FORTUNE — Economists, as you have likely heard, are enjoying a bit of a renaissance these days. With a startling new piece of economic news emerging on a near daily basis — Greece is going under! No, it’s Spain! China is in the midst of a housing bubble! China is our savior! — there’s been a surge in demand for those who would purport to tell us what it all means.
If, like us, you don’t like your economics dry-as-dust, the man to turn to is David Rosenberg, chief economist and strategist at Canadian wealth management firm Gluskin Sheff. Rosenberg’s daily missives (which you can sign up for on the firm’s web site) both inform and entertain, while at the same time scaring the bejesus out of you.
Rosenberg, you see, is an unapologetic bear. He’s no perma-bear — the man was a bullish for most of the 1990s — but his reading of today’s data leaves him no choice but to continue sounding the alarm in the face of those who would have us believe the worst is past. We caught up with Rosenberg yesterday afternoon to get his read on Dow 10,000, Ben Bernanke, and the future of gold.
The last several days have been spent crossing and re-crossing what the papers have taken to calling “the important psychological level” of Dow 10,000. Is it important to you? Should it be to us?
Dow 10,000 has absolutely zero meaning, except that maybe it has more zeroes attached to it than any other level we’re going to see anytime soon. If you’re a real investor, a much more important number is 943 on the S&P 500 which is a 50% retracement of the bear market rally. That’s a real technical level, whereas Dow 10,000 is nothing but a number. But you’re right — 10,000, 11,000 or 9,000 are very popular with the media. But anybody who looks at specific numbers is using technical analysis, where there is as much a chance of a zero as any other number.
You make the distinction of a secular bear market versus a correction. Unfortunately, you think we’re in the former. Why?
The markets move in primary trends. Just as in life and with the seasons there are cycles when it comes to investing. It has always been such. From 1948 to 1956, there was a secular bull market. From 1956 to 1982, a secular bear market. Then, and this is what most people remember today, from 1982 to 2000, we had a wonderful secular bull market. You can go back further if you like.
The equity market peaked in inflation-adjusted terms in 2000. We had a roughly eighteen-year bull market. And today, we are 60% of the way through a secular bear market. In a secular bull market, corrections are buying opportunities for long-term investors. It’s quite clear after the fact that 1987 was one of the best buying opportunities of the last century. Who knew there were thirteen more years to go in the bull run? People who paid attention to history, that’s who.