Updated: 5 days ago
I often discuss Bull markets and Bear markets but there is another type of important stock market cycle to consider – the Neutral or Flat stock market.
The Neutral or Flat market goes nowhere. It stays stuck in a small trading range for a period of months. Based on my cycle definitions, this type of market must last at least five months to meet my criteria for a Flat market.
In most of my writings, I only talk about Growth or Bear Decline market cycles. I simplify the market this way to make particular points about the stock market. I actually track four market cycles for my Growth & Safety investment system – the Bear Decline, the Flat market, the Steady Growth cycle and the Volatile Growth cycle. My investment rules change depending upon which market cycle we are in at a given time.
Today, I want to discuss some key points about the Flat market cycle because we have just experienced one. This recent Flat cycle began on October 20, 2025, and ended on March 19, 2026. During this period pictured below, the S&P 500 went nowhere and stayed within plus or minus 4% of its average price over the five-month period. The cycle ended in late March when the market dropped further due to the war in Iran.
DISCIPLINE AND PATIENCE
The first point I would like to make about the Flat market cycle is the need to stay disciplined. A common mistake made by both amateur and professional investors is to “chase” higher returns when markets are stuck. People get impatient and take on more risk to boost returns. This approach rarely works and when it does work, it is due to luck and not skill.
Flat markets tend be relatively short cycles and nobody knows when they will begin or when they will end. Flat cycles tend to be followed by volatility. Flat markets can turn into bull markets or bear markets, and it can happen rather quickly.
Remaining patient during Flat cycles is the best strategy. You must accept that it is not possible to win every battle in the stock market. You won’t lose money in Flat cycles if you are patient. You just need to be ready to position yourself for the cycle that follows the Neutral cycle.
Remembering that the stock market grows at 10% per year in the long run allows you to stay patient during Flat markets. If you chase higher yields in Flat markets by investing in fixed income assets, you will likely miss the next bull market right around the corner.
THE PATTERN
Flat cycles usually follow bull market growth cycles.
The recent Neutral market of 2025/2026 followed the amazing bull market of 2023 through the end of 2025. Aggressive investors and my Growth & Safety clients saw their investments climb more than 70% over those three years in what was one of the best three-year cycles in market history.
It is typical for markets to pause after this kind of growth. It happened in 2004 after the bull market of 2002 and 2003. It also happened in 2011 after the bull run of 2009 and 2010.
Unfortunately, there is not a consistent pattern that occurs after Flat markets. In some cases, the market declines for a period after being flat and sometimes the market begins a bull cycle.
WHO WINS IN EACH CYCLE
Investing in the stock market is the best choice because the market is in growth mode most of the time (74%). The Bear Decline only represents 14% of market cycles and the Flat market only constitutes 12% of market time. Let’s look at who wins and who loses in each cycle.
Aggressive investors are people who put close to 100% of their money in the stock market. Conservative investors are people who primarily invest in fixed income assets. Balanced investors are people who put some money in stocks (50% to 70%) and some money in bonds (30% to 50%).
Cycle Type | Winners | Losers | Neither |
Growth Cycle (74% of time) | Aggressive | Conservative |
|
| Growth & Safety | Balanced |
|
Bear Decline (14%) | Growth & Safety | Aggressive |
|
| Conservative | Balanced |
|
Flat Cycle (12%) | Conservative |
| Aggressive |
| Balanced |
| Growth & Safety |
My fund, Growth & Safety, generates flat results in flat markets. My fund has been flat since last October as it should have been.
Aggressive stock market investors experience the same thing. They stay stuck during Flat markets. They win big in Growth cycles and lose big in Bear Declines.
Conservative investors see small gains in flat markets because they earn some interest while stocks are stuck in neutral. Conservative investors win during Bear Declines because they gain around 3% while stocks drop 36% on average. Conservative investors lose big during Growth markets, however, because they only earn 3% while stocks are gaining almost 20% per year.
Balanced investors (Target Date funds) post slight gains during Neutral markets due to interest earned on their fixed income assets. Balanced portfolios lose big in Bear Declines (not as much as Aggressive investors) and also lose in Growth markets because they only achieve half the growth of the stock market.
In the table above, you can see why my Growth & Safety fund waits patiently during Flat markets. We tolerate the lack of gains while we wait to win big in both the subsequent Growth cycle and the next Bear Decline.
The Flat market is the only cycle where my Growth & Safety fund doesn’t win. We don’t lose money, but we stay stuck in neutral while we wait for the next cycle change. We sit on the recent large gains, and we wait to pounce on the next opportunity – up or down.
If you would like to learn more about investing in my Growth & Safety fund and want to position your portfolio to win in the next Bull or Bear market, click below to book an appointment. You will get a free investment coaching session as part of the discussion. You don’t need an Advisor; you need a Coach.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The stock market has fallen by about 6% over the last month. The war in the Middle East has driven up the price of oil and created global economic uncertainty.
The chart below shows the price trends for the S&P 500 and the Nasdaq over the last month and since the end of October 2025.
Prices were basically flat from the end of October until the end of February. You can see the drop in prices over the last few weeks. The Nasdaq has dropped slightly more than the S&P 500.
Where prices go from here is totally dependent upon the situation in Iran.
In the last few days, the stock market has inched higher. The market is currently optimistic that the war will be ending soon and that oil prices will retreat.
The situation is very volatile, and the market is responding daily to the headlines.
The underlying economic drivers beyond the war remain. Economic data continues to be mixed. Employment data has been volatile – good one month and bad the next. Inflation continues to run above the Fed’s goal of 2% but it has been stable. If oil prices remain high, inflation will increase.
At this point, all we can do is hope for a fast and peaceful resolution to the war in Iran. Those of you who invest with my system can take comfort that your savings will be protected if things get ugly.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
I’ve worked with hundreds of investors on their retirement plans. People approach investing in every possible way.
I see conservative investors. I see aggressive investors. I see moderate investors. I see speculative investors. I see confident investors. I see anxious investors.
I see investors who are primarily focused on taxes. I see investors whose focus is capital preservation – avoiding losses. I see aggressive investors who are totally comfortable suffering short-term losses and riding out market downturns.
I see investors who are drawn to exotic and complex investing approaches – options, alternative investments, commodities, etc. I see investors who are big proponents of bonds and others who hate bonds. I see investors who think they can beat the market by picking individual stocks and others who only buy ETFs.
I see investors who depend on financial advisors and others who never use advisors.
Everyone has their own approach to investing. This is a good thing. We value different things and we want different things from our investments.
I am always curious, though, as to how people arrive at their investing style or strategy. I try to understand the beliefs and the information people use to choose their approach. As you might imagine, the reasons are all over the map.
The biggest weakness I see is that most people are not strategic about their investing approach. They take one or two pieces of information and base everything they do on a limited view of the investing world.
To illustrate my point, I would like to briefly review the classic strategic planning process used in business and other fields.
Good strategic planning processes involve data gathering and analysis, goal setting, the creation of action plans and an ongoing assessment and measurement process.
Goals Setting
Everything starts with your goals. Goals should be as specific as possible. Goals should be realistic. Goals should be measurable.
Strategy developed from a comprehensive review of the marketplace.
A solid strategy supported by data and analysis to achieve your goals
Understanding keys to success – what works and what doesn’t
Intimate knowledge of the market – real world experience
Action plans to support the execution of the goals.
Prioritized activities to achieve your goals
Milestones and assessments
Measuring progress and making adjustments if necessary
Another key component of a good strategic planning process is testing. Even the best plans contain risks and uncertainties. There are always ways to test ideas in a small way to prove or disprove a hypothesis.
The investing world, like the business world, is complex and dynamic. Successful businesses and successful investors cut through the complexity.
Many, if not most, of the investors I come across DO NOT follow a disciplined strategic process to arrive at their financial plans. The biggest shortcoming is typically a lack of a thorough analysis of the investing market. Most investors are missing key pieces of information that leads to a less effective strategy.
The other major weakness is the lack of a thorough and complete assessment and review process. Because many investors are missing key data about investing, they cannot make the proper evaluation of their results. They don’t know what to compare their results to or how to properly assess their performance.
It is also common for me to come across investors who stick with one and only one investment strategy. In many cases, people should be deploying multiple investment strategies. One strategy might make sense for tax deferred accounts and another for taxable investment accounts, for example.
If you are uncertain about which investment strategy to deploy (most people are), you should be testing multiple strategies. You can get the answers for yourself.
The investing world is confusing and most of the experts make it more confusing. You are not alone if you struggle with this.
My mission is to cut through the noise for my clients. I have done the research and the work to be able to simplify the investing process – to share the data about what works and what doesn’t work.
But I can’t create your goals. You must do that for yourself. And you can’t figure out your ideal investing strategy without creating some goals – both objective and subjective.
Your goals come from what you need from your investments (income, returns, etc.) and what you want (safety, growth, risk, etc.).
If you need to draw heavily from your retirement accounts to meet living costs in retirement, the process is more straightforward. In this case, the strategy becomes very numbers driven. If you only need to earn 5% per year from your retirement investments, you have a variety of options available to you. If you need to make 6.5% per year to generate enough income in retirement, that leads to another set of options.
Many of the people I work with do not need to withdraw much from their retirement accounts to meet their living expenses in retirement. Some have enough income from other sources (pensions, Social Security, annuities, etc.) that they don’t need to rely on any money from their retirement accounts.
If people don’t need to touch their retirement accounts, the goals for those accounts are a little less straightforward. These investors need to decide what will happen to the money when they die. Who will inherit the funds? Will it be children? Charitable causes?
Do you want to maximize the money that you pass along? Do you want to avoid potential losses and keep the money safe? If no one is depending on that money, do you want to invest it aggressively? Do you want to simply minimize taxes?
The most important thing in coming up with the appropriate investment strategy is figuring out what you want. The best way to do that is to ask yourself a series of questions. What scenarios would make you happy? What scenarios would make you upset? Describe your ideal situation in 10 years, 20 years, etc.
Once you know what you want, the strategy flows from there. The key is to have the strategy and the goals aligned. In many situations I encounter, they are not aligned.
Every investment you own should line up with your strategy. Owning something just because you think it is a good investment is not good enough. You should understand every investment that you own and you should have a reason for owning it.
If you are strategic about your investing, you can be more disciplined and you can keep emotions out of the process. If you are not strategic, you will end up relying on luck. Luck is not a strategy.
If you need help with goal setting or strategy development for your investing, you can book a quick call with me using the link below. Talking this through with someone else can help you figure this out.
You can book time on my calendar by Clicking Here.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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