Richard Bernstein '80 was interviewed for the "Taking on the Street" section of Fortune magazine. In the Q&A titled "Still Bearish After All These Years," Bernstein, who is Merrill Lynch's chief U.S. strategist, responds to questions about the stock market.
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Merrill Lynch market strategist Rich Bernstein isn't ready to call this spring's rally the real thing.
Are you the biggest bear on Wall Street?
That doesn't quite characterize me correctly. I'm more cautious than other people right now, which is why I appear to be so incredibly bearish. I think people are overly enthusiastic. But I'm not bearish about everything. You'd be hard-pressed to find bulls as passionate about their buy themes as we are.
...But after three years of lousy returns, aren't we due for a good run?
You would think so. We've had three years of a bear market and the worst profit recession in history. The problem is, that hasn't killed the speculation. It all comes down to basic economics. The market is not allocating capital to where it is needed most. It is allocating capital to technology, a sector with huge amounts of overcapacity that is in serious need of consolidation.
...Some stocks must look attractive, right?
Yeah. There's tons of value in the market, just not in consumer cyclicals and technology.
...Will there ever be another long-running bull market in stocks?
Of course. I'm not sure when it will start. But it won't be in the same stocks that drove the last one. That never happens.