock bull market.  Bullish long term and short term cycles have merged.  No wonder the market just keeps grinding higher.  Double strength, and we are not yet done.

Of note, we are likely to get one more cyclical bear market between now and the final end to this super-bull.

When the current technology bubble finally pops, the stock market and economy will then move into an overlapping Secular BEAR market and a concurrent Cyclical BEAR market.  We will switch from 18 years of double strength to 10+ years of double weakness. (Secular bears can also be exploited for profits.)

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Where do I see current strength?  Gold, silver, fixed-rate corporate BONDS of almost any duration, most stock sectors (even the healthcare sector appears to be turning higher), most cap sizes (with small-caps & mid-caps now showing as much strength as large caps), developed market stocks held in Euros, IPOs, growth stocks and momentum stocks.

Gold miners show GREAT strength, but I would personally prefer to hold gold over gold miners because pure gold offers better diversification and protection.  And over the next few years, silver may prove to be even more powerful and important than is gold… but I would still hold more gold than silver because it offers better portfolio protection.  By the late 2030’s, gold may hold an extreme value of perhaps $25,000 per ounce.  Yes, I am serious.  Starting back in the year 2000, I personally started collecting brilliant-uncirculated 150-250 year old European gold coins when gold was still $250 per ounce and it was a much less expensive hobby (and yes, they are in a security storage unit, not in my home).

Utilities and real estate are both defensive sectors, and we hold both via “active” ETFs, and they offer some protection when the general stock market is falling.  Gold and bonds also offer protection during any downside for stocks.  I currently, and for the first time in my life, prefer high-quality corporate bonds over Treasury-bonds.  Treasury-bonds may be down for the count because no foreign country currently wants to loan money to the United States Government.

Bitcoin currently has weak breadth and weak momentum.  Downside support is at $100,000; next upside target is at $150,000.  By 2029 Bitcoin and Ethereum may both be higher than people can currently imagine.

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Way back in October of 2011, when I was the only one announcing the official start to this Secular stock bull market, I started predicting a technology bubble that would culminate in a huge tech bubble in the later years of the 2020’s with the final three years being, by far, the strongest.  I repeatedly stated that it would likely end in 2029, but then Trump came along to speed things up, so I now think that it will be even more parabolic but that it ends, perhaps, one year earlier, in 2028.  Historically, Secular stock cycles have been 18 years long, but that isn’t etched in stone, so we will continually watch for the signs of a major top.  My goal is to nail the date of this top, just as I did with the prior two major peaks in 2000 and 2008.

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President Trump’s economic plan is to:

1. Lower taxes for wealthy business developers and corporations… (while passing the rising costs of goods and services onto the average American).
2. He wants to completely deregulate corporations and financial institutions so that they can grow unencumbered. (This is exactly what caused the Great Financial Crash of 2008.)
3. He wants to flood the economy with money in order to force growth. (This will cause a massive increase in our government’s debt level.).
4. He wants freely flowing fossil fuel energy (regardless of any environmental problems) in order to supply cheap energy to corporations and to AI data centers.
5. He wants to artificially lower interest rates toward 0% in order to offer money (cheap loans) for corporate expansion and for home purchases and for IPO creation.  (0% interest rates + tariffs = inflation.)

These five things will super-inflate the stock bull market.  Unfortunately, continually over-inflating the economy and the market can only end with one outcome.

And what smart and very easy thing could President Trump do to help to shore up the U.S. Government?  We have 147-million troy ounces of gold in Fort Knox.  In the past it was given a book value of $42 per ounce and this price has never been updated!  If Trump were to sign an executive order that simply raises the worth of this stored gold to its current price of $3855, then we instantly have a whole lot of money.  We would pull an instant $650-billion out of thin air.  It could be used to shore up the USDollar without a single ounce of the gold disappearing.  Somebody should tell him.

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From the highly respected (and expensive) Ned Davis Research:

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The path of inflation is likely to follow the path of the stock market higher through (roughly) 2028 before falling again during the final big bear market.  The DARK BLUE line below shows inflation from 1974-1982 and the LIGHT BLUE line shows the tracking of current inflation.  The two lines continuing to track each other would fit perfectly with my long-held prediction.

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Gold moves higher when people are worried about the condition of the world, like now.  This next chart shows the price of gold from the start of the 2024 election cycle year; it has moved up from $2000 per ounce to more than $3855 on September 30th… a roughly 90% gain in just two years, which is unprecedented.  (MarketCycle accounts generally still hold a 20% position in gold and silver.):

 

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Despite the constant chatter about of a weakening USDollar, the below 15-year trend-channel chart shows that the USDollar is still moving within the walls of this BULL market trend channel… and just below this is super-strong support @ 89 (orange dashed line).  I drew this chart way back in 2021 and projected it into the future.

If the USDollar (USD) temporarily breaks through its long-term trend channel and hits 89, and it may, then it is likely to then bounce higher again, back into the (then broken) trend channel.  A falling USD is what President Trump is promoting, but the market participants will ultimately determine the price of the USD.  Strong countries generally have strong currencies and this counterbalances any chaotic USD weakening activities of the current administration.  A tug in both directions ultimately, over time, pulls the USD (gyrating) sideways, as it has already been doing for the past decade.

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After being bearish during all of 2008 and early 2009, during the Financial Crash, I have been BULLISH on stocks since the first week of April in 2009, only two weeks off of that bear market bottom.  I remain bullish today.

Because I have not actually met the vast majority of my clients, I still look at everyone’s photo once each week in order to remind me whom I am working for (some clients just won’t send me a photo, but I’ve managed to find most of them on social media!).  Because of my self-imposed reclusive hermit lifestyle, I tend to remain invisible… but I definitely still care!

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Cartoon hint:  Dracula is driving the white car…

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MarketCycle Wealth Management was started so that we could help to navigate your investment portfolio through the coming bubble and subsequent crash… both of which can be highly profitable for one that understands the nuances of complex market action.  CONTACT US if you think that we can help you!  (HINT:  We can!)

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MARKET CYCLE  — TREND FOLLOWING  —  ETF  —  SECTOR INVESTING  — RELATIVE STRENGTH  — DUAL MOMENTUM 

Written on August 31st, 2025.

It is crazy how there are too many good things to invest in.  This is a rare opportunity and you just have to pick and choose from a long list of potential assets.  The difficult multi-year concentration, with only the top 7 mega-cap technology stocks outperforming, has suddenly moved toward strength spreading out far and wide.  A multitude of sectors and assets and regions and cap sizes are all now doing well.

As I recently wrote to clients in a private MarketCycle Update, the market was (and still is) presenting with signs of a near-term period of temporary weakness.  August and September are often weaker months for the economy and stock market, and if not, then October is usually the difficult month.  Perhaps the S&P-500 wants to pull back toward 6200?  That isn’t bad; it is a routine pullback.  We WILL move higher again… to new record highs.  The stock market ALWAYS has to let off steam when it gets a bit too hot (like now), and this is a good thing.  Pullbacks lead to new highs.

So, pullbacks are a normal part of investing in a bull market.  Protection partly comes from our portfolios being diversified in such a way that all assets are in their own bull market and yet they do not all move in unison!  IE, gold is currently in a bull market and stocks are currently in a longer-term bull market, and they move independently of each other. 

One wants to ignore temporary “V” pullbacks… but to absolutely avoid the big bear markets.

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Intermediate term STRENGTH IS FOUND IN:  growth stocks, momentum stocks of all cap sizes, AI, robotics, innovative-technology, Bitcoin, Ethereum-blockchain, financials, industrials, small-cap stocks (which will benefit from the Fed lowering interest rates this Fall and all through 2026, plus they are a great anti-tech position that can go up when tech drops), gold & silver, private credit and developed market stocks (which will benefit as the USDollar drops a bit lower in the near-term, before recovering in the intermediate-term).  Newly increasing strength can be seen in REITS, healthcare (non-pharmaceutical)… and perhaps China (if it can break above its strong, long-term overhead bear market trendline).

REITS, for a host of reasons, look promising; they are not only defensive in nature, but they are severely oversold.  They go up when interest rates are lowered (coming soon, courtesy of Trump) and they go up when higher inflation is created (also coming soon, courtesy of Trump).  They pay tax-advantaged interest.  They have a (price-to-earnings valuation) P/E of 16x in a world where big tech has a P/E of 29x.  REITS and healthcare and financials all have low P/Es of 16x, meaning that they are undervalued.  REITS, healthcare and financials (plus utilities and most technology) suffer almost no impact from President Trump’s tariffs.

Potential NEW BUYS? 

• REITs (Real Estate Investment Trusts) are the #1 recent buy suggestion from BlackRock, centered in residential and global data centers.  [Note that BlackRock is not the same company as BlackStone, and they do behave differently.]  Avoid private-equity REITS; they are ill-liquid and their total collapse, in a few (4???) years, may help to cause the next big super-bear market, just as collapsing fraudulent home mortgages accelerated the Financial Crash of 2008.  Home prices may dramatically drop during the coming super-bear market (and fixed-rate mortgages may be quite low again), with prices recovering fully during the 2030’s.  Because of the strong potential for stagflation in the 2030’s, avoid floating-rate mortgages like the plague.  If you buy your home at the bottom of the next bear market (in 4-ish years?), because of the strong tax incentives, NOBODY should ever pay cash for a house… let the bank buy your house for you whenever interest rates are low.  Perhaps a fixed-rate, no points, 15-year mortgage when both prices and rates are cheap?  After all, this is, by far, the biggest expense of your lifetime and if you need or want to get out, it can act as if it is an ill-liquid investment.  In the meantime, renting is always a good choice, and renting is easy to get out of.
• Healthcare sector (minus pharmaceuticals and biotech) is the #1 recent buy suggestion from Goldman Sachs (and Warren Buffett).  Aging demographics throughout the developed markets helps to backstop this investment.

Near term, large-cap technology may show some weakness over the coming weeks.  And Crypto may show some near-term weakness.  Frankly, the strongest asset that I see right now is gold.  The strongest asset, when the big super-bear market arrives in a few years, will likely be gold and not crypto, despite what the entire world currently believes.

Inflation seems to be holding at the 3% level which I predicted a couple of years ago.  Nobody will remember that.  President Trump artificially pushing rates toward 0% could raise the inflation level toward chronically higher levels, well above 3%.  During the 2030’s, I’ve been predicting killer inflation levels, creating severe stagflation.  INVEST NOW!  Delay your need for instant-gratification (of buying things) by just a few years, then buy them cheap at the bottom of the coming super-bear market!!  If I am correct, then sometime around the year 2030, everything is going to be dirt CHEAP (before prices rise higher than ever during the 2030’s decade).

Right now, we are in the early stages of a very profitable multi-year bubble formation.  Trump wants to artifically move interest rates toward 0%, regardless of the higher inflation that he will cause.  Deregulation (literally “anything goes”) is moving at lightning speed.  Investors are becoming immune to President Trump’s non-stop shenanigans.  There is money sloshing around everywhere you look; tons of it.  Zero rates will create very low margin borrowing levels for investors (and low fixed-rate mortgages).  It will force “savers” away from bonds and into the stock market.  Low rates create great market-boosting stock buy-back conditions for corporations (who want to raise their stock price by buying and then eliminating their own stock shares, making all remaining shares more valuable).  These are all very strong tailwinds that will drive the stock market higher!

A relatively new client recently asked, “Will we be able to see the final top in this bull market just before the bubble pops?”  My strongest investing ability is seeing tops and bottoms forming.  Clients sometimes call to argue with me at the time, but over the past 35 years, I have been continually right about major tops and bottoms… almost always to the exact week and sometimes to the exact day.  And I say this with no humility… I mean “with all humility.”  lol

So, yes, likely near-term weakness, but I am still CRAZY BULLISH!

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MarketCycle Wealth Management is in the business of managing your investment account so that you can be positioned in the strongest assets and so that you can avoid the big downturns that damage investment portfolios.  We try hard to earn our keep.  There is a CONTACT tab at the top of our website.

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MARKET CYCLE  —  HEDGE FUNDS  —  MOMENTUM  —  RELATIVE STRENGTH  — 

 

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The stock market is showing incredible internal strength.  It was weak and has now strengthened.  Usually when the stock market has been weak but then improves, the economy itself (and home prices and the consumer) then becomes temporarily weaker as stocks rise up off of their bottom.  That is happening now: stronger stocks, weaker economy; the two do not move in tandem.

And then there is Trump.

President Trump naturally spent the weekend threatening high tariffs again and he (temporarily) followed through on Monday with attacks on some of our closest allies (and the Dow stock index is down over 600 points as I type this today).  Frankly, I just wish that he would concentrate on his golf game; he certainly doesn’t understand how tariffs or the economy work.  Volatility, with drawdowns, is the result in the near-term… but it won’t last; the stronger stock market will eventually win.

Trump’s “Big Beautiful Bill” just passed and is now signed into law… and please don’t shoot the messenger:  The rich get lower taxes and more loopholes; the poor get higher taxes and higher food & health care costs and more hurdles to jump.  Hungry poor children lose their school lunch assistance.  Hospitals and clean energy suffer under the new bill.  Trump gets endless money to build prison camps for legal naturalized citizens and illegal migrant workers, not just in the Everglades of Florida, but his stated plan is to build them all across the country.  Social Security itself was weakened by the bill since the tax cut for some seniors comes directly out of the Social Security system’s coffers… but if you work after qualifying for Social Security, and if you earn too much, you are penalized.   Of course, the deficit quickly goes up by another $3.3-Trillion; the United States is now $37-Trillion in DEBT.  

-$37,000,000,000,000

We may get some near term (tariff caused) economic weakness & turbulence plus continued weakness in home prices and consumer spending… with weakness ending in the late Fall of this year?  Below is a weekend quote from President Trump.  I don’t know about you, but I can’t figure it out.  I do know that when push comes to shove (if the stock market suddenly drops), Trump will cave in on tariffs, continuing the TACO trade.  Please remember that tariffs are NOT paid by the foreign country… they are ultimately paid by YOU in the form of higher prices.  And we have to remember that tariffs haven’t really happened yet… July 9th is the deadline… or is it August 1st?  (Quote courtesy of Fortune via Yahoo News):

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Tariffs impact stock sectors differently, with the below sectors on the left being the safest in a “tariff world.”  REITs and financials (banks) and gold & crypto would also be on the left.  MarketCycle’s client accounts are strongly leaning toward the (green) left on this chart (Chart courtesy of Apollo Global):

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Everything that is needed for the stock market to run higher is now in place since corporations no longer need to worry about regulations or any damage to our environment.  And the super-bull market will now broaden out and pick up speed and, in my opinion, it will eventually go parabolic for longer than people would currently believe possible.

We are in the final few years, the strongest years, of a 20-year secular stock bull that started 16.5 years ago.  The current period will mimic 1997 to 2000, where Internet stocks went sky high and generated outstanding profits.

And the bear market that always follows at the end of all 20-year secular bull periods is a real killer.  The last example was the Dot.com Crash in 2000 which was followed by 10 years of weakness (and the crash was copied again in the Financial Crash of 2008).  If I am right, the coming crash at the end of this decade may totally reset both politics and the economy (and maybe the U.S. even just defaults on its debt or we allow the Federal Reserve to “buy” all of our debt and permanently hide it in their non-audited books?)… a chance to start over, including a new gold backed digital currency since the U.S. owns most of the world’s physical gold; a chance to do things differently and better.  Crisis leads to opportunity.

During the next few years, it will be innovative technology and particularly AI & robotics and crypto & blockchain (and inflation assets) that will lead the way to great profits.  By 2028 the stock market may be moving parabolically higher and this might even cause people to (dangerously) take out second mortgages on their homes and to borrow money from brokerage houses in order to toss the money at the stock market.

There will be some bumps along the road, perhaps a temporary larger pullback in 2027, but investors just need to hang on until the very end.  My job is to spot the end times and then to switch gears AT THE RIGHT TIME in order to profit from the destined big bear market that will then be due.

Technology is fairly immune to tariffs and interest rates and inflation.  Technology has been leading the market higher, BUT it is still in the early stages of its ascent.  Innovative technology, just now at the middle of its “S” curve cycle, is likely to be a particularly strong asset during the coming few years.  AI and robotics technology are both extremely important, as are the smaller utilities that run AI data centers and the big banks and private credit companies that fund the new technology startups.  Effective July 1st of this year, the market is suddenly broadening out while the USDollar is less strong, which means that we now have an opportunity to successfully buy innovative & disruptive technology in all cap-sizes and from all countries, including Japan and Asia.

Interestingly and hard to believe (and fact checked) Amazon literally just created its millionth robot (imagine, Amazon now has 1,000,000 factory robots!).  Meta has just hired a giant “who’s who” list of AI builders.  It’s happening, so one might want to buy into the stock market and just hold on!  (Chart courtesy of TechCrunch)

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I personally believe that the need to create an intelligence is built into our DNA and, as a sort of “manifest destiny,” it cannot be stopped.  So, going forward the BIG story will be artificial intelligence (and robotics).  The rush into AI will likely push the stock market to unbelievable heights over the next few years.  AI & robotics will be a key factor during the remainder of our lives (and beyond), no matter how the stock market reacts to the AI & robotics trade in later years.  I now use AI every day of my life. 

This important chart below shows the potential of what may be THE great technology super-bull that is still in its early stages.  My bet is that the “AI trade” goes parabolic for a profitable and prolonged period.  Going forward, every time that someone on Wall Street declares that we are in an AI technology bubble and that we should “watch out,” just laugh and ignore them… they have no clue as to how big a bubble can become.  In my opinion, this AI bull will be big.

The current wave may prove to be the big one… we’d currently be just about where the question mark is.  (Chart courtesy of Benedict Evans, a technology expert based out of London):

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In general, MarketCycle’s client accounts hold the following positions (there may be some accounts that are too small to hold all positions and custodial trusts for minors and corporate accounts cannot hold any “esoteric” positions):

1. Gold bullion
2. Private credit funding for technology companies (half floating-rate & half fixed-rate, 100% secured, paying 7% interest)
3. Bitcoin & MicroStrategy (our bitcoin ETF pays 28% interest without cutting into profit gains and MicroStrategy is cornering the market in Bitcoin)
4. Managed futures (long-short global interest rates, global currencies and commodities, but does not hold stocks… a great diversifier and a big help during inflationary periods)
5. Developed market growth stocks (growth = strong)
6. Small-cap momentum (momentum = trending strong)
7. Mid-cap momentum (cap = size of the corporation)
8. Large-cap momentum
9. U.S. Technology sector
10. Global innovative technology
11. Global artificial intelligence
12. Global robotics
13. U.S. large-cap banks (they fund new IPOs and mergers)
14. U.S. small-cap to mid-cap utilities (they supply energy to AI data centers)

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That’s it, thanks for reading!

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MarketCycle Wealth Management, for a low fee, manages brokerage accounts for the general public… in the United States and globally.  There is a contact tab at the top of our main website.  We strive to earn our keep.

Our REPORT site can be reached via the connecting link on our website.

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MARKET CYCLE  —  TREND FOLLOWING  —  ROTATION  —  RELATIVE STRENGTH  —  DUAL MOMENTUM  — HEDGE FUNDS

Clients may take it for granted that I am bullish during a bull market.  I mean, what else would I be?  I sometimes quote my (famous) investor acquaintance, Ed Seykota, by saying:  “It is not logical to be bearish in a bull market.”

Well, most investors are still illogically bearish, and this includes professionals and major institutions and even the paid analysts that so many investors depend on.

When one “shorts” the market, they are betting, with their hard-earned money, that the market is going to fall sharply.  Right now, we have the biggest hedge fund ETF short position in the history of the universe.  This makes me very bullish because most people are always wrong… when sentiment is too bearish, it is a very bullish signal.

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And we currently have the most money, in the history of the universe, still sitting on the sidelines, waiting & wanting to move into the markets but too afraid to make the move, although it will.  This makes me long term bullish since much of the $7,250,000,000,000 will slowly enter the market over the next few years.

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Currently, most investors are still selling into any rallies (see the red area at the far-right bottom).  This makes me very bullish.

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But when the stock market drops 18% and then (“V” shaped) recovers as quickly as it just did, then the market tends to just keep moving higher (see the green vertical lines as compared to the S&P-500 over the past 55 years).  This makes me very bullish longer term.

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Currently, there are 34% more home sellers in the United States than there are home buyers.  This will lower home prices, which will lower inflation (because 55% of inflation is being caused by high home prices), which will allow the Federal Reserve to finally be able to lower interest rates, which will be extremely stimulative for the entire stock market, including the very undervalued small-cap stocks.  Lower yields would also offer lower rates on new home mortgages, so that stimulation would put somewhat of a floor under home price losses with, perhaps, strengthening home prices showing up again sometime in 2026.

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SUMMARY:  I’m watching provisions in Trump’s “Big Beautiful Bill” and how it affects U.S. investments by U.S. citizens and by overseas investors; I’ve probably read more about the bill than have most members of Congress.  There is certain to be a battle getting approval for the bill because Trump’s program would increase the U.S. deficit by a whopping $5.8-Trillion (which defeats any legitimate purpose of DOGE… which is now to continue under the leadership of Peter Thiel).

The economy (and housing) is starting to weaken.  Stocks lead the economy… stocks were weak, but they are steadily getting stronger.  And now it is the lagging economy’s turn to weaken as stocks now get stronger.  It is likely that six months from now, in the late Fall, both stocks and the economy will be strong at the same time and remain strong for an extended period.

So, I remain bullish.  I am still bullish on U.S. stocks but have also added Developed Market stocks to our mix (such as Euro area, Northern Europe, UK and Japan).  The USDollar, despite its recent weakness, is still within the walls of its bullish trend channel, but I still also hold gold bullion which is “anti-dollar.”  Artificial intelligence and innovative-disruption stocks will lead the way higher over the next few years.  Big banks will gradually be funding new (IPO) Initial Public Offerings of innovative new baby companies, and both will profit.  Growth stocks will continue to beat value stocks over the next few years, until they fall out of grace in the 2030’s.  Of course, we will continue to get zig-zagging (often Trump caused) volatility and occasional downdrafts.

And we will eventually get the big bear market that is always promised at the end of ALL secular bull market cycles (as in the technology based Dot.com bust in 2000), and that will offer additional profits because it will finally be the correct time to “short” the market.  Again, a “short” is a bet that markets will drop.  But at that “end-times” event, we will be the rare short holder and most of the market participants will be euphorically bullish and buying on every dip, as the market drops (and drops and drops) over a, perhaps, two year period.  But that is not now and it is not soon.

Although everyone else is highly negative, I’m so (patiently) bullish that I’m almost giddy!

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Thanks for reading!

MarketCycle Wealth Management is in the business of watching over the investments in your brokerage account.  The entire process is easy.  We try hard to earn our keep. 

The REPORT website can be visited via the connecting link on the main website.

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MARKET CYCLE  —  TREND FOLLOWING  —  MOMENTUM  —  RELATIVE STRENGTH  —  HEDGE FUNDs

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My last few blogs have been long, so as the pendulum swings, this one will be somewhat shorter.

We are in a secular stock BULL market that started in the Spring of 2009.  Historically, they last for around 20 years.  Secular stock market cycles are long cycles that determine the prolonged strength or the weakness of the markets.  When we are in a secular stock BULL market, the bullish periods will be exceptionally strong and the bearish periods will be less significant.  This current secular BULL cycle likely ends in the Fall of 2028 or the Spring of 2029… I’ll know when we get closer to the end.

We are also in a concurrent and overlapping cyclical stock BULL market that also likely runs until the Fall of 2028 or the Spring of 2029.  Cyclical stock BULL markets run for around 6 years and this one started in the Fall of 2022, at the bottom of the 2022 bear market.

20-year secular bull cycles usually contain three 6-year cyclical bull market cycles plus two bear markets.

The two cycles, secular and cyclical, may end together in late 2028 and both would move in unison into a combined secular AND cyclical bear market which, if history proves to repeat yet again, the combined bearishness could end in a monster bear market crash.  Perhaps the worst in history.

Crashes can be more rapidly profitable than can be any bull market.  I made most of my personal money by shorting the entirety of the crashes of 2000 and 2008.

But right now, a super-strong and unstoppable bull market continues higher; I expect the final couple of years of this bull market to be parabolically strong with a market emphasis on artificial intelligence, robotics and innovative technology… sort of a super-copycat of the late 1990’s Dot.com technology bubble.  If I am correct, people will be obtaining margin loans and mortgaging their house to get hold of extra money to invest in the stock market; a dangerous pursuit because these same people will get themselves trapped in the eventual bear market.

What will cause the next giant bear market?  Massive U.S. government debt (Trump and the Republican Congress members are well into the process of passing a gigantic debt increase, mostly for tax savings for the top 5% and for military weapons, via Trump’s “Big Beautiful Bill.”  This follows Biden’s out-of-control spending habits).

A headline from today’s CNBC financial website:

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So, how will we fund our debt?  It is normally done via the U.S. selling Treasury bonds.  But now, nobody wants to own U.S. Treasuries.  I am writing this article on May 21st and today’s Treasury Auction was a complete dud and the stock market, that was flat, dropped 800 points on the Dow within minutes of the auction.  Treasury bonds are essentially loans given to the U.S. government.  Right now, nobody wants to loan the U.S. government any money.  Most of MarketCycle’s client accounts own NO Treasuries.  So, to fund our rapidly growing debt/deficit, the U.S. will “print money” and buy its own debt via a “not talked about” Quantitative Easing process… which will work… until it doesn’t.

This process of “printing money” to buy our own debt, coupled with Trump’s tariffs (which are entirely paid for by U.S. corporations and U.S. consumers) will create high inflation.  High inflation makes the cost of servicing the debt rise and rise and rise to eventual unpayable levels.  Specifically, this is what will cause the coming debt-ridden bear market.  Unpayable debt and inflation that would be impossible to stop without the Federal Reserve raising interest rates beyond 20%.  Yes, that is what I believe.  I saw rates go to 19% in 1981.  My first home mortgage was at 16%… and I was too dumb (and unstoppable) to understand that 16% is problematic.

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Right now things are good in the markets; where should we invest?  Below is what the market itself is telling us to hold (and this is primarily where MarketCycle’s client accounts are positioned, although I am not suggesting that you should do the same):  innovative technology, mega-cap technology, financials (large banks), consumer services and small to mid-cap utilities.  Momentum stock ETFs would hold primarily those sectors just mentioned, and particular momentum ETFs are often winners (but some are poorly designed).  We should also add “crypto” into the mix.  REITs may not do as well as during past bull markets.  Industrials should (eventually) get stronger again as the new administration in the White House backs further away from their destructive tariffs.  At the end of this final super-bull market, energy will also get strong, just as it did during the Dot.com bubble bull market.

Invest in assets that generate outsized profits (Chart courtesy of Datatrek):

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Artificial intelligence, which offers humans astounding benefits along with accompanying terrifying consequences, will soon be the big (big!) money maker and its profit potential will continue to be under-estimated.  My opinion is that the creation of artificial intelligence is unstoppable… sort of a modern “manifest destiny.”  (Chart courtesy of Morgan Stanley.)

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Certain “momentum” ETFs are often a good method for catching the best assets during the best times, although they have to be watched carefully during downturns.  MarketCycle always holds a minimum of 25% momentum stocks in our portfolios.  (Chart courtesy of Alpha Architect.):

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That’s it… thanks for reading!

MarketCycle Wealth Management is in the business of managing your money through the market cycles.  There is a contact tab on our website, but I can be reached via:

StephenAust@MarketCycleWealthManagement.com

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MARKET CYCLE  — DUAL MOMENTUM  — TREND FOLLOWING  —  RELATIVE STRENGTH  — HEDGE FUNDS