This story appears in the July 20, 2015 issue of Forbes.
While it’s often claimed that this bull market is the least appreciated in memory, the problem is our memories. As detailed in my 2011 book, Markets Never Forget (but People Do), our memories of past markets are incredibly inaccurate. This bull market turns out to be pretty darned normal for one following such a huge bear market.
The biggest bear markets have historically created enough skeptics to make the subsequent bull runs feel unjustified or death-defying. That’s the famous “wall of worry” that we’re currently climbing over. Remember Sir John Templeton’s famous phrase, “The four most dangerous words in investing are ‘This time it’s different.’ ” It isn’t really.
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Economic and social details always seem new, yet they rarely have much impact on these bull cycles. In 2009 I criticized the then ubiquitous idea of “ new normal” as “utter nonsense–rubbish of the first caliber” as it relates to stocks. Look for normalcy as your stock investor guide and you’ll be better served.
Similarly nonsensical: the idea that we’ve avoided implosion and disaster and had any bull market at all only due to our various central banks flooding us with money via “quantitative easing.” As I’ve detailed often, yes, QE built bank balance sheets and central bank reserves. But America’s and the world’s actual quantity of money, M2 or M4, has grown slowly throughout this expansion, however measured.
Over time bull markets have trended irregularly longer. So ours may end up the longest ever. I’m not betting on that. But you shouldn’t bet against it. It’s a real, normal long bull.