WhereIsTheMarketGoing

At the writing of this article, Seth Glickenhaus was 88 years old. Glickenhaus has been investing all of his life for private clients and since 1981 has had a mutual fund that has produced an average gain of 16.7% a year. In 2000 it gained over 16% while the rest of the market dumped and managed to generate flat returns last year. His firm manages over a billion dollars in assets. The July 14th week's issue of Barrons had an interview with Mr. Glickenhaus that you might find interesting.

"It's an entirely different market than any that has existed since the 'Thirties. The bear markets we've had for many years now have been very short in duration and often had a crisis involved. In the 'Sixties, the Cuban crisis triggered it, then there was the oil embargo in the 'Seventies," Seth says, "There were several wars. But this is different. This is a full-fledged business-recession-inspired bear market. This is going to be comparable to what happened in the 'Thirties." He does not think that we will see another bull market for over a decade. Instead he thinks that it will be stuck in a trading range. He says:

"Where we're going now, and it's going to take 16 years, is to consolidate that marvelous move from 1000 to 11,000. In 1949, the Dow Jones Average was 160. By 1966, 16 years later, it was at 1000. Then it spent the next 16 years consolidating. From 1966 to 1982, the market could not move out of the 1000 range. And, in 1974, the average even got as low as the 500s. A chap by the name of Reagan was appointed President in 1980 and, from then until 1988, the market went from 1000 to 3000. Not coincidentally, the federal debt went from $1 trillion to $3 trillion in that time."

"This is a cyclical economy and in a period of a boom of that magnitude, companies get overexpansive. They create far too much capacity for the world and for the country. People spend money in the most promiscuous, irresponsible ways. They get into wild debt. The very success of the business cycle breeds excess. That's why we have to consolidate. A period of growth such as we've just had takes many years to rectify, to eliminate the problems and readjust for the world as it is. Historically, this has always been the case. Go back to 1929, when we had a huge post-World War I boom and we reached a peak in the Dow average in the 300s. Do you know how many years it took before it reached the peak of 1929? Twenty-four years. It was 1953 before it hit the same level of 1929."

Seth M. Glickenhaus, Senior Partner and Chief Investment Officer, has devoted his entire career to all aspects of the investment business that support the management of client portfolios. He began his career as a Stock and Bond Specialist with Salomon Brothers where he gained important insights into the relationship between various sectors of the securities markets - - corporate and municipal bonds and equities. Prior to serving with the U.S. Mountain Troops during World War II, he founded the predecessor organization to Glickenhaus & Co. Throughout the firm's history, he has directed the controlled expansion of both the professional staff and client base while actively managing the capital account in a manner that would ensure continuing financial viability. He received a B.A. in Economics, cum laude, from Harvard University, an LL.B. from New York University's School of Law and was admitted to the Bar of the State of New York.