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In case you missed it, the New York Times featured a story over the weekend on Dow 20,000.The article refers to a new research note from Seth Masters, Chief Investment Officer of Bernstein Global Wealth Management.
Needless to say, Masters makes a bullish case.
And the fact that it’s in a print publication has the contrarians wary.
David Rosenberg, the bearish strategist over at Gluskin Sheff, wrote about it this morning.
“[F]rom what history teaches us, secular bear phases do not typically end with headlines about Dow 20,000 but rather with contrarian news,” he wrote.
More from his note:
Well, this is perfect.
It is amazing how many pundits still believe in stocks for the long run. See The Long-Term Argument for Dow 20,000 on page 6 of the Sunday NYT Money & Business section. Shades of Jeremy Siegel.
So what are we left to conclude?
The bottom line is that from the spring of 2009 to the spring of 2011, the stock market doubled, and it doubled principally because of a wild short-covering rally in the financials which were priced for insolvency at the lows. It was a classic 1933-1936 bounce that never saw a new high and never foreshadowed better times ahead. The Great Depression ended nearly a decade later and the next secular bull market did not begin until 1954. And from what history teaches us, secular bear phases do not typically end with headlines about 20,000 but rather with contrarian news like The Death of Equities on the front cover of BusinessWeek back in 1979 (or Awash in Oil on the front cover of the Economist back in 1999, when crude prices were turning in their secular lows).
Page six of the business section isn’t as bold as the front page. Nevertheless, the history of media getting it wrong speaks for itself.