The Rising Influence of Rising Affluence

[10nisman]

Educated investors should not give a hoot what Roubini thinks now, or ever.

I fully disagree with your comment, Dew. Roubini didn't change from bearish to bullish in March 2009, which is exactly in-line with the bullish who never turned bearish and road the markets down from the highs in late 2007 to March 2009. The GFC was the most obvious economic downturn in history and the vast majority of economists and investors didn't see it coming (what were they looking at???) and spent a good number of years trying to climb back to even.

There are valid arguments for his comments and it wouldn't be surprising to have low single digit average annual equity returns for a decade. Unlike the past couple of decades, the Fed isn't going to rescue markets with QE / significantly lower interest rates. Once inflation is under control (i.e., very close to 2%), the Fed will likely shift rates lower but zero bound rates and QE aren't coming back unless there's a crisis that seizes the financial system. Thus, higher interest rates for the foreseeable future, which unlike the last few downturns (Dot.com, GFC, COVID), will likely cause a significant number of business restructurings, bankruptcies, etc., as well as, lower equity valuations.