Are Equities Dead?

We are still in a bull market, but I can show you the chart below all day, and many people won't see the trend.  Every line is still higher highs and higher lows.  Yet, all investors are seeing is the correction of the last 3 months as they envision the next jolt down.

Click on the chart above to view a larger image.

Yet, while the trend has been up, you can see in the chart above that since that peak in the spring of 2010, the progress has been very mundane.

BusinessWeek, where are you when we need you?  We need that cover again that you gave us after 13 long years of no market gains in the Dow Jones Industrial Average (read the historic article here).

Is it different this time?  Yes, it's different, but it's also the same.  Thirteen years of no gains and massive volatility had convinced the public investor back then to stay away from equities.  Then, there was the amazing evidence in August 1982 of a brighter future, as the bells were ringing loudly...but nobody heard them ringing.  That is, until the late 1990s, and by then, the bells were more of a funeral call than the call of a new birth (bull market). 

So today, Ladies and Gentlemen, we have a bull market still hanging around - believe it or not - since its lift off on March 9, 2009.  Now, this bull market has gone through a massive recoil phase, seen a huge increase in earnings, got a little worried when Obamacare was passed, rallied as the mid-term elections of 2010 brought a more business-friendly Republican majority to the House, then corrected as the debate raged on about spending versus revenues.

However, we believe that the next lift-off is going to happen very soon.  Now, this current rally "could" be it, but we are still leaning to the more likely possibility that we probably have 4-5 more weeks for this market to stew over all of the headlines.  But today, the bells are ringing loudly as they provide us with insight of a brighter future.

Don Hays

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