Deja Vu

History provides insights when we observe it from the appropriate perspective. The most recent secular cycle, a bull, ran from 1982 through 1999. It was preceded by a secular bear starting in 1965 and ending in 1981. The characteristics of each secular period are reflected in the general direction of the markets and in the frequency of positive returns. As this presentation shows, secular bull periods have generally upward-trending markets and predominately positive (green) annual returns. Secular bear periods are erratic and present a significant number of negative (red) annual returns. The net effect is substantially muted returns due to offsetting positive and negative years. So where are we today? The last secular bear cycle started when the P/E ratio was 23 and inflation was 2%. The current market conditions reflect the same vital signs. Deja vu?