When the market hit the 5000 mark for the first time since the global financial crisis in early 2013, it spurred me to plan the launch of the first listed investment company to provide investment and social returns.

But after it hit 6000 points on Tuesday after multiple attempts over the past few years, I am nervous that the mature US bull market may be close to an end.

The US is still the driving force of global equity markets worldwide. With record-low interest rates across the world, investors have devoured shares and, I believe, have mis-priced risk.

In the US, the bull market has run for more than eight years, making it the third-longest in history. Alongside it, the 30-year bull market in interest rates has expanded price-to-earnings ratios.

Since the GFC, the 50 largest central banks around the world have cut interest rates 700 times and injected $9 trillion of liquidity into global markets.

The surge in global liquidity and increased investor appetite for risk and yield have driven asset prices to record levels.

The effects of this policy response has been compounded by the growth of passive, open-ended equity trust structures – exchange traded funds (ETFs).

In the US, ETFs have grown to $4 trillion, or 16 per cent of the entire equity market. When the tide turns and liquidity dries up, unfortunately, many investors will be caught at sea.

On the positive side, we are seeing a return to capital investment by corporate Australia, an upswing in the resources cycle and synchronised global economic growth.

Will these factors be enough to drive our market higher? If history is a guide, it won’t be higher for much longer.

With these risks prevalent in the market, we are holding above average cash in our listed investment companies.

In my experience, the best investment opportunities closely follow major market adjustments.

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