Contrarian Investor: Equity bulls beware - a market correction may be looming

Nearing end of stockmarket cycle

Talk to equity bulls and even they will admit we must be somewhere near the fag-end of the current stockmarket cycle. The current upswing has lasted a long time, although growth has been more muted than expected.

Given this uncertainty, it is best to discount the worst, in which case the equity bulls are in trouble. I would argue the business cycle is looking threatening for equities. Valuations are also a tad optimistic and no-one could argue US equities represent 'fair value'. High P/E ratios might just be justified if earnings were roaring ahead - but the brutal truth is they are not. Earnings season We now have numbers for two-thirds of businesses due to publish their Q1 2016 earnings in Europe, and 90% in the US. Over in America, the best that can be said is that companies have mainly r...