Sam Stovall is chief investment strategist at CFRA Research. He is the author of the books, "The Seven Rules of Wall Street" (McGraw-Hill, 2009) and “The Standard & Poor’s Guide to Sector Investing” (McGraw-Hill, 1995). He writes a weekly investment piece on S&P’s MarketScope Advisor platform ( focusing on market and sector history, as well as industry momentum.


Stephen from CA posted over 7 years ago:

Excellent, high-level article by a pro who's been around for years.

Edgar Koshatka from PA posted over 4 years ago:

I have to continually intone one of my favorite adages when I read this kind of material: "History does not repeat; only the experts repeat."
Another one I like is: "Anyone who has concluded that the stock market is rational is the most irrational person in the room."
Well, at least Mr. Stovall put in the disclaimer, and the print size was the same as the rest of the text: "Should this equity market recovery be similar to prior recoveries - AND THERE'S NO GUARANTEE IT WILL-........" Those are the most important words in the article.

Jay Lagree from DE posted over 4 years ago:

Great Article!

@Edgar Koshatka.....The most often repeated falsehood in investing: This time it's different.

Calford Scott from NY posted over 4 years ago:

When was this Article written. I am reading it 01/012014. It does not seem to apply to today

Jonathan Niles from CO posted over 4 years ago:

I'm seeing May 2009 for a date on my page - and the market cycle discussion seems about right for that time too...

Larry Hutcheson from IN posted over 4 years ago:

Recycle an old article? Okay, but does the average reader know how to use this as a framework for today or tomorrow. Great evidence and evaluation but could on updated paragraph be added for clarification?

Edgar Koshatka from PA posted over 3 years ago:

Comment for Jay Lagree:

This time, last time, next time, IT IS ALWAYS DIFFERENT. "Life is it differs from the rocks..."

William Monteforte from WA posted over 2 years ago:

Waste of my time! Nothing new here.
This Sam is not the old Sam.

Jason Dobson from NV posted over 2 years ago:

Hadn't seen a Sam Stovall piece for AAII in so long and was e-mailed the link to this recycled story. I remember reading this 6 years ago and seriously contemplating its truth, so I decided to revisit the article. The investment climate under which this article was written seems like so long ago as if it events described happened to generations past, not to all of us just 6 years ago. I think it's clear the utility of interest rate manipulation has basically lost its efficacy as an economic driver. What interest rates consistently affect now are asset class pricing and investor animal spirits, not necessarily corporate executives' animal spirits. Engaging in excessive share buy-backs to reduce share counts and drive EPS with cheap debt on the back of ZIRP is just one of the many misguided behaviors that have arisen as a disproportionate response to the Fed philosophies. Knowledge of interest rates is no doubt an integral component of one's investment tool belt, but the world of monetary policy really is a much, much different place now.

Roland Phelps from NJ posted over 2 years ago:

This article was most enlightening and I got the feeling I read it before. None-the-less, it was a rewarding article.

Kelvin Watson from OH posted over 2 years ago:

Overall, this is good old(2009) article because it helps us get a handle on how the markets are likely to react to the rate hikes. Something I really wanted to know!

Carl from NY posted 9 months ago:

Great Article – I agree with the article but believe there is a much more fundamental reason why our economy is being held back.

The "new" economy especially of the last 10 years has not "speed up" to historical levels as expected despite lower interest rates worldwide. The macroeconomic reason is that there are other "brakes" on the economy unrelated to the fiscal crisis. These "brakes" are not “monetary policy” factors which is why lowering rates did not “fix” the economy (i.e. a return to historical GDP growth levels).

What is new to our economy is massive government interventions (healthcare, bank regulations, etc.) that have reduced productivity by adding unnecessary costs and constraints to the economy. These policies act like an anti-fiscal policy or as "friction" that wastes resources. The result is permanent reduction of productivity real terms.

Productivity can qualitatively be viewed as cost-of-inputs/value-of-outputs. The cost of inputs has gone up (due to interventions as reference above), theerefore productivity by definition has decreased.

My concern is that a new "normal" where the regulatory burden referenced above is "permanent". If so, we have passed the tipping point where real GDP growth may never achieve historic growth rates, and may never be materially positive on a go forward basis. Can anyone say a permanent recession?

This impacts of course, how we "invest".

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