Murray: The restoration of reason. The restoration of some sense of reasonable expectations and a strong sense of the need for good advice. That's the diamond in the ashes here. I think that 18 months ago, the biggest, richest generation of Americans that ever lived, the baby boomers, had been conditioned by the culture to spit on the whole idea of advice. The apotheosis of the culture 18 months ago was the ad that said, "If your broker is so smart, why is he still working?" I would ask today's advisors: Would they rather be practicing then or now? I would certainly rather be practicing now.

Simonoff: What are some of the positives that you see in what you could call the post-bubble hangover?

Murray: What are the negatives is a better question. There's virtually nothing but positives. I mean let me count the ways. You had the bursting of the worst financial bubble of all time. Until September 11, it failed to produce a recession in the economy. One struggles for a less hyperbolic adjective and fails to find one. This is miraculous. This is a testimony to an economy that is so broad, so deep and so vital as to defy the imagination. You have the fastest deepest cut in interest rates ever. A faster, deeper interest rate cut than 1982. Which of course assisted in the birth of the greatest bull market of all time.

However deeply flawed it is, and it's terribly deeply flawed, you have a meaningfully stimulative fiscal policy in the tax cut. If the little men from Mars came down and said, "What's going on?" and you told them those three things which I would argue are the three most important aspects of the American economy, the little green men would assume that in the next breath you were going to tell them the Dow was 20,000, as it surely will be. Personally, I'm the most long-term bullish I've ever been in my life. I don't know what this proves, but the last time I felt anything like this was in the fall of 1990.

Simonoff: Until September 11, you basically regarded this as a garden-variety correction.

Murray: No. It is a bear market. Now having said that, I think you have a whole generation of advisors and a whole generation of investors who've never seen the average bear market because everything since 1982 has been either very short, very shallow or both. The exception being '87, which was very deep but almost momentary. If you blinked, you missed it. To appreciate that this is an ordinary bear market, you have to have a perspective that goes back at least 20 years. The other thing that people have gotten used to, especially since 1987, is this sort of instant snap back.

So it's the combination of a bear market that goes from peak to trough for a perfectly ordinary 13 months and then five months later is still basically close to the lows and again a whole generation of advisors and investors has no living memory of something like this. And that's why they read too much into it.

Simonoff: Do you think the problem really lies with people's expectations, their Pavlovian conditioning, and not with what a lot of people are calling the end to the secular bull market like the one in 1973-74?

Murray: Actually, I would argue that the end of that secular bull market came in waves between 1966 and 1974, which was the greatest time to invest of the post-war period. And one of the two best times to invest in the 20th century.

But back to your question because the "E word" got out and the "E word" is the key to all of this. And that is expectations.

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