The third factor is investor sentiment. People became spooked and wouldn’t invest for several years after the 2008 market crash. However, Bernstein said that the data now show that people have become accepting of equities. "And that has been a big change,” he said.
Bernstein said he is bullish on the technology sector. But he is also “skeptical” that the big recent GOP tax cut will have a dramatic affect on the American economy.
“Cutting corporate taxes is like giving a shot of adrenaline to a healthy patient. The U.S. corporate sector is very healthy and cutting taxes will likely make the sector even healthier,” he said.
But he added that increased spending will likely result in more sales abroad. For instance, Bernstein said that corporations and individuals with more money in their pockets might not provide a long-term boost to the economy.
“For example, a company might consider purchasing new computers if capital equipment can be immediately depreciated/expensed, but those computers are most likely manufactured in Taiwan, Korea or China rather than the United States,” Bernstein said. “So some portion of the tax cuts’ stimulus will inevitably leak abroad.”
Ricard Bernstein Advisors analyzes macro trends and has some $6.5 billion under management.