From their March lows, the major US stock benchmarks have rallied some 50 percent. At current levels, investors are wondering whether this is the beginning of a new bull market or just another head fake. Could history repeat itself? After the initial decline during the Great Depression, the Dow rallied 48 percent before dropping like a stone.
There surely is not shortage of personalities proclaiming that a new bull market has started or that, at the very least, a deeper recession has been avoided. The Wall Street Journal touted on July 23rd, “The Economy Has Hit Bottom.” A recent survey of economists revealed that 90 percent of all economists believe that the recession has ended in the second quarter of 2009.
You can’t help but wonder where all those geniuses were in March. If my memory serves me right, the doomsday atmosphere surrounding the March lows permeated Wall Street as well as economists. “The worst is still to come” was the outlook then.