One of our longstanding themes — that the current environment is a secular Bear market, punctuated by cyclical bulls — gets the full coverage in the WSJ this morning.

“Many investors are now calling the rebound in stocks since early March the start of a new bull market. But it could be only a temporary respite from a longer-term bear market dating back to the beginning of this decade.

If the market is poised for a multiyear run, investors can be more aggressive about diving into stocks. If the bear market will regain its grip on stocks and send prices lower again, investors need to be cautious. Historical data and the still struggling economy seem to point to the latter case, called a cyclical bull market in a secular bear market . . .

In late 2001, Ned Davis Research, a market analysis and money-management firm, raised the idea that stocks had entered a secular bear market, a long period of flat or declining stocks. That idea gained traction last autumn as stocks fell below levels of a decade ago.

Ned Davis considers this the fourth secular bear market since 1900. The last one, from 1966 to 1982, ended when the Federal Reserve moved to aggressively crush inflation. These “secular” cycles run for long periods; secular bull markets have lasted from six to 24 years and bear markets 13 to 16 years. Within those cycles are many more cyclical bulls and bears — nearly three dozen of each since 1900. (Ned Davis uses its own criteria for a cyclical bull or bear market, based largely on 30% moves.)



Is This Bull Cyclical or Secular?
WSJ, June 15, 2009

Category: Markets, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Cyclical or Secular Bull ?”

  1. matt says:

    At least during the previous secular bears, there were some dividends to cushion the blow. In the New Era, “smart” executives just do large-scale buybacks immediately before the crashes to try and goose a few more dollars out of their performance compensation packages.

  2. cvienne says:

    I partially take my cue from the following comment…

    “Ned Davis considers this the fourth secular bear market since 1900. The last one, from 1966 to 1982, ended when the Federal Reserve moved to aggressively crush inflation”.

    The ’66-’82 was punctuated by ‘stagflation’…we’re not even coming close to having to address that phase of the bear yet and the INFLATION part is still trying to be created…I mean, you have to “create” inflation before you can “crush” it right…So right now, deflation is really the larger problem.

    As far as the bear market ending when the DEFLATION ends…Well, the only example is on the chart, and that coincided with a World War…So do we have to go there? If not, then DEFLATION will persist until asset prices settle down to prices that provide a market for them…This is a phenomenon that BO does not seem to understand as all his policies are doing is trying to put an artificial floor under asset prices. The best example of this type of behavior as a failed policy was when Nixon enacted “Wage & Price controls…

    Bottom line: a secular bear market will end when either DEFLATION or INFLATION runs its course…At this point, we’ve hardly budged a step (because during the Bush years, real estate was allowed to artificially inflate, and now with Obama, they’re not letting the air out of the balloon)…

    What’s worse now is that Obama has basically done away with the ‘moral hazard’ issue…There’s no risk anymore for bad behavior, and no reward for good behavior…He’s cutting the knees out of the hardest working and most enteprising folks in our economy…So it’s hard to say how long this will play out…

  3. super_trooper says:

    Wank off, wank off, wank off…………… or we’re just in a Japanese style bear market that is 25+ years in the running……. But no, the demographics of the US population is very different. And who knows, maybe there a new revolution out there, few predicted an internet revolution in early 90s recession.

  4. wally says:

    In business and the market, no good or bad decisions are ever made. Decisions are taken, and then they are made good or bad by subsequent events.

  5. Mr. C. Cheese says:

    cvienne says….
    New prez …’cutting the knees out of the hardest working and most ente/enterprising folks in our ecomony…’
    Barrick Obama is Tony Soprano

  6. VennData says:

    If there’s no risk for bad behavior how can bankruptcies be so high? Foreclosures? Your claim has no data to support it.

    And an artificial floor under asset prices? Where is the policy that states that? …when house prices drop? Treasury bonds drop? The USD drops? natural gas drops?

    You’re simply parroting back GOP media machine talking points. Useless.

  7. Bruce N Tennessee says:

    Actually, the facts (green pea shooters aside) are that only China is moving now. And it takes little to see why this is happening. The Baltic Dry Index apparently was stimulated by the Chinese purchasing raw materials to stockpile. Today’s New York Fed is much weaker than expected. The Europeans are not solving their crisis, and the facts (data) as opposed to hope bear this out.

    What is to be taken from the data sets? Simply that this was a big worldwide problem, and it won’t be over this year. Even the IMF says that the worst isn’t over and Paul Krugman says the world may be in for a Japanese style 25 year “L”….

    And Franklin, it doesn’t mean we won’t get better, it just means that sometimes Christmas just never seems to get here…but we’ll just have to wait until it does.

  8. cvienne says:

    @VennData (9:01)

    I certainly hope you don’t spend your day looking for “policy” statements regarding asset prices…Nor do I hope that you have your ears pricked up waiting for that bell to ring to signal that we’re either at the top or bottom of asset prices…

    So I don’t have any DATA for you on that VENN…

    So if I refer to an “artificial floor”, I refer to trillions upon trillions of money spent by the US Government either in direct cause, or by “guaranteeing” other assets…

    If you want to make the case that 12 trillion dollars worth of such guarantees and expenditures were done for SOME OTHER PURPOSE, I’d like to know from you what purpose that might be…Because it seems like an awful lot of money to be tossing away on a whim…

  9. cvienne says:

    @Bruce in Tn

    Franklin fancies himself as Linus sitting in the pumpkin patch waiting for the Great Pumpkin…

  10. Moss says:

    Any artificial floor attempts are meant to temper the artificial assent.
    The polices are meant to bridge this gap.

    Who can say what the correct ‘value’ is?
    Are the markets all of sudden rational?
    Is oil worth $150, $30 or $70 per bbl?
    The bubble/bust cycle is inherently unstable and will result in these wild gyrations until leverage is taken out of the equation.

  11. leftback says:

    NO fair to start the franklin abuse while he is still asleep !

  12. cvienne says:


    The children were all nestled snug in their beds…
    While visions of sugarplumbs (called HOPE & CHANGE) danced in their heads…

  13. DL says:

    Nice rally in a secular bear.

  14. constantnormal says:

    Don’t kick Franklin too hard. A confrontation with Reality lies in his future, as I cannot imagine a worse state to be in than California as the economic fantasy train rumbles to a halt there, the train having left the rails a while back. They’re all doing the Wile E Coyote sprint across open space at the moment … but moments do not last forever, and the canyon floor is a long, LONG way down. Even in the cloistered, sheltered halls of academia, there will be a chill wind as state funding goes to zero.