Why I am bullish!

Why I am (and remain) bullish!

I have been a professional investor for over 30 years and the first thing I want to say is that this is what a bull market feels like.  The market goes up regularly, almost every single day.  It goes up in small increments.  Then, it will move sharply lower for a short period of time, often just a day, before rebounding and begin the slow move upward.  If you think back to the last panic or correction in 2008 and 2009 we had exactly the opposite phenomenon.   The market went down with gut-wrenching regularity.  Sure we had an occasional rally, but each one was followed by a swift move to the downside erasing the one day gains as the market moved inexorably lower.

The above chart is incredibly sexy and makes me very excited for the near and mid term future for stocks.  To explain it, let me start with a basic principle: the intrinsic value of stocks and the underlying companies always goes up.   (This is not true for every individual corporation on the S&P 500 or even the Dow, but it is certainly true for those corporations as a whole.)  The price of the stocks fluctuates around that intrinsic value sometimes wildly.   As a result, we have these powerful bull markets that always end in an excess of exuberance.   When the bubble of irrational exuberance bursts, stocks plummet and we end up with a "lost decade."  We had two of these "lost decades" in the 20th Century; 1929-1942 and again from 1967-1982.   After each "lost decade" the market rose precipitously for a long period of time eventually increasing the value of a basket of stocks exponentially. 

Looking at the chart, we see that we seem to have completed another "lost decade."   If history repeats itself, the next 15-20 years should take the market to dizzying levels.   I would suggest it is a ride you cannot afford to miss.

Scott A. Grant
www.standfastic.com