-Bob Doll of Blackrock on Wealth Track with Consuelo Mack

Although I am usually skeptical of the musings from the men and women who run large institutional funds, I thought this comment from the man CNBC calls the Trillion Dollar Man (based on the size of the asset portfolio he helps oversee at Blackrock) was a great description of the dynamic that has led the debt and equity markets around the world to recover so dramatically. Usually, when you hear these people talk about their outlook for and assessment of the financial markets, they are simply espousing the pre-determined strategic views of their firms. Under the guise of giving advice to non-professional investors about where to invest their dwindling wealth, more often than not they are talking up their own book. In other words, when Bill Gross says that US Treasuries are the place to put your money, you can bet that PIMCO has made a large bet on Treasuries. Or when Bob Doll suggests that he is bullish on US equities despite his admission that there are severe secular headwinds facing the economy, you better believe that Blackrock is putting its mouth where its money is (as opposed to the other way around).

What is most interesting about Mr. Doll's commentary is the dissonance between the long run and the short term and what that implies about his firm's willingness to bet that short term government stimulus and Fed zero interest rate policy will drive equities higher. I have to admit that is disconcerting to hear people who are supposed to be managing your money with a long term perspective basically making a trading call based on government largesse and Fed money printing. What retail investors don't want is to be invested in funds that are trying to get every last penny out of what could be the mother of all bear market rallies. The reason is that in the long run, if the secular concerns that Doll references are legitimate, they will undoubtedly overwhelm any government attempts to reflate the asset markets. One of Ben Graham's most important observations was that in the short run the market is a voting machine but in the long run it is a weighing machine. My concern is that the weight of the numerous headwinds— rising health care costs, lack of funding for social security, dependence on foreign fossil fuels and foreign purchases of debt, continued housing weakness, consumer de-leveraging, and a crumbling education system—will prove to be significant impediments to US GDP and companies' earnings growth.