There’s a common question in job interviews that is incredibly tricky to answer, even though you know it’s coming. Where do you see yourself in 10 years?

The response says so much about the candidates’ level of ambition, confidence, and drive -- or maybe just their ability to conjure up farm-fresh baloney on the spot.

For investors interviewing today’s U.S. stock market to see how much longer it plans to stay on the job, BMO Capital Markets strategist Brian Belski has an attention-grabbing answer: The bull looks like it has legs to run another 10 years with 10.5 percent average annual returns from current levels.

Before discussing his rationale, consider how hard it is to precisely predict where the market will be a year from now, let alone a decade. At the beginning of 2013, Belski’s prediction for year-end level of the Standard & Poor’s 500 Index stood at 1,575. The benchmark gauge ended the year at 1,848.36, more than 17 percent higher than his forecast. Even the strategists closest to the mark, Tobias Levkovich at Citigroup Inc. and Savita Subramanian at Bank of America Corp., were more than 10 percent off.

Regardless of whether you have faith in Belski’s 10-year prediction or not, his report makes it clear it’s a well-reasoned call and he’s not conjuring up farm-fresh baloney on the spot. Here is the condensed version of his thinking and math:

David Fuller's view

Here is the full report.

Long-term bullish forecasts against the background of a long-in-the-tooth stock market uptrend have often proved to be wishful thinking contrary indicators.  However, Brian Belski’s report is more than just cheerleading and contains some useful points.

The first point: “lost decades”, is the most important by far.  Brian Belski has recognised that very lengthy trading ranges, punctuated by one or two very sharp bear markets, are valuation contraction cycles. 

Inevitably, the proceeding circumstances have been very different.  The secular bull market commencing in 1947 was preceded by WWII and benefited from the economic recovery that followed.  That eventually became overheated and was followed by a valuation contraction cycle amidst much higher interest rates to curb inflation.  In 2000 we saw the peak of a technology sector bubble.  An even bigger bear trend occurred in response to the serious credit crisis recession in 2008. 

While economies are still recovering, many stock markets raced ahead in response to extremely accommodative monetary conditions, including QE.  Strategists who are also market historians or at least look at long-term charts will note that the S&P since 2000 resembles its earlier valuation contraction phase from the late-1960s to 1980, followed by a pullback into August 1982 before it really took off in the secular bull trend up until 2000 and most notably punctuated by the 1987 crash. 

I have been commenting on the valuation contraction similarities for several years, not least in the Friday big picture Audios.  Today’s valuations are now considerably higher on Wall Street, so I would not be surprised to see a medium-term pullback at some stage, before the next secular bull trend is really underway.  If correct, I maintain that the next really big move to the upside will be driven by: 1) an accelerated rate of technological innovation; 2) lower energy prices in real terms, at least for the USA and other countries that have developed their energy production capability; and 3) the continued growth of the global middle classes, thanks to capitalism in its various forms and an increasing global population.