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From the September 2006 issue of Investment Advisor • Subscribe!
Behind the Numbers, with Richard Bernstein
During a recent television appearance on Consuelo Mack Wealth Track, Merrill Lynch's chief investment strategiest had some comments both about the equity market and the housing bubble. "People are saying we're just entering a period of low returns, but...for the S&P 500, we've been in a period of low returns for eight years now, going back before the technology bubble. Basically that was the time when people began to think that stocks were the, quote, 'asset class of choice.'" Bernstein reminded viewers that when "too much money chases too few ideas, you depress returns, and that's what happened in the United States equity market." On housing he agrees with Merrill's chief economist, David Rosenberg, that "housing will be in a protracted bear market for quite some time." He says that media stocks actually have a negative correlation to housing. "So if you wanted to hedge consumer exposure, you do it using media stocks...It's not only an anti-consumer play, it's a contrarian play as well."--Robert F. Keane