Dow at 12,000! Could Happen, Says Analyst

WEEK AHEAD

A stumbling stock market offers cause for celebration, says one expert, not concern.

It's a "buying opportunity," says Raymond Worseck, chief economist at A.G. Edwards & Sons Inc., one of the nation's largest retail brokerage houses.

Mr. Worseck sees this stock market headed higher, much higher.

That view - not shared by many analysts - does not rule out "corrections," such as the 10 percent fumble in early April. But "a hundred points here, a hundred points there, isn't going to change much."

Bull cycles

Stocks, he argues, sit midway through a long bull-market cycle, similar to two previous cycles.

The first, which he calls the "Industrial Bull," ran from 1877 to 1929, fed by the introduction of electrical power, advances in mining and manufacturing, and rapid railroad expansion. It was followed by the Crash of 1929.

Another revolution

The second, or "Consumer Bull," ran from 1932 to 1968. In this period, the automobile business thrived along with fast food, television, and jet airplanes. Suburban America boomed.

Which brings us to the current bull market. He dubs it the "Technology Bull" and says it began in 1974, responding to a revolution of blazing fast computers, genetic engineering, powerful software, and the Internet.

"The previous bull markets lasted 52 years and 36 years, respectively. This current bull market has been in progress for only 23 years. It still has room to run."

But not without "normal" price volatility. He concedes stock prices could slip lower, particularly with the Federal Reserve poised to hike interest rates.

"That will make the market nervous," he says. But the Fed just wants to cool the economy "a little bit," not create a recession.

His thesis is that each bull market, this one included, starts with a decline in long-term rates. A second phase follows significant lows in commodity prices and short- and long-term rates.

Government goofs

What kills these long-term bull markets, he says, is mistaken government policies, such as overly tight money and bureaucratic interference, plus an attractive alternative to stocks.

Worseck sees no such hazards in view, leaving stocks free to rise: 9,000 to 12,000 for the Dow.

He admits that past performance doesn't guarantee future results.

And it's worth pointing out that in 1929, the great stock crash was preceded by no shortage of analysts who said the bull market still had legs.

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