Hello Again,
I just have to talk about the stock market folks. This is where the action is. The S&P 500 is trading at all time highs, the Nasdaq is at all time highs, small caps are at all time highs, and even certain international stock indexes are at all time highs. The only one that is not at all time highs, yet, is the Dow Jones Industrial average, or the Dow, as we call it. The Dow is trading at about 50,000 right now, whereas the all time high was around 50,500 back in February. Probably just a matter of time for that one too.
So let’s step back and ask ourselves, where are we in the big picture? I have talked about this long cycle before, but it’s been awhile. So here it goes: It’s all based on our view that the great generational bull market (up trending market), started in 2009 at the end of the great recession, and that this bull market is likely to last for some 25 years or so, and then peak sometime in the mid 2030s, prior to another great recession. All of which is being driven by the Millennial Generation spending cycle and new technologies like AI.*
That’s the two sentence thesis, so what does this possibly look like Mike? Does it mean 8-10 years of higher stock prices? We think it does mean that, but it won’t be in a straight line of course. In fact, we expect there to be a moderate recession between now and the eventual top. The moderate recession would be some time around the end of the decade. It would involve a very sharp pullback in stocks (30% plus), but then it would go up again for a few more years after that, prior to the final peak for that generation.**
So the outlook is still rosy in my view, but much like the first half of this generational bull market, the second half will have some radical down drafts within it, all the while still trending higher. Below is a rough draft of what we expect for the next 10-12 years or so. It is not meant to be absolutely accurate, it’s just a potential guideline, so that you know where my head is at. You can follow along. That’s all it is. But it’s a great way for me to clarify my outlook, while at the same time it gives you a means to ask questions and plan ahead. Of course anything can happen at anytime, and things can and will change. But right now this is my current hypothetical outlook. Let’s see what happens from here.
My thanks to all of you.
Mike
*These projections are based on current assumptions and are not guarantees of future results.
**These are forward-looking statements based on current expectations and are not guarantees of future results.