What Part of the Market Cycle Are We In?
Knowing where we are in the market cycle is one of the most valuable tools for long-term investors. Right now, all signs point to a classic transition phase — one where fear is giving way to FOMO, and upward momentum is taking hold.
For those who bought during last year’s dip, this moment has been a long time coming. At Michael Leslie Investments, we added to positions multiple times on the way down, not because we believe in timing the market, but because disciplined investing during periods of pessimism often leads to the best returns. When tariffs were eased earlier this year, it marked a pivotal shift in sentiment, and we saw an opportunity to buy in size.
But what about investors who stayed out? That’s where things start to accelerate.
FOMO Is Fueling the Next Leg Higher
If the first leg of a rally is typically led by the patient and the prepared, the second leg is often driven by those who don’t want to miss out. This is where we are now. Enthusiasm is building among investors who sat on the sidelines and are now looking to re-enter. That buying activity pushes prices higher, setting the stage for continued strength.
It comes down to supply and demand. The more people willing to buy stocks at higher prices, the more upward pressure there is on the market. This part of the cycle is where sentiment shifts from cautious optimism to outright excitement. And historically, that momentum tends to last longer than many expect.
We’re already seeing new highs in multiple sectors, and barring any major macro shocks, this trend could easily continue for the next 8 to 12 months.
The Midpoint Matters
Legendary investor Howard Marks has long emphasized the concept of the midpoint when analyzing market cycles. Rather than obsessing over peaks and troughs, Marks focuses on how far the market is from its long-term average. He describes the midpoint not as a fixed number, but as an upward-sloping line that reflects the general direction of stock market returns over time.
We are now pushing above that midpoint. Historically, when the market moves past this average in an upward direction, momentum tends to build. That’s because investors gain confidence. They see recovery, they see gains, and they act on it. The psychology of the market shifts. Fear of losing money gets replaced by fear of missing gains.
This combination of technical position and investor psychology can create the conditions for sustained rallies.
A Window of Opportunity
Marks and other seasoned investors know that once a market clears the midpoint and optimism returns, prices often rise faster than fundamentals alone can explain. This is where momentum begins to lead the cycle, and where delayed action can come at a cost.
That is exactly the window we are in now.
It’s not about guessing what happens next week or next month. It’s about understanding where the market is in relation to its longer-term trajectory. Right now, the historical pattern suggests we are entering the most dynamic part of the recovery — where returns compound quickly, and missed opportunities are hard to recover.
Final Word
This is not just a technical bounce. It is the next stage of a cyclical market recovery, where sentiment, liquidity, and positioning begin to align. For investors waiting for a clearer signal, this might be it.
Markets are moving. Capital is flowing back in. And the midpoint theory offers a compelling case that the next 12 months could bring faster gains and new highs. The best time to get invested may have been months ago — but the second-best time might be right now.
Not sure how to position your portfolio for the next phase?
At Michael Leslie Investments, we help clients stay ahead of the curve and build long-term wealth with confidence. Schedule a call today and see what a forward-looking strategy can do for you.
