UpTrajectory Review
Mark Hulbert's MarketWatch piece opens with a distinction every business owner who has lived through a cycle already senses in their gut: crashes end with a bang, but booms end with a shrug. Bear-market bottoms are capitulation events, moments of visible panic. Bull-market tops, by contrast, are slow leaks — a grinding loss of momentum that lulls even experienced investors into complacency. Hulbert's argument, as far as the available text goes, is that the current market's advance has the hallmarks of a maturing bull, and that a correction on the order of 15% for the S&P 500 is a plausible next chapter, not a doomsday scenario.
For a small-business operator, this framing matters more than the headline number. A 15% drawdown in the S&P is not 2008. It is the kind of event that happens, on average, every few years and historically resolves without a recession. But it does change the weather. Valuations on publicly traded comparables compress, which drags down acquisition multiples for owners thinking about an exit. Banks tighten lending standards when collateral values wobble. Customers who feel poorer on paper trim discretionary spending. None of this is catastrophic; all of it is real, and it arrives slowly enough that by the time you feel it, the easy hedging window has closed.
What is genuinely useful in Hulbert's observation is the asymmetry it highlights. Most owners prepare for the wrong kind of downturn — the sudden crash that dominates financial news — and under-prepare for the slow fade, which is the far more common way bulls die. We are somewhat skeptical of any single-figure correction target, since precision in market forecasting is usually false comfort. But the structural point, that tops are processes rather than events, is well supported by market history and worth taking seriously even if the 15% figure proves off by half.
The second-order effects cut in both directions. Owners with strong balance sheets and dry powder often find that a 10-15% equity correction is when commercial real estate, equipment, and even competitor businesses come up for sale at more rational prices. Conversely, owners running thin cash reserves, floating-rate debt, or customer concentration in cyclical sectors feel the squeeze first and hardest. The same market move is a buying opportunity for the prepared and a liquidity crisis for the leveraged. Knowing which one you are before the fade begins is the entire exercise.
Practically, this is a prompt for a stress test, not a panic. Review your credit lines and covenant headroom while banks are still relaxed. If an exit or capital raise is on the two-year horizon, consider whether you want to price it into a weakening tape. Revisit customer concentration and contract terms that assume uninterrupted demand. And resist the urge to time the top — Hulbert's whole point is that tops are invisible in real time. The owners who fare best in corrections are not the ones who predicted them; they are the ones who were boringly liquid when everyone else was not.
“Unlike bear-market bottoms, which typically end with a spasm of despair as traders throw in the towel, bull-market tops are far more gradual and less dramatic.” — MarketWatch Top Stories
Takeaway: Stress-test your cash runway and credit lines now, because bull tops fade slowly and the best preparation window closes before the downturn feels real.
Excerpt from the original — MarketWatch Top Stories
Unlike bear-market bottoms, which typically end with a spasm of despair as traders throw in the towel, bull-market tops are far more gradual and less dramatic.