Kass: A Rare, Long-Term Outlook

This blog post originally appeared on RealMoney Silver on May 1 at 7:53 a.m. EDT.

Not surprisingly, much of my writing deals with the near term -- namely, the outlook over the next several months -- as most investors and traders have that as their focus, but I do occasionally touch on the longer term, as I recently did in a discussion of "The Death of Buy and Hold." In actuality, though recent history might seem to counter the argument, the "real money" is typically not made in short-term "chops" rather it is made by thoughtful intermediate- to long-term investing.

As to the short term, I am sticking with my view that March 9 represented a generational low but that the road to higher ground (to be traveled during the summer) might be bumpy, volatile and could test the conviction of the bulls.

SPDR Trust (SPY) -- Expectations Bloomberg

The fortuitous (accidental?) precision in my previous SPDRs (SPY Quote) forecast of two months ago (see above chart) as well as the continued seeming validity to the parallel with the late 1930s experience in the U.S. stock market (see below) suggest that I should test my luck and now focus on the longer term.

Dow in the 1930s and 1940s vs. Nasdaq Now Very similar patterns Reuters

In simplest terms, over the last century, 15- to 20-year bull markets are commonplace. Thereafter, a vicious two-year bear market has typically been followed by a retracement rally that works off the deep oversold that was a byproduct of the bull-market correction. Following the retracement rally, the market usually falls back down (e.g., 1937-1938 and 1974). This makes sense, as the markets, the economy, individuals and corporations require time to liquefy after an economic contraction and/or debt crisis.