Staying Long in a Bull Market: The Relentless Test of Conviction
The latest from daquinn@targetedequityconsulting.com
Disclosure: This is commentary, not investment advice! For investment advice consult a professional advisor.
Summary
The greatest challenge in a bull market is not identifying the trend—it is staying invested in it. From the moment a rally begins, skepticism follows. Market participants are bombarded with a never-ending stream of macro risks, valuation warnings, geopolitical shocks, and "this time is different" narratives. While some threats are real and require attention, many are noise—amplified by a media and financial industry structurally incentivized to stoke caution. The hard truth? Bull markets climb a wall of worry, and most investors do not make money because they get off the ride too soon.
Conviction Fatigue
Since 1995, we have seen this cycle repeat: long, grinding rallies that force investors to constantly justify why they remain exposed to upside while headlines scream recession, overvaluation, and systemic risk. Staying long is not an act of ignorance—it is an act of discipline. The volatility in a bull market is rarely linear; sharp corrections, sector rotations, and temporary drawdowns are not bugs—they are features. They are the very mechanisms that shake out weak hands and reset positioning before the next leg up.
The problem is cognitive: humans are loss averse. Even during historic bull markets (e.g., 2003–2007, 2009–2021), investors faced dozens of “reasons to sell.” And with today’s 24-hour financial media and algorithmic amplification of negative sentiment, the pressure to de-risk prematurely has never been greater. Being bullish requires stamina. Most cannot hold on that long.
The Business of Bearishness
An entire ecosystem profits from fear. Some professionals have built entire brands around bearishness. The market's complexity allows for endless permutations of risk scenarios, and sounding the alarm—regardless of accuracy—often earns attention, airtime, and perceived credibility. Nobody is fired for being too cautious. And yet, history is merciless to chronic skeptics: they might be right once but miss compounding in every other cycle.
Even during the dot-com recovery or the post-GFC expansion, bearish strategists argued the gains were artificial or Fed-driven. In 2016, the consensus view was that political instability would derail markets. In 2020, the world collapsed, and yet the bull returned faster than anyone expected. In each case, those who stayed long—while tactically managing risk—built wealth. Those who did not watched from the sidelines.
Staying Long ≠ Staying Blind
Staying long does not mean staying static. It means staying engaged. Market leadership rotates, multiples expand and compress, and fundamentals evolve. But the investor who builds a long-term framework based on earnings power, secular tailwinds, and valuation discipline will outperform the investor chasing headlines or reacting emotionally.
There will always be a next correction, just as there will always be a next rally. Timing both with precision is nearly impossible. But riding a bull market—without flinching at every bump—is the surest path to compounding. The hard part is not knowing what to buy. It is knowing when not to sell.
In January 2007 AT&T signed their first deal with Apple. Those who bought the dividend and stability of AT&T lost out big time. All of the value of that deal was appropriated to Apple. Over 18 years Apple shareholders were rewarded with an 8000% return.
From Training to Inferencing
AI is driving the cycle today and it is just getting started. But in the next stage it moves beyond “Training” models.