Market expert who called the dot-com bubble says this time it's different

financialpost.com:

The stock market’s unrelenting rally this year has claimed its share of celebrity bears, the best known beingJPMorgan Chase & Co. market strategist Marko Kolanovic.

It’s a story practically as old as Wall Street itself. Just ask Charles Clough, Merrill Lynch & Co.’s chief global investment strategist from 1987 to 1999, who stayed bearish through the dot-com boom of the late 1990s, but was only vindicated after ultimately leaving the firm.

Looking at today’s market, Clough said it’s nothing like that era. Now 82 and still running his eponymous hedge fund, Clough Capital Partners LP, he sees companies generating the cash flow to justify their swelling share prices. The economy is doing well. Inflation and interest rates are poised to come down. And in his eyes, equities have plenty of room to move higher.

“The differences are far more important than the similarities” when comparing the current stock market to the dot-com bubble, he said. “The cash generation and the scale of these companies suggest that they’ll be around for a long time and continue to be very profitable.”

Clough’s hedge fund celebrates its 25-year anniversary this year. Prior to joining Merrill, where he became one of Wall Street’s most revered forecasters, he spent time at Cowen & Co., Boston Co. Inc., Colonial Management Associates Inc., Donaldson, Lufkin & Jenrette Inc. and Alliance Capital Management LLC. He also is an ordained permanent deacon in the Roman Catholic Archdiocese of Boston and serves in that capacity at his local parish in Massachusetts.

Here is an interview with Clough that has been edited for length and clarity.

Clough: We have a very positive view. The most important thing that’s going on in the economy is inflation is coming back