What ends a bull market? Everyone has a firm idea of one sort or another on this — some crazy, some seemingly rational. It’s valuations. It’s policy mistakes. It’s the alignment of the stars. It’s interest rates. It’s October. It’s a run of corporate scandals and bankruptcies. It’s inflation reaching 4 per cent. It’s just time.
But to focus on any one thing is, I think, slightly to miss the point. A better way to look at the end of a bull market is to think of it as if it were trapped in an arcade coin pusher (or penny fall) machine — the ones into which you roll a coin to the back of a pile of coins in the hope that it will tip the rest over a ledge and into a collection drawer.
The piles of coins always look about to fall. But they don’t actually do so until long after it feels like they should. (This drives kids crazy, of course. If you want an afternoon to end in tears, end it on a penny fall). The current market is frustratingly jammed with coins.