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Rekenthaler Report

The Great Bull Market That Everybody Missed

How the economists got it wrong.

The Big Surprise
This may not be the best stock bull market in modern U.S. investment history. The 1950s and 1990s are formidable rivals. By any standards, though, tripling one's money in real terms, in less than a decade, rates as a great success. That this gain occurred during a period of low volatility, with few large reversals and subdued inflation, heightens the achievement.

Yet nobody called it. Of course, that statement is not strictly true. Somebody, somewhere, advised near the market's bottom that investors load up on stocks. Not many, though. The best example that I can recall was GMO's Jeremy Grantham, who stated in January 2009 that while stocks were not "dramatically cheap," they were worth buying, as he expected them to generate a 65% real return over the next seven years. Half correct; stocks rose 130% for that period.

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