Chapter 13. 1996: The Nifty Nineties

"Predicting tops is not part of my investing method. I don't even try. . . . People who forecast market tops depend on foreseeing forces that will both materialize and make the market tumble. If the forces don't appear, neither does the top. And even if they do appear, there may be other, unforeseen events that arise and offset the negative developments they did anticipate."

"The Orderly Retreat," June 17, 1996

"If capitalism works, if supply and demand determine prices, and if liquidity flows from sector to sector, it defies logic to presume one broad class of common stock is permanently better than others."

"Small Isn't Always Best," November 4, 1996

Nineteen-ninety-six was a bittersweet year for many Forbes readers. Stocks had a great year. But 1996 was also the year of Steve Forbes' first failed run for the presidency. Despite Forbes' strong showing in the Republican primaries, Senator Bob Dole won the Republican nomination, eventually losing the presidency to President Clinton, who won his second term. Republicans lost a few seats in the congressional elections but maintained control of both the House and Senate. The result was more political gridlock—and investors cheered.

Ken was bullish heading into 1996, but he was watchful for sign of a bear. "Last year, I stuck my neck way out by predicting a gain for the market of between 20% and 40% . . . In 1996, I'm less certain, but expect a rise of 10% to 20%, with more risk than in 1995." ("Year ...

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