OFF THE WALL: Is the bull back on Wall Street?
By Rene Pastor
As I counted down the minutes yesterday waiting to see if the Dow would close above 16,000 for the first time ever, my mind wondered: Am I seeing something last seen in 1982?
That was the last time a secular bull market took off, a nearly 20-year run when sustained economic conditions powered a long rally in stocks which saw their value jump over 600 percent by the time that bull market died in 2000 at the end of President Bill Clinton’s term.
Before 1982, that perfect storm of conditions which spawned a sustained bull run in the stock market was from 1950 to about 1968.
For many analysts who we listen to on CNBC or Bloomberg TV, they have known nothing but a vicious bear market in place since 2000. Their fear of doom was aggravated by the bursting of the tech bubble in 2000-2002 and the sub-prime credit debacle in 2008.
Then you have Greece and Europe, the Arab Spring and the civil war in Syria, Iran’s nuclear program, the government shutdown and the Fed. That’s your lineup for the bears bracing for the next slowdown and drop in stocks by 10 percent to 20 percent.
My problem with that ingrained fear is that as an investor, you get paralyzed by the fear-mongering and would rather keep your money in the bank where it earns 1 percent a year.
I don’t blame the small investor for being scared when the bear haunts Wall Street market like Freddy Krueger torments Elm Street.
The thing is, I think a secular bull market has been born in 2013. Europe is on the mend and China is going to avoid a hard landing. U.S. manufacturing is coming back and it looks like a deal will be worked out in Iran. Syria is still bleeding, but they will get a chunk of its chemical arms.
The only screw-ups for the market out there I see are the Republicans in the House whose hatred of anything Obama approaches the pathology of a sociopath willing to drive the country over the cliff for ideological purity.
But back to stocks. American companies are chugging along and growing. It is not runaway growth, but about two-thirds are beating both their earnings per share and revenue targets.
From Boeing to Disney to Apple, Lockheed Martin to Hershey to McDonalds, Starbucks to Ford and Johnson and Johnson – American companies are doing well.
Disney owns ESPN, the ABC TV channel, and all those theme parks sprinkled from Paris to Orlando, Anaheim to Hong Kong.
Even better, Disney recently bought movie rights to Star Wars, the Marvel heroes like Iron Man and Thor, and they also have Pixar, just the best animators on the planet.
Starbucks now owns Teavana and its selection of French pastries is jacking up sales. Ford is leading a renaissance in U.S. car sales just at a time when Americans are about to change their vehicles because the average age of the cars is now 11 years.
I think many investors are going to miss this rally because many are still spooked by the savage mauling market bears dished out. A lot of the smart guys on the Street are so worried about another pullback they literally jump at their own shadow.
When Apple was being beaten down like a drum in the middle of the year and its shares sank below $400 per share, the play was not to sell but to buy. Now the company is worth $520 and climbing towards $600 or higher.
The only way to catch this rally is you buy stocks now or earlier in the year when the advance was just gathering steam.
By the time this rally is done around 2028 to 2030, I think the Dow could easily be over 30,000, maybe even 40,000.
Don’t laugh. That number is actually conservative since the secular rally in 1982 saw stock values soar over 600 percent. I am just looking for this thing to double.
‘Off the Wall’ is a weekly column on the stock market. The comments expressed here are the author’s personal views and are not meant to recommend the buying or selling of stocks.
