I pulled from my desk drawer a copy of the Wall Street Journal from Wednesday, May 23, 2007. It was not a particularly notable day. The bull market was in force, and the Dow was hitting new highs … even though gasoline prices were at record levels. But here at Cabot we had been noting a growing divergence in the market; both the NYSE Advance-Decline Line and the Nasdaq had failed to confirm the Dow’s high. Also, we detected a high level of optimism among both investors and the general media. So I saved The Wall Street Journal, in part because of the lead article that announced, “Why Market Optimists Say This Bull Has Legs.” The subhead of the article followed with, “They See Decade of Gain Fed by Global Growth; Skeptics Cite Big Doubts.”... So I reread the article and what did I find? Fundamental talk about global growth, low interest rates and a technology revolution that would boost productivity. [One bull] even had the courage to utter the phrase that makes an experienced investor quail, ” … it really is different this time.” Also given ink were the detractors, who claimed that reversion to the mean was inevitable, that low interest rates couldn’t last, and that the weak dollar and above-average P/E ratios would eventually pull the market down. But here’s what I found interesting (in hindsight): Not once in the entire article did anyone mention credit!!! Today, we know from our rearview mirror that credit was the culprit of a decline that has crushed the global financial system. But just 17 months ago, a reporter looking for reasons the bull might not last found no one mentioning credit!All of which is to explain why you're not going to find any predictions for 2010 in this post.
Posted on December 31, 2009 Posted to Cato@Liberty
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