Here’s the relevant portion of our exchange:
Financial Sense: Avi, with regard to stocks, do you think we’ll see a final euphoric phase of this bull market as we’ve seen in the past?
Avi: That’s my expectation I believe for 2016. Somewhere around the 2016 period of time I believe that is what we could be seeing. Until then, while I do see a very strong potential decline over the next six months, once we break that 1900 region [on the S&P 500]—I do see that big decline taking place—I still do not believe yet that this market is done with these all-time highs. Initially, years ago I didn’t think we could get up to the 2000 region, but as we were developing this move higher I now see the possibility of getting up even as high as 2500 to 3000 on the S&P, but not yet—not just yet. That’s going to take some time. That’s the 2016 region…[but] my expectation is that, once we get that big decline, then you’re going to start seeing mom and pop pouring into this market, which is what’s going to be driving our last move higher.
Last, but not least, is someone that is so convinced the market and economy will crash in 2016 that he’s staked his reputation on it and written a book. I give you New York Times bestselling author Thom Hartmann and his book, “The Crash of 2016: The Plot to Destroy America—and What We Can Do to Stop It,” which I have not read. From skimming the pages available on Amazon it appears his choice of the year 2016 is based roughly on an 80-year cycle. He writes: “It was roughly eighty years from the Revolutionary War to the Civil War, and eighty years from the Civil War to the Great Depression and World War II. And here we are, eighty years later after that great disaster.” Hopefully, there’s more to his analysis than just that.
What do I think about all of this? For that I point to a different book, “Prediction or Prophecy? The Boundaries of Economic Foreknowledge and Their Socio-Political Consequences,” where Gregor Betz shows empirical evidence that “macroeconomic forecasts cannot reasonably be derived for horizons larger than two years.” Certainly, 2016 falls within that window. Beyond that, however, it’s anyone’s guess.
This article is brought to you courtesy of Chris Sheridan from Financial Sense.