This morning BlackRock CEO Larry Fink told CNBC that he was convinced equities were still fairly cheap and could realize 8 to 10 percent returns in the next 5 or 6 years, taking the Dow to the 28,000 area by 2019. Fink is no Harry Dent. Quite to the contrary, he is a sober risk manager who runs the world's largest investment firm and cut his teeth 30 years ago in mortgage-backed securities when that market was in its infancy.

If his scenario materializes, the bull market that gets no respect could start claiming some big RIAs as victims. The fact is that the RIA and brokerage communities contain thousands of advisors who, often in agreement with clients, view the raging bull market as a Fed-induced “sugar high” or some variant of that theme.
More than a few RIAs are designing client portfolios accordingly. In recent months, I’ve heard about RIAs structuring portfolios that invest 50 percent of their client assets in gold and others that are 10 percent to 20 percent in equities. While a Dow that hits 28,000 by 2020 sounds like an outlier scenario, I think it has a higher probability of happening and benefitting clients than the scenario that would favor a portfolio that is 25 percent in gold with a similar amount in equities.
Many RIAs may disagree. Two months ago, I had breakfast with an advisor who had started his own mutual fund. At the time, he had virtually nothing in equities.
That was when the Dow was below 14,000. He railed against Wharton professor Jeremy Siegel, referring to him as a “charlatan” leading the little lambs off to the slaughter. Surprisingly, the assets in his fund, most of whom were clients, were holding up.
Some observers are starting to think that 2013 is beginning to look a lot like 1995, when the S&P 500 climbed 35 percent. One Fox Business reporter predicted the Dow would hit 20,000 in the next 12 months.
These predictions seem dubious, but the case for equities moving higher does not. Money has very few places to go.

The fact that there is nowhere else for investors to go is hardly a legitimate reason for a bull market that now more than four years old to be transformed from a stealth market rally to a ubiquitous one. The easy money has been made and now would seem to be a good time to proceed with caution.

In other words, the non-believers could still be right.  Corporate profit margins are at historical highs, and the slowdown in bottom-line is suddenly catching up with the weak revenue growth that has been a key feature of this 50-month bull market.
But if the bulls are right and we are still in the early to middle innings of a long-term secular bull market, the non-believers may have some tough  questions to answer from clients. I have little doubt that many of these RIAs developed portfolios after engaging in serious financial planning based on the outcomes clients need to reach their financial goals, not on chasing relative performance. That said, if this bull market continues, they’ll find out how successful they were at persuading and obtaining real client buy-in to their strategy.

For his part, Fink is calling for a federally mandated savings policy along the lines of what Australia. Libertarians may cringe. After all, Milton Friedman said the national savings rate should be whatever the sum total of Americans choose to save.

Wait 10 years and we'll see millions of Americans retiring with $10,000 in the bank. After that happened in Australia decades ago, they moved to a mandatory national savings plan requiring citizens to invest 9 percent of their salary in the plan. Travel to any popular tourist destination today and you may bump into a prosperous Australian retiree.