What is ahead for the stock market
April 8, 1999 - © Copyright 1999 Sheldon M. Bell
I don’t think that the party on Wall Street will be over any time soon. Perhaps the stock market is under-valued not over-valued as many pessimists (bears) profess.
The extent that technology will continue to revolutionize U.S. and foreign businesses has certainly not been fully realized today. The future will harvest the fruits of the streamlining of the operations of all business as we know it.
The increased productivity of businesses today has all but eliminated the inflationary pressures that grew in the past due to economic-overheating.
The Federal Reserve has been on hold since its meeting on November 18, 1998 when it lowered short-term interest rates slightly. It is unlikely in my opinion that they raise short term interest rates this year with the Y2K challenge ahead in the year 2000 and its potential slowing of the economy.
My bullishness in the long term does not mean that there will be smooth sailing as the economy and stock market grows. The key is always to be properly diversified, and have the right mix of stocks, bonds and cash in your investment portfolio, and to be able to manage your cash flow efficiently.
The last major Bear market was in 1973 and lasted almost 10 years bringing the Dow Jones Industrial Average down almost 50%.. The trigger for that Bear market was oil prices escalating aggressively along with escalating inflation and interest rates. In addition the Watergate Scandal was the straw that broke the camels back.
As oil prices today are relatively tame historically, and inflation is virtually non-existent, barring any unforeseen domestic or international events, the economy and the stock market should continue to grow for the foreseeable future.