U always rises faster than it falls. The secular trend in U should persist into the early 2010s, when the secular period of economic stagnation has run its course. Moroever, whoever is elected in 2004 will get a relatively free ride in 2008, as the economy, profits, and stocks will be in full recovery mode, albeit at a more modest pace than the boom of the 1990s. Yet, is is probable that, in such an environment, recent secular bull market highs will not again be reached and surpassed until the 2020s. As such, stock prices, especially oils, non-durables, drugs, etc., have not yet begun to price in a severe recession and high U and a further contraction in profits and private investment.
Gold looks hopeless too.
These ideas are not my instinct though. Mr. Alexander is a pharamceutical industry scientist and engineer, thus the analytical aspect of his work is very credible. Also, Mr. Alexander is working on another book about the social, political, and economic aspects of the Long Wave with a professional historian. The long-term effect is sustained underperformance by common stocks. Keep in mind that the consensus now is the the worst is behind us, that earnings will bottom this quarter, the economy will NOT experience recession, and that economic growth will pick up in the second half of the year.