In the 1933 movie “I’m no Angel,” Mae West famously said, “I used to be Snow White – but I drifted.” Some portfolio managers might need to say the same thing.
Long gone are the comparatively easy investment days of 1982 to 2000 when all you had to do was just buy and then hold through the occasional market downturn. Now, performance seems to be just drifting as everyone tries to figure out what to do.
Such is the nature of a secular (long term) bear market. That’s why, after all the dramatic ups and downs over the last 12 years, the market has basically gone nowhere.
Just when it looks like things are getting better, it rolls over; and just when it looks like everything is heading straight south, it starts back up again. Get used to it because this is not likely to change for a few years.
Long time readers know that I think we have been in a secular bear market since 2000 and probably have about another four to six years to go.
It has been my projection that the market would experience another correction this year and then a rally late in the year and into early 2013. That, of course, depends a lot on the upcoming election, what the Fed does or doesn’t do, the global economic slowdown and what happens in Europe.
After that I think we face the prospect of at least one more cyclical bear market and recovery before this secular bear market finally ends near the end of this decade.
That would follow the pattern of the last 100 years, in which secular bear markets lasted about 17 to 18 years. Long-term problems still remain that will require another washout to complete the recovery. Those problems mostly revolve around the massive government debt throughout most of Europe and in the U.S.