Hi Jay,
That's a very thought provoking article from Forbes, a notorious bull publication, that might seem to reinforce the bearish perspective. I for one, truly believe that we are indeed no longer in an ordinary bear market, but have now started the second leg of a very entrenched secular bear market, and that the 6 years or so that I have been counting on for stocks to recover may be hugely optimistic on my part. Using my figure of 6 years would put us in the 2008-2009 time frame before the markets might recover on a sustainable year-over-year basis. However, the baby boomers continue to grey during this time frame, meaning less consumer spending from that segment of society and more saving for retirement, which now appears must be pushed back many years from the original intentions. As boomers get fed up with stocks and bonds, and thusly look for other investment vehicles with which to fund retirement, real estate becomes the next obvious choice for many of these people. Or investing in a hobby that pays returns (such as arts & crafts, woodworking, landscaping, etc.) might be a fourth choice. It really doesn't matter what the choices are. The bottom line is that investment capital gets directed away from the markets and into something else, thusly prolonging the bear's presence and preventing the bull from reasserting himself. So, if we use say a 10 year period (2012/2013 time frame) before the bull can reappear, this time frame also looks very ugly because the gargantuan boomer population (now retiring) is spending savings to simply survive, thusly decreasing the national savings rates, and exerting damping pressures on equities or bond markets that are trying to recover. It's beginning to look a lot like a long, vicious trading cycle that spirals ever downward for the next few years. The best we investors can hope for is to trade the dips and rallies. At least that's how the picture looks to me right now...
KJC |
