investor88

Separation of Stocks and State

Eric's article contains a wealth of data on major equity cycles in the USA since 1900. Interesting to note that there are distinct 16 year bull and bear cycles; further the Dow all time high in 2007 does not negate the expected 16 year bear cycle that began in 2000. The implications are sobering: the next secular bull cycle won't begin until 2016 about 8 years away. Expectations being expectations [we cannot precisely predict the future] equity markets may not be as bad as we think but perhaps not a bad policy to hope for the best but prepare for the worst. Lest we lose all hope, during the supposedly secular bear phase beginning 2000, we have this superbull phase 2003-2007 in which tremendous wealth was generated worldwide. So it doesn't mean in the next 8 years we can only short the markets, there will be powerful counter-rallies which are no less satisfying than those during the secular bull phase.

The present precarious financial turmoil calls for extreme caution especially when the next 8 years falls under the secular bear phase.