by Michael Tarsala, CMT
Is Michael Kahn of Barron’s Online wrong to think that Dow 30,000 is in the cards once a new secular bull market begins?
Well, you have to listen to his entire reasoning.
As Kahn. a market technician, explains, there are two timeframes that long-term investors need to know. One is the secular trend, which takes place over roughly 15 to 18 years. And within each one of those long-term trends are several up-and-down multi-year cycles.
There’s a full interview below, with a nice graphical explanation:
What he is arguing is that the next multi-year cyclical trend is coming soon, which will take stocks lower within a larger secular bear trend.
However, if the very long-term pattern holds, the next bullish secular trend will begin again in 2016. At that point, he says it’s not unreasonable to think that stocks could as much as triple during that next 15-to-18-year cycle.
There are three big takeaways from his analysis:
- Kahn recommends holding high-quality dividend stocks and companies with international exposure over the next few years.
- However, he also recommends having cash on hand to get fully invested again, in preparation for the next secular upswing.
- Once a new secular trend is confirmed, economically sensitive stocks could again be en vogue.