They Were Right, No Matter Why
Not everything I pulled from my files of the last 10 years proclaimed that the sky was falling.
For example, I saved a number of reports penned by Abby Joseph Cohen, perhaps the most famous market bull of the last decade. In 1995, she wrote a report titled “Low Dividend Yield Not Worrisome,” refuting the then-popular idea that the low dividend yields on blue-chip stocks signaled a market peak.
In March 1996, Cohen wrote to clients that “S&P; Profits Will Continue to Grow,” laying out her case for a continued profit expansion by the blue-chip Standard & Poor’s 500 companies. (She was right.)
A number of reports I saved from the mid-1990s pointed out the potential benefits to markets and the economy if the federal budget were to finally be brought into balance. Yet few of the forecasters imagined the size of today’s federal surplus.
In the case of many bullish ‘90s projections on the stock market, the forecasters were often right--but not for the reasons they put forward.
A 1989 report from brokerage PaineWebber declared that “A Decade of Affluence” lay ahead for markets. Inflation, the brokerage declared, would not be a problem. But the report also built its thesis in part on expectations for a soaring personal savings rate--which did not occur, though the stock market has hardly missed it.
