Why this isn't the start of another 10-year bull market

10/19/2009 12:32 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Absolutely brilliant table on Briefing.com this morning explaining why the rally off the March 9, 2009 low is a great short-term bull market but why longer-term the bear remains in control.

The jargon for those who care is that this is a cyclical bull inside a secular bear. The last great secular bull market stretched from 1982-2000, Briefing.com points out. And the conditions that produced that huge long-term running of the bulls couldn't be more different from today's fundamentals.

I think Briefing's chart shows that more convincingly than a truck load of words.

To quote:

"The table below encapsulates this concerning message with a presentation of what key data points revealed at the end of 1981 and what those same data points are showing today.
























































































 

1981



Today


CPI year-over-year

8.9%



-1.3%


30-year bond

13.65%



4.24%


Fed Funds Rate

12.00%



0.00%-0.25%


Highest Marginal Income Tax Rate

69.125%(a)



35%(b)


Highest LT Capital Gains Tax Rate

28%



15% (c)


Home Ownership Rate

65.2%



67.4%


Household Debt as % of Personal Income

56.1%



114.4%


% of Families with Retirement Accounts

20.4% (d)



52.6%


Personal Savings Rate

11.4%



3.0%


Mortgage Debt as % of Disposable Income

43.1%



95%


Baby Boomer Age Range

17-35



45-63


Federal Deficit as % of Nominal GDP

2.5%



11.2%(e)


PCE as % of GDP

61.9%



70.7%


U.S. Debt as % of GDP

32.2%



75.6%


Household Debt as % of GDP

47.2%



96.8%




(a) For individuals with taxable income over $212,000 (source: National Taxpayers Union)
(b) For individuals with income over $357,700
(c) This will jump to 20% after 2010
(d) Source: Fed's Survey of Consumer Finances (1983 earliest publication)
(e) CBO's Baseline Budget Outlook

 Briefing.com's Patrick O'Hare goes on to say that while the comparison doesn't say that the current rally is about to end, it does cast doubt on the argument that we're in a new long-term bull market.

Briefing.com is, in my opinion, one of the most valuable sites for investing news and commentary. Check it out. I think you'll find it worth the subscription.
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