Economy Rockford: Is the Rally Real?

The stock market has gained more than 35 percent in the last eight weeks, restoring optimism for many. Scott Laue, a financial advisor in the Stateline explains why he’s bullish on a big market return.

Financial advisor Scott Laue says economic data has gone from mixed to positive recently. Based on the rally over the past eight weeks, he’s betting on above average returns in the near future. Also playing into his bullish outlook is the high consumer confidence, and improving unemployment numbers and housing starts. Laue also points to federal government’s action regarding the auto industry and financial institutions. Laue says, all of this could put us on the road to riches.

“We’re expecting returns to be in the 15 to 20 percent range over the next five years. That is higher than normal but part of it is that stocks are so depressed and low right now, that to get back to the historical average we should have above average returns. When we look at a historical basis of what the returns have been dating all the way back to 1932, the average return is over 20 percent when those yields hit those high points.”

Laue says normal returns range between nine and ten percent. But remember, if you lose a quarter of your money, you have to make one-third of it back just to break even.

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