Historically, this suggests an extended period of range bound trading as the highest probability long-term scenario in my view. I expect vicious rallies, and wicked sell-offs to occur — over shorter term cycles — within the larger timeline. Active management and capital preservation are going to be the key methods of outperformance.
In 2013, markets broke out, implying the start of a new bull market. The Dow's P/E has averaged 16 during the past three years, in the middle of the range during secular bull markets. We discussed last year the divide between the veteran market strategists, technicians and traders who were either in the secular bull or bear camps. I remain in the secular bull camp, and will share what would make me change that view in a future column.
One final thought: These things are always terribly clear in hindsight; in real time, they are more challenging to discern. It is easy to say 1982 to 2000 was a secular bull market, but read the commentary at the time. It was hardly definitive while it was happening.
This column was provided by Bloomberg News.