Date: Wed Jul 27 2005 16:14
trotsky (unbridled enthusiasm) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the stock market in the aggregate hasn't gone anywhere for months ( obviously some sectors have performed quite well though ) ...but the bullish consensus has still grown by leaps and bounds. in fact, it hasn't gone anywhere in YEARS...the S&P index is exactly where it was 6 years ago. due to inflation, all passive investors have iow lost money over this stretch of time. and yet - if you listen to WS strategists, look at mutual fund cash to asset ratios ( close to an all time low ) , look at the bull/bear ratios evident in sentiment polls, futures positioning, and options open interest, the conviction that there's no better investment than the stock market is more ingrained than ever.
this is highly reminiscent of the early 70's, when the residual bullishness from the 50's and 60's secular bull market period also carried over into the early part of the decade. of course, when the decade ended, investors had to mourn an inflation adjusted loss of nearly 70%, and NO-ONE was interested in stocks, mutual funds, etc. anymore. even Wall Street's strategists had almost unanimously turned into bears ( with luminaries such as the irrepressible Al Goldman excepted, who is, and was, always bullish, no matter what happened ) . it is probably very telling that the market's trading range over the past 6 years has produced such a frothing surfeit of bulls...it tells us that the secular bear that began in '00 has a lot of work left to do.
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