Respect the Bear

Respect the Bear

June 21, 2022
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We became bullish about stocks once mark-to market accounting was fixed in March 2009.  We were also bullish after COVID-19 hit.  We got called "perma-bulls," but as we look back at the low interest rates and healthy profit growth, we don't see any other course to have taken.

We were still bullish at the end of last year, forecasting 5,250 for the S&P 500 and 40,000 for the Dow Jones Industrial Average for 2022.  As always, we used our Capitalized Profits Model to assess fair value for the stock market.  The model starts with the government's measure of economy-wide corporate profits and uses the yield on the 10-year Treasury Note to discount those profits.

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