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Friday, April 11, 2014

Secular bull market poll result

Do you believe we are in a new secular bull market?

  5 (27%)
  13 (72%)

This is better then I expected.  I should have included an I don't know answer.  For those that think we are in a new secular bull market I can tell you unequivocally you cannot possibly know that.  You are guessing.  Have a look at the charts in Secular bull vs bear market.  We need to get through a bear market without crashing to new lows before we can even begin to say the ultimate low is in.  In both the 30s and the 70s the bull markets off the ultimate lows did not make new highs.  There were in fact multiple bull and bear markets that did not make new highs or lows before the final resolution.  In 1973 and 2007 the Dow made new all time highs in the middle of the secular bear market and plunged to new lows.  Since we blew another bubble in the market there is a real possibility we go below the March 2009 low.  This is why I was really looking and hoping for a top in 2012.  Had that happened there was a reasonable chance the next bear market would have made a higher low and the worst would have been over.   Based on past history the odds might be higher that we see the March 2009 low again rather then us being in a new secular bull market.  If we can get through another bear market and make a higher low that would change the picture. The bubble may be too big for that to happen though.  I guess we will see.

The age demographics and valuation argue for a continued secular bear market.  If we really are in a new secular bull market it is "different this time".  That seems really unlikely to me.


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