A parade of optimistic expert assessments...continued with a hedge fund official saying, "the largest U.S. companies are cheap and the odds of a second recession in three years are about one in five." The vice chairman of a top private-equity outfit predicted a return of 8.1% a year for the S&P and a near doubling by 2020. "Two disastrous decades in a row is extremely unlikely." These remarks place sentiment a long way from a major stock market low.
Elliott Wave Financial Forecast (Sept. 2010)
Forget the next few months or even the next few years: the above-quoted expert claims that the next decade is going to bring attractive returns for stock investors
Yet where is it written that there can't be two consecutive decades of negative returns for the stock market? Back-to-back bear market decades do amount to a long time, that is until you think about a bear market which lasted over six decades. That very thing happened in the 1700s. The stock market didn't start to really recover until 1784, 60 years after the South Sea Company Bubble burst in Britain.
So, yes, the huge financial mania that ended in 2007 still generates a residual optimism among many investors. The International Business Times recently conducted an interview with EWI's Robert Prechter. Here's an excerpt:
"Despite ten years of weak prices, the Elliott wave model and major-trend measures of sentiment (low dividend yield, low mutual fund cash holdings, etc.) still indicate historically high levels of optimism.
"Social mood is down from the record-setting optimism recorded in 2000 and 2006 to 2007, but it is still high.
"Most people think that society is worried, but it’s not. It only seems that way because people are using the greatest extreme in optimism in 300 years as a benchmark."