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Letter 1554

December 10, 2014

It’s late 1957. The bull market had started in June 1949. Suddenly a recession starts in late 1957. Sentiment among the crowd turns black bearish. The market sinks into a severe correction. I don't believe that the bull market is over. People call me an idiot, but I am convinced that the bull market has a lot further to run. The reason is that the bull market never produced a third speculative phase. I write an article published in Barron’s to the effect that I expect a third highly speculative phase to appear ahead. People remain stubbornly bearish. They tell me I’m out of my mind. But I know that the market normally has a severe correction following the second phase of a bull market and just preceding the third speculative and final phase.

The Dow sinks to 419 in October and then turns up in the face of the severe recession. Investors are actually ... Log in or subscribe to continue reading.

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