Barry Ritholtz has this nice chart on the stock market, and asks the question, where are we.
Unfortunately we know where we are, and it’s somewhere on the down part of the cycle. What we do not know is how far down, and how long until we reach the bottom.
As for the long term prospects of the market as a whole, the future is also uncertain. Factors which will tend to reduce the market in the long term are these.
|Why are these people happy? Because they are not in stocks|
- Interest rates are at the lowest point possible. Low interest rates drive money into stocks. If at some time in the future interest rates return to historical norms, this will draw money out of the market.
On the plus side are the rapidly growing areas of Asia and Latin America. These regions are producing growth and wealth that could be invested in western stock markets, and this will support higher prices.
|The Dismal Political Economist's View of the Market|
So what does The Dismal Political Economist think will be the long term prospects for stocks? He just told you, he believes in this Random Walk thing. In plain English that means “he doesn’t know”.