Yes, this is the same firm that was slimed by a former employee in The New York Times last week, setting off a firestorm of suspicion and hostility toward the firm.  He alleged the firm was, to be kind, ethically-challenged, referring to its clients as “muppets” to be fooled and fleeced.  Readers will recall that I do believe the allegations.  While I have no love nor respect for Goldman, I have great respect for their research.

Today, they stated that this is a “once-in-a-generation” opportunity to buy stocks!  They believe the long rally in bonds is finally over, and money will be forced into stocks, driving up the market.

A long-running theory of investment management is the “odd-lot theory,” which suggests you should always invest in the opposite direction of the small, retail investor, who sometimes cannot afford a full 100-share lot or order and must buy odd-lots or a few shares.  Last week alone, these retail investors pulled $126 million out of stock mutual funds and put $10.7 billion into bond mutual funds.  (Bond mutual funds are almost certain to lose money when interest rates rise.)  Wall Street refers to this as “dumb money.”

The rising stock market could only happen if new money was coming into stocks.  It has risen this year but the new money is not from the retail investor, who is still shell-shocked.  It is coming from “smart money,” i.e., hedge funds and institutional investors.  If Goldman is right and if the retail investor remains out of the market, the divide between the 1% and the 99% will only get bigger.

My feeling is that the bull has indeed returned and that it is time to increase exposure or allocation to stocks.  That is not the same thing as saying “once-in-a-generation.”  The bull is here.  Let’s just enjoy the bull run for now and be prepared to get out of the way when the bear returns . . . in our lifetime . . . or even a few years, but not right now.