Burkhard Varnholt: "Bull markets grow on skepticism"

Equity markets have seen an upward trend for almost nine years and investors are becoming increasingly optimistic. Is there cause for concern?

Equity markets have been bullish for a number of years and the low volatility suggests that investors are becoming increasingly optimistic. Is the bull market about to peak and is it therefore time to sell? Or, is the upswing set to continue for a while? In this video, Burkhard Varnholt, deputy Global Chief Investment Officer, explains which market phase we are currently in and the drivers behind the ongoing bullish cycle.

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Key take-aways

Every market cycle consists of four phases: Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.
Investor behavior suggests that skepticism is still high . Equity allocation levels among Pension Funds, for example, remain substantially lower than those seen before the financial crisis.
Despite the consistently bullish conditions over many years, investors remain cautious because the financial crisis was no ordinary market downturn but, rather a once-in-a-lifetime crisis event. Many investors continue to be traumatized by it today.