The Great Obama Bull Market will roar till 2016
Commentary: Historic market up 250%, aims for a 300% gain by election
So what can we expect from the stock market by 2016 and the election of the next American president? More! Fabulous 250% gains so far. And bigger gains possible coming in the next couple years till we elect a new president. Maybe over 300%. Gains likely to favor a Democrat.
Get it? GOP conservatives may have been successful in slowing America’s economic recovery. But the stock market is actually getting surprisingly stronger from this political war. With every Obama progressive move — Obamacare, ERA regulations, equal pay for women, gay rights, minimum wages, stem-cell research, immigration, Osama bin Laden, deficit cuts and so much more — GOP conservatives and the tea party learn little, only hear enough for another attack on Obama, offer no solutions, just opposition.
But the bull market keeps roaring and roaring. Get it? As the war against all-things-Obama accelerates, as the economic recovery slows, as the GOP fights infrastructure funding, as they fail to pass jobs stimulus programs ... the stock market gets stronger, roars bullishly ahead.
And the Great Obama Bull Market will help Democrats in 2016No matter how self-destructive conservative opposition gets, demographic trends are also rapidly diminishing the power of the party of “angry white men,” as GOP Sen. Lindsay Graham calls it, further fragmenting his party, spotlighting the lack of a strong presidential candidate, and, paradoxically, increasing the prospects of a Hillary Clinton election.
But still, in spite of the intense ideological war, if all the experts predictions are on target with another 30% in the Dow and the S&P500 rising to 2,250, Wall Street and Main Street investors could see a remarkable 300%-plus gain by the next presidential election.
Check out these predictions: “Expect a 30% gain before the bull market ends,” is the headline prediction of Decision Economics CEO Allen Sinai in Bottomline Personal. He sees 18,500 on the Dow in 2014. And ahead we don’t even “need a robust 4%-to-5% GDP to keep the bull market going,” echoing the bullish forecasts of other forecasters, like Nouriel Roubini and Merrill Lynch strategist Michael Hartnett who also see a roaring bull till 2017.
And in “Best Guesses for the Next Two Years,” one of America’s more accurate market forecasters, Jeremy Grantham, strategist and founder of the $117 billion GMO money team writes: “This year should continue to be difficult.” But after October “the market is likely to be strong, especially through April and by then or in the following 18 months up to the next election (or, horrible possibility, even longer) will have rallied past 2,250, perhaps by a decent margin.”
Yes, America’s headed for a historic 7-year bull by the 2016 electionsGrantham’s wrap-up: “then around the election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse, depending on what new ammunition the Fed can dig up.” Yes, Grantham is predicting a possible market collapse from a seven-year long bull market. Meanwhile, enjoy a couple more great years, and protect yourself for later.
Grantham admits a black swan could stop the bull early. But his bottom line is clear: The bull “will not end for at least a year or two and probably not before it reaches a level in excess of 2,250 on the S&P 500.” But while it will “end badly ... given this regime of the Federal Reserve and given the levels of excess at other market peaks, I think it would be difficult to end this bull market just yet.” So the bull will just keep roaring to more records.
OK, so maybe you don’t believe him, it does sound too good to be true. Well, run the numbers yourself. The fact is, this bull market did start at 6,547, in the doldrums of the 2009 recession. And it’s predicted to just keep roaring, even adding another 30% on top of the current near-record DJIA pushing 17,000. And assuming no black swans, that could put the benchmark DJIA roaring all the way up around 22,000 by the time we vote on a new president in November 2016. Yes, let’s all celebrate.
Yes, folks, you are seeing a rare historical event, two bulls back-to-back, end-on-end with no real bear market in between. Yes, rare, over the past century, says IBD Publisher Bill O’Neil in his classic, “How to Make Money in Stocks,” the average bull cycle runs up for an average of 3.75 years, then falls into a bear for an average nine months.
Today Wall Street stocks are climbing a wall of worry. A similar event happened in the 2002-2008 bull run. P/E ratios were so high in 2004 Wall Street panicked. The market ignored it, barely paused on its six-year bull run till its 14,164 peak in late 2007.
This time, there’s also no real bear break between two bull runs. The Great Obama Bull Market took off in early 2009 and just keeps roaring. We reported on how Gross, Roubini and many gurus apparently thought the IBD/O’Neil data meant the market was headed down in 2013. But like 2004, it didn’t drop. Now, both the market and economy could just keep roaring till the 2016 presidential elections. That’s over seven years with a potential bull gain of 300%-plus.
Yes, the Great Obama Bull Market would be one for the history booksSo, yes, in spite of the relentless GOP opposition, the attacks, legislative gridlock, economic headwinds, and global macroeconomic land mines put in his path, in spite of the ever-possible, unpredictable black swan, the Great Obama Seven-Year Bull Market, as financial history books will likely call it, may just keep thriving, overcoming obstacles, and roaring ahead predictably, hopefully till the next presidential election on November 3, 2016.
And that label will stick no matter who gets elected the next president: From the Democrats corner, the current frontrunner, Hillary Clinton, whose “Hard Choices” book tour has launched her campaign, who is clear choice of the majority of American women who believe it’s time for a woman president, and whose resolve now has the added incentive of the conservative Hobby Lobby attack on women’s reproductive rights.
Bottom line: the legacy of this long bull run would also be locked in financial history even if a Republican becomes president — whether a loyalist like Jeb Bush, Chris Christie or Mitt Romney again. Even if the tea party takes over the GOP and nominate a favorite like Ted Cruz, Rick Perry, Marco Rubio or Rand Paul and they defeat Hillary Clinton. No matter how much conservatives will forever hate to admit it, if the Great Obama Bull Market keeps roaring till 2016, it deserves a chapter in the history books.
Celebrate the birth of our great nation ... a bull run till 2016 ... the Dow roaring to 22,000!
Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell. |
