Forum Archive Index - December 2001

["Peter" <pmaiden@xtra.co.nz>]

Agree Phaedrus. This is not a debate around technical stuff and fundamentals but about gathering all the information we can and making our own assessment as to what might happen over the next five / ten / twenty years.

 

A lot of what was covered in that article by Warren Buffett in Fortune is also covered in the book I mentioned a few weeks ago - Stock Cycles: Why Stocks won't Outperform Money Markets Over The Next Twenty Years by Michael Alexander.

 

It's pretty heavy reading but it points out that basically there have been 14 secular (very long term) trends since 1800 - seven secular bull markets and seven secular bear markets. But underneath it all there has been an uptrend - ie higher lows etc.

 

This study of secular trends along with a bit of economic, socionomic and stockmarket cycle theory clearly points to the current state of the world stockmarkets being bearish. And each of these secular trends have lasted for up to 15-20 years.

 

To what level the current bear market will fall is anybody's guess but in all probability the low will be higher than the low of 1982. This will continue the long uptrend of world sharemakets since 1800. It is also worth while pointing out that this uptrend should in theory be relative to earnings over time.

 

Have a look at this chart (if it comes through). It is one that Mike Alexander uses in his papers. It shows the S&P500 (in 1999 dollars) adjusted for dividends. It shows the last 14 secular trends and why in all probability a new bearish trend has commenced. A picture is as good as a thousand words.

 

 

 

Cheers

 

Peter