Now, we are near the end of a rally. The shortest rally in the last 5 years has been 88 days long. If this rally is that short, it will end in two weeks, June 18th. Given the weakening economy, I can t conceive of this market hanging on for 104 days past June 18th to make it to an average 192 days in length, let alone lasting 265 or 320 days. Yes, after a few unsettling months, everything seems to be back to normal.
Investors can once again count on the sumptuous double-digit gains that they'd come to expect.
Only a Cassandra, you say, would dare suggest the future may not be so rosy. But then, by at least one historical analysis, the current stock market is headed for such nastiness that even a Cassandra will look like a Pollyanna. No. 1 about the stock market is that over the long term, share prices track profit growth. For profits to grow at the same rate they did during much of the bull market, some long-standing historical models would have to crumble. More likely, he notes, profits will merely track the expansion of the economy as a whole.