Secular Cycles Explained

The long-term view of the stock market reflects extended periods of surge and stall. These periods, known as secular bull markets and secular bear markets, are not optical illusions; rather they are extended periods when market valuations (i.e. price/earnings ratios: P/Es) are either multiplying the effect of rising earnings or mitigating them. Secular bull market periods have always started when P/Es were below average, and secular bear markets have never ended when P/Es were above average.