Bear rally or onwards and upwards? (poll)

[ratkin]

With many commentators becoming more bullish , what are your opinions?

[ratkin]

My own view is that the selloff was largely manipulated to shake the highly leveraged out of the tree.
It certainly did that with many of the margin boys being wiped out.

Those who held and bought more during the correction will be the long term winners , chartists will also have done well. Big losers those who used borrowed money.

Markets much safer place now imo.

[Dr_Who]

I have a different view. I think the American economy is stuffed with way too much debt, low growth, high inflation and will take many years to recover. The war in Iraq will drain their cash and they will require to borrow and print more cash to finance the hollywood lifestyle.

The global economy will move along nicely with the assistance of China and India. USA is like Japan in the 80s and will lag behind the rest of the world.

High growth in China and India will continue to put upward pressure on commodities and oil. Peak oil is here to stay.

[The Big Ease]

i think we are due for a massive sell-off.
the key IMO is to look at what started this in the first place. its the subprime loans!
we are only halfway through the peak months of sub-prime resets and in the midst of a property downturn (well underway in the US and just beginning here in the UK)

many of these borrowers are looking at 2-3% hikes in their interest rates. theyre going to capitulate.
it takes 3-6 months before a loan typically defaults after reset (according to alan kohler), so i reckon we will begin seeing another round of sell-offs between july-oct, when this feeds into the banking system and further write-offs are announced by the banks.

if the major banks around the world beg for 300B in capital to shore up their balance sheets, yet we are only part way through the resetting of loans that have caused the problem to begin with, i cant understand the rationale that says this thing is over.

[mark100]

I'd say the US is definitely in a bear market rally. Although its not even technically in a bear market at present.

For that reason I'd say the Aust market will pull back with the US at some stage although I'm now expecting the low 5000 area to hold for Aust unless the RBA decides to punish with further multiple rate hikes (which I think is unlikely)

[Lizard]

I found that hard to vote on between 2 and 3.

Firstly, alot of money that has gone out of the market is not about to reappear any time soon - some went to repay loans (which will now be more difficult to get) and some will be quite happy with higher interest deposits and bonds.

Secondly, we are seeing the first evidence and rumours of hits to the real economy which will be reflected in the next round of forecasts. May is the month of company updates to forecasts and the sell-offs will probably be more savage than the buy-ups (see ELX yesterday, RCR earlier in the week).

However, I also expect there to be opportunities as the money re-entering the market takes a fresh look for stocks and picks on some that have been out of favour and/or undervalued rather than sticking with previous popular choices.

I think the stage we are in (and probably close to finishing) is a rewarding bounce. After that I see choppy sideways at a higher level than the low but which may (or may not) eventually finish with a move to a new low. During the choppy sideways I expect there to be quite alot of opportunities in selected stocks as the market bounces like a sieve and separates wheat from chaff. I wouldn't want to call the end stages yet. I'm not sure if we saw the ultimate low or not, but I don't really expect a full-blown bull market for at least another 9 months.

However, I'm not going to let my long term view of things influence my trading too much and will just stick to plan, keep portfolio fairly balanced and take advantage of the opportunities as I see them.

[Lizard]

Btw, I was interested to see the results of this poll earlier in the week:
Bear or Bull? (http://www.investmentpostcards.com/2008/04/25/poll-of-the-week-stock-markets-–-which-way-jose/)

Maybe it's just the people who read this guy's blog, but I was amazed at how low most expect the Dow to go by year end (yet many were expecting more short term up).

[AMR]

The US will inflate their way out of this mess. I'm expecting all that extra money to go into commodities such as oil and gold. Technically we've had a close above the 12800 mark which is a bullish sign usually, although I'm actually more keen to short the Dow since it might be a false breakout.

[Hoop]

I've voted that the market will reach lower lows. After all we are still in a bear market phase and bears downtrend...

This phase change from Bull to Bear is following the script perfectly.. passed down from previous historical Bull/bear periods.

From analysing past history the near term future broad outlook is not good as all previous changes in market phases follows the same path..history repeats itself to the point that it is nearly (if not) identical.

The young people don't learn history and the older people forget....hence when the present event happens nearly everyone thinks that this time it is unique and methods used to combat it are unique...this belief is a lie.
FEDs rapid interest rate cuts (used here as an example) is portrayed as something different ...its bullsh1t ...it has been done many times before.

If you have time read from to beginning through to the end the investing strategies and the secular bear markets (http://www.sharetrader.co.nz/showthread.php?t=5171&page=8)...this thread has information links showing history and the similarities then and now. Note one of the last entries showed a link to Jeff Cooper 10 April 2008 article predicting a major rally breakout was eminent.

At the moment the hard part is whether you believe the markets are in a phase change or a large prolonged correction in the still existing Bull Market Phase. From history, all the signals and trends (behavioural) are showing it is a Bear and to err on the side of caution is the best strategy.

[STRAT]

Its a hard call still and most of us are not qualified to make it. I sure aint but I recon this fine weather we are having is good for another month tops.:(

The vote was a toss up between the last two

[Tok3n]

Range bound with a down-side bias.

Fed only has 2% left to play with now, RBA has more :)

I hope the mother of all depression hits NZ though, sick of hearing NZ people telling me how much their properties are worth and that trading shares, commodities and FX etc is a waste of time vs the property "which never goes down".

[macduffy]

I voted 3. I reckon there are still a few more bad apples to be shaken out of the tree, more sub-prime related pain.
That doesn't mean to say that there won't be buying opportunites around but they will take more than the usual care to select.

;)

[Dr_Who]

I hope the mother of all depression hits NZ though, sick of hearing NZ people telling me how much their properties are worth and that trading shares, commodities and FX etc is a waste of time vs the property "which never goes down".

I sold most of my property portfolio about 1-2 years back when I started hearing the Taxi drivers, hair dressers and all my friends talked about how much they are worth and how many investment properties they have. I recall my friends laughing at me for selling my properties too soon. The writing was on the wall, esp when one have been through 1987.

There will be more pain to come for the US. In NZ there will be more pain and blood for the property market, it aint over yet. I have a feeling this time round, the downturn will last longer than other cycles.

The money to be made is in commodities, primary sector and oil. Watch those retail stocks get hammered further with the next round of profit reporting.

Dollar Collapse - The Schiff Has Hit The Fan - End Game 2012
http://www.youtube.com/watch?v=T1_Yo2BGdUk&feature=related

[COLIN]

I have read all the above comments with much interest (after I had voted, because I didn't want to be influenced by the erudition of you esteemed contributors.) However, I feel comfortable with my bullish vote, having regard to the way that the options are worded. If I was asked to write my own preferred option it would be along the lines of: "We have turned the corner and, although there could be some unnerving choppiness over the next month or two, there will be a steady and pronounced overall upward trend". (I guess that lies somewhere between the first and second option.)
There are many reasons for my optimistic stance, but for the moment I just want to draw your attention to the following two very important factors which I believe are highly relevant and don't appear to have been raised yet:

(a) P/E ratios on global markets are now the lowest they have been since 1990.
(b) The sharemarket always pre-dates the "real" world - by many months.

I believe it is not the time for serious sharemarket investors to be sitting idly on the station. You could well miss the train, and it may not be a slow one either. And as our good friend Phaedrus has pointed out, on another thread, great opportunities abound. Food, fuel, healthcare...............the world needs them all.

(The NZ property market is quite another issue. There is a lot more pain to be experienced there, yet, and it appears that many sellers are still resisting the realitities of the market by holding out for inflated prices. Sooner or later they are going to have to face these realities. And the number of mortgagee sales will increase.
But the issue we are considering on this thread is the likely trend of global sharemarkets.)

[tommy]

I voted "More corrections , choppy markets , maybe downward tendancy" but would be quite happy to be proven wrong.

I think some sectors within the market will outperform the general market index, such as the agri sector including fertilizers and supply-side services.

I am surprised how weak gold has been lately... do people really believe financial sector stability has been restored? With the FED literally printing heaps of money to avoid a recession, and with very little room left to slash interest rates (can't go below zero, you know), inflationary forces building plus a weaker US dollar would seem to indicate that gold might not be a bad place to store wealth. Yet, the market is telling us that contrary is the case... mmm am I missing something??

As the All Ords has far from decoupled from the DOW, I think any jitters in the US economy will scare investors in OZ land and thus easily turn sentiment around overnight. All Ords has been trading within a narrow band (5400-5750) over the past month, clearly indicating that no directionality has been determined yet.

http://asx.netquote.com.au/charts.asp?code=xao&x=0&y=0

[macduffy]

I see that Warren Buffett says that " the worst of the crisis on Wall St is over".
For some reason, this reminded me of George W Bush's famous declaration about the end of the war in Iraq, which is very unfair as I have the highest regard for WarrenB !

;)

[STRAT]

Anyone else wondering when the action of the last week is going to hit the ceiling with a big SPLAT?? What an awsome couple of days though:D

[Footsie]

Colin where is your data to say stocks are cheapest since 1990 when S&P500 p/e ratio is 22 or 23x