Project for a year or two: It's much easier to make a case for a troubled stock market than for a flourishing.
Begin with the actual market development. Even though stocks increased on Wednesday, a rocky harvest dried out most of the year's profits, and investors have problems with pattern arguments for a market that has not been able to maintain upward pace.
Paul Hickey, founder of Bespoke Investment Group, an independent market research firm, regularly reports what he calls "pros and cons" on the stock market. I asked him for a casual update: He came up with 1
This abundance of negativity is not meant as a quantitative assessment of the market prospects, but it gives a rough sense of his view and, I think, by many joke investors.
"We were bullish for a long time, but right now I want to say I'm in wait," says Hickey. "I think it's time to be careful."
I also asked James W. Paulsen, chief investment strategy at Leuthold Group, an investment research firm in Minneapolis, for his sense of the market. An economist, Mr. Paulsen, is worried about stocks because he is worried about the economy, he said. While the United States is not in a recession now, he said, "we have moved into the ballpark by a recession."
Mr. Paulsen said that neither he nor anyone could depend on a reliable recession. "That kind of prediction is just too hard to do," he said. But he added, it is possible to judge when the risk of recession has risen.
"It will be a little easy with a small experience to recognize when you are in the ballpark of a recession," says Paulsen. "This is where we are now and that alone is quite a lot of information."
Given his current Outlook, which is that the probability of a recession within two years is fairly high, but not sure, "this is a good moment to take some risk out of your portfolio, only if things go down," he says.
The market, says Paulsen, often moves before a recession – and a falling market can help a recession – making investment time extremely difficult now. In this dangerous environment he said, "right now, I would be a bit careful."
Herr. Hickey, too, recommends caution, because when he counts the pros and cons of the market, the positive side is sharp. It includes factors such as these:
■ Despite some difficulties, the gross domestic product in the US rose to an annual rate of 3.5 percent in the third quarter.
■ The leading economic indicators index of the Conference of Supervisors has been increasing, which suggests that a recession is probably not imminent.
■ The yield curve – the difference between long-term and short-term interest rates – remains in a bullish zone, although the positive margin has been narrowed and the bears look closely.
■ The end of the Federal Reserve's interest rate cycle may be in sight. Jerome H. Powell, the Fed leader, said Wednesday that interest rates were already close to a "neutral" level, which may mean that prices will not rise much higher.
■ Finally, there is already so much bad news about the stock market that it makes good news. According to the contraric logic, Hickey said, the negatives are backed up in stock prices so that the market can rise.
The last item can be a stretch. It's an indication, he said, he has trouble being optimistic.
The market negative of Mr. Hickey's list, on the other hand, is fair. A selection includes these items:
■ Stock price developments have been quite negative. While a number of strong days can turn it around, momentum is bearish.
■ Despite Mr. Powell's last comments, Fed continues to tighten monetary policy, which easily traces the stock market and the economy.
■ The fiscal stimulus of tax cuts is increasingly behind us. Combined with tighter monetary policy, the loss of fiscal stimulus can damage the American economy.
■ Prices have risen, and business feelings have been depressed by the opportunity to expand the trade war.
■ Global economic growth has fallen and many stock markets around the world are already on the market for bear.
■ The domestic housing market has weakened, homebuilder shares have declined, commodity prices have fallen and car sales are relatively weak.
■ The technical sector, which ran the market higher earlier this year, has now lost hundreds of billions of dollars in value. Due to the importance of stocks like Amazon, Facebook, Netflix, Alphabet (Google) and Apple, the psychological "impact of your weakness can not be exaggerated," Hickey says.
■ Corporate debt levels are high and create new vulnerabilities.
■ Revenue growth will probably fall. It can disappoint Wall Street analysts and tear up the market.
And it's just a start. Negatives go again and again.
In the  tenth year with both an economic expansion and a big beef market, it is obviously not surprising that warning signals have begun to blink. At this stage, as I wrote recently, it seems wise to be prepared for lows.
Still, even in spite of these portraits, it can not be quite bad economic view. For example, neither is Mr. Hickey or Paulsen sure that the beef market is over or that there will be a recession soon.
"There may be another strong bull run," said Hickey. "But I do not think we'll have a good sense of it until at least by the end of the year."
I asked Paulsen to do the strongest case he could reasonably have for positive financial and market outcomes for the next two years. In reply, he said that it was possible that the Fed wanted soft monetary policy to expand its economic recovery and strengthen the stock market. If the economy continues to grow and corporate earnings continue to increase, Paulsen said that the shares will rise.
The various conditions in 2018 have already made the stock valuations more attractive. Because prices have been flat while earnings have risen, the price of S & P 500 revenue has decreased to about 18, from around 23.5 in January, he pointed out.
If this trend continues, Paulsen said stocks could be quite tempting. "If we do not go into a recession, and if interest rates do not rise too much, stocks can at some point look good for another bull run," he said.
But he added that he would not & # 39; t Bet on it with the money needed to pay the bills over the next couple of years.
After a nearly ten year old run, the downside of the market became clearer.