The Great Rotation – Why Stocks Are Bullish



Hand-drawn Chart Published in 1979

I have been explaining how capital shifts from Public to Private during a Private Wave investment cycle. Bond yields are way too low and risks way too high. It is now being recognized that capital is starting to shift from bonds to equities. They call this the Great Rotation. Based upon studying even the commentary in the newspapers during these periods demonstrates the thinking process fluctuates.

Interest rates decline during every recession and depression and rise during bull markets. During the 1920s, the press reported rate increases as bullish because it demonstrated people were still borrowing. When people stop borrowing, markets decline. In a Public Wave, rising interest rates are seen as bearish because the government doesn’t like what is happening not what is happening economically or why. Hence, this is the distinction between of Public and Private Wave. We are now seeing the effects of a Private Wave where people focus on the market not what government says.