The market went up from 1920-1929, rambled until 1941, up until 1965 and sideways until 1982.
Then it went up for 18 years until 2000. We've been in another sideways motion since 2000 and I've felt this will continue until at least 2010 or even 2020. Contrarian strategies work best when the market is flopping along sideways for decades. CANSLIM works great in bull markets.
What causes these 20 year trends. Human nature. When the market roars for 20 years, inefficiencies are created. People feel they can't lose and bid prices up crazily, as in the dot-bomb bubble. As the NASDAQ retreated from it's March 2000 high of 5000, money flowed into real-estate, creating a bubble there, which ultimately contributed to our current financial issues.
Knocking out the bubbles is like playing wack-a-mole. Greenspan killed inflation of the dollar, so we got dotbomb asset inflation instead. Then it moved to real estate. Each one gets bigger.
This one is $700 billion, the next is $7 trillion, and after that the whole world goes bankrupt.
That's if you try to fix it fast. Let it work itself out and you have what we've had for the last 8 years for another 12. That's my best guess as to what will probably occur here.
Take another look at that graph. Those 20 year cycles are hard to argue with. They seem to
just be a fact of financial life.