Secular Cycles

The stock market has demonstrated longer-term secular bull and bear cycles. Secular cycles are periods with a common trend.

In the stock market, these secular cycles are driven by trends in the P/E ratio.

This chart presents the secular stock market ycles since 1900, based upon analysis of P/E ratios, inflation, and other factors.

The cycles correspond with peaks and troughs in P/E ratios, often over extended periods of years.

The P/E atio cycle corresponds with inflation rate cycles as they move toward and away from periods of price stability (low inflation: 1%).

By Terry Grennon

Asset Allocation Strategist