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March 2003 Revisited: Yes, I do have My Bullish Moments!


I have held the strong view that the stock market is mired in a secular bear episode; I continue to believe this. So as you might expect, my image in many if not most quarters is of someone who is inflexible when it comes to the stock market's upside possibilities.

Of course, this is foolish -- actually, it is downright antithetical -- to someone like me who does accept the secular bear case. After all, it would be terribly difficult for the equity market to fulfill the negative long-term characteristics I envision and have been predicting were there not periodic events of a decidedly bullish nature.

It is now going on five and one-half years since the S&P 500 and the NASDAQ 100 set their last all-time highs. In the case of the Dow industrials, it is even longer -- January 14, 2000 was the day the DJIA closed at 11,722.98.

I do believe the current upside move in stocks is very, very late in the day, thereby creating an increasingly dangerous climate as a consequence. But looking more closely at the current environment is not the purpose of this missive.

Rather, I want to go back to March of 2003, immediately before the latest Iraq war commenced. Ironically, it was a moment in time when, believe it or not, when this secular bear was exceptionally bullish on stocks. Thus, I suppose one purpose of this article is to show readers I do possess at least a modicum of flexibility. But of greater importance is to go back over the chronology and highlights of the last great secular episode. For convenience, I date it as running from the very end of 1965 through August of 1982.

Demographic considerations are such that a large number of today's market participants did not have firsthand experience with that intriguing but often-troubled period. In the process of conveying some of the important history of that era, my March 2003 article presented a good deal of supporting statistical work, much of which some readers may find a bit shocking -- the interest-rate and stock-market valuation material in particular.

The following link returns us to my missive of March 2003, "Do Stocks Have Life After War?" And portions of it return us to a period that begins almost 40 years ago. http://www.gillespieresearch.com/cgi-bin/s/article/id=137

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