In case you were wondering, 2009 is on track to be among the best years in the annals of the stock market. There’s still nearly three months of trading left, of course, and so we shouldn’t write anything into stone just yet. But as we write, it doesn’t get much better than this. In fact, we don’t expect it to get any better and in relative terms, at least, it’s likely to get quite a bit worse. Or perhaps we should say less stellar.
Whatever label is appropriate, there’s just no way that equities can maintain the pace so far this year. As our chart below shows, it’s been nothing less than extraordinarily profitable in the land of equities, here and abroad. The bullish momentum may roll on, of course. In the short term, anything’s possible. But as a strategic matter, there’s reason to wonder.
This much is clear: The trailing returns of recent vintage won’t survive for the year or two ahead. No, that doesn’t mean that we’re headed for a new bear market, although no one can dismiss the idea entirely given the still-precarious nature of the economic revival. But equity performance is headed for a period of lesser results, if any, for the foreseeable future.