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Strategies & Market Trends : The New Economy and its Winners

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To: Elroy who wrote (30794)	11/6/2006 12:27:18 AM
From: Lizzie Tudor	Read Replies (3) of 57684

I agree with this article from the Motley Fool. A secular bear, as we had in the 70s is a lot of years with flat markets and zigzagging which creates tremendous risk and muted returns for longer term investors. Interestingly, secular bear markets generally end at about the same level they began, but with far lower P/E ratios. During the typical 10- to 15-year bear market cycle, there can be violent downswings -- like those we experienced from 2000 to 2002 -- followed by rapid climbs -- like we've seen the past few years. Are we still in the belly of the bear? Easterling marks 1999 as the final year of the last secular bull market and the beginning of the current secular bear market. That puts us a little more than 6 years into the cycle. As of June 30, the P/E for the S&P 500 stood at 17.5 -- that's slightly above the long-term average of 16, and well above the historical bear market bottom of 8 to 12. I'd certainly like to think we're at the beginning of the next secular bull market, but relatively high P/Es, rising interest rates, and signs of increasing inflation lead me to believe we're still in the belly of the bear. fool.com

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