Stars and gripes: as investors in the US move from irrational exuberance to irrational despondency, is history repeating itself? Ted Stone analyses past performance and argues that there are reasons to be confident in the future of America's equities market.

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Business US Economy

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Stars and gripes: as investors in the US move from irrational exuberance to irrational despondency, is history repeating itself? Ted Stone analyses past performance and argues that there are reasons to be confident in the future of America's equities market.

The bear market of the past couple of years has been a grisly one for stockholders. From the peak of the Standard & Poor's 500 Index of 1,527 in March 2000 to the low of 798 in July 2002, stocks have fallen almost 48 per cent--just shy of the largest postwar bear market, which occurred in 1973-74.

There have been two causes of this malaise. First, the preceding bull market in technology stocks created an overvalued IT sector and the initial part of the bear market was simply a correction of its excesses. The second part was caused by the corporate scandals that rocked Wall Street and caused a crisis of...

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