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The Orphaned Bull Market

  • "Relative to the past 50 years, this stock market has been abandoned and orphaned even as it had made participants wealthy," writes Bill Smead, drawing on a Howard Gold report showing only 37.7% of global investable assets were in equity at the end of 2012, the lowest since 1959 when records first began being kept.
  • Why? The mass movement to fixed income, the trendy move towards wide-asset allocation at the expense of plain-vanilla large-cap U.S. equities, the rise of alternative investing, and the echo-boomers - born between 1977 and 1996 - have been much slower to get married, have kids, buy houses, and invest in stocks than previous generations.
  • Smead's prediction: As rates rise over the next 10 years, fixed-income will sour and equity dividend payout ratios will normalize. Further returns from commodities and other esoteric asset classes won't match their once-in-a-lifetime moves from 1999-2012 and investors will lose interest. Rising rates will make LBOs less economic and private equity returns will decline.
  • "The lack of affection for US large cap equities will mute declines and reward patient long-duration owners of quality common stocks."
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Comments (3)
  • WallStreetDebunker
    , contributor
    Comments (2261) | Send Message
     
    It's a study of global investors and global assets, yet Gold and Smead seem to have applied the research specifically to US investors and the US stock market. Seems like there's plenty of room for error in the conclusions drawn.
    10 Jun, 03:55 PM Reply Like
  • kmi
    , contributor
    Comments (3975) | Send Message
     
    I find statements like "As rates rise over the next 10 years" suggesting that rates will inevitably rise very amusing, since I don't believe it.

     

    It immediately predisposes me negatively to the rest of anything coming from the same source, if only because it makes no allowance for alternative opinions.
    10 Jun, 06:00 PM Reply Like
  • AContrarian
    , contributor
    Comments (132) | Send Message
     
    Can you tell he used to be a broker?
    10 Jun, 06:58 PM Reply Like
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