As Risks Emerge, Be Selective, Know What to Buy

There’s a growing sense that the US bull market is entering its twilight years.

Of course, nobody can pick the exact day and time that adjustment arrives. But it’s hard not to fathom that we’re approaching a top in this history-breaking run.

So with that in mind, here’s the question I keep coming back to…

If the tech giants driving this market finally crack, does that take commodities down with them? Well, short answer: most likely, yes.

Every serious sell-off triggers an initial flight to safety, usually into long-duration government bonds and safety net currencies like the US Dollar.

Virtually all asset classes become liquidated during a market crash, even physical gold.   

But that panic phase is usually temporary; it’s what happens AFTER that interests me.

The Question I’m Testing

Does a US stock market crash (when it finally lands) mark the end of the upward turning of the commodity cycle?

In other words, when tech equities break, do commodities break permanently alongside them?

One way we could find the answer is to look at the 1970s playbook: the era of inflation shocks, oil shocks and elevated commodity prices.

While many readers will be familiar with the idea that the 1970s were good for commodities overall. Few have looked at what happened during the actual crash phase of that era and what it meant for different asset classes.

So let’s unpack that period into its three distinct phases:

Part One: The Nifty Fifty Boom

Between 1968 and 1973, a group of roughly 50 large-cap growth stocks dominated the US market. They were nicknamed the Nifty Fifty.

Investors called them ‘one-decision stocks.’ Buy them once, hold forever, and the returns would take care of themselves.

Sound familiar? Today’s AI tech firms have a similar flavour… Buy the dip, hold on, and let the portfolio compound.

But then this happens…

Part Two: The Crash

Between 1973 and 1975, the S&P 500 fell close to 48%.

The trigger was the 1973 oil crisis, made worse by the collapse of the Bretton Woods system and runaway inflation.

That combination shattered the idea that these stocks were unstoppable. At the time, it was described as one of the worst market events since the Great Depression.

Which leads us into the final phase of the 1970s:

Part Three: A Grinding Recovery

From 1976 to 1980, stagflation set in. Stagnant growth and rising prices squeezed investors from both sides.

Many assets posted decent gains in nominal terms but lost value when adjusted for inflation.

This is the stage when commodities made their mark, particularly gold and energy stocks, delivering strong real returns at a time when the value of most asset classes went backwards.

Shifting back to today

It’s important to note that we haven’t seen major stress in the US market yet.

If anything, we’re still living inside our own version of the Nifty Fifty boom. US markets are only a few percentage points from their all-time highs.

But cracks are forming in inflated asset prices. Like here in Australia…

The September quarter of 2026 was officially the worst quarterly drop in Australian house prices on record.

According to newly released data from Domain, combined capital city house prices plunged 4.7% over the last three months, marking the first time in 15 years (and only the second time in history) that house prices have fallen across every single capital city simultaneously.

Meanwhile, in the US, home sales dropped to their lowest level since records began in 2001, as the nation struggles with higher interest rates.

Housing: is it the canary in the coal mine?

It’s certainly worth watching.

The property market offers a useful leading indicator of a system under stress. As the bedrock of an economy, it’s usually where rate stress first shows up first.

While the final bell might not have rung on the historic US market boom (yet), it’s worth considering the potential consequences when sentiment does finally shift.

In the meantime, there are still opportunities in this market, and we’re continuing to recommend stocks to our paid readership group. We’re just being extremely selective in what we pick.

Primarily, recommending stocks that have a stronger margin of safety built in.

If you’d like to find out more, you can do so here.

Stay tuned.