Economic Cycles, Interest Rate Cycles, Technology Cycles, Commodity Cycles, Construction Cycles, Credit Cycles, Demographic Cycles… There are more cycles than in the Tour De France.
Counter-Movements and Corrections
Financial markets are marked by numerous cyclical trends and assets that often move in opposite directions. When uncertainty surrounds the stock market or if there’s a belief the dollar will weaken, investors seek refuge in gold. When interest rates rise, equities tend to suffer. Most recently, investors have positioned themselves for falling interest rates and economic expansion—buying equities that have already delivered strong returns. But what lies ahead when the equity markets are overbought?
Looking at the major indices, most are currently at higher levels than the peak of the significant bull run in 2021—which, as we know, was followed by a sharp correction. As with anything that ascends rapidly without corresponding changes in fundamentals, a return to earth is to be expected. At present, stocks are trading at lofty P/E ratios and unrealistic multiples, and we are hovering near a technical pattern known as the Hindenburg Omen.
The last time we witnessed a significant downturn in equities, many investors turned their attention to watches. Prices soared to unprecedented levels, and watches became a safe haven—until they, too, became overvalued. Yet selected brands outperformed all equity indices for nearly two years.
We are currently seeing a marked increase in turnover among retail customers compared to the same quarter last year. Many of those who recognized the signs last time are now significantly increasing their positions in Urhandleren Invest. As of this writing, approximately 300 watches are in stock—primarily Rolex, Audemars Piguet, and Patek Philippe.
