Investing strategies and secular bear markets

[macduffy]

Interesting article.Food for thought
http://www.nzherald.co.nz/best-of-bu...ectid=11520783

Interesting indeed!

A thought from the future? Article is dated 30 Oct 2015!

[RRR]

Just noice, are they not? Population growing, people living longer - are these not simple logical reasons to remain positive and have a long term view? Now is the best time to live as Homo sapiens! I am investing on a regular basis and not concerned about short term oscillations.

[kiora]

Phew ,now anyone can make money from the sharemarket. You don't have to be an expert or have any experience
http://www.start-up365.net/Pages/Top...PMH99OGMQ9D2AA

[Hoop]

Originally Posted by Hoop

... Contrary to main stream media belief, research has shown that Economic (business) cycles and the sharemarket has a surprisingly poorish correlation overall...

Thanks for you post Hoop, was slow to reply - busy weekend! I've analyzed Winner's chart and, contrary to my original assessment, I think it does show that sharemarket bearmarkets start close to when the rate of growth of GDP is close to its peak. Which doesn't seem to fit your statement above, or are you saying they have a poor positive correlation? I gather that you are saying what it also says on that web page ( http://www.aheadofthecurve-thebook.com/04-01.html), that: "Businesses and investors must instead focus on leading indicators of rates of economic growth, particularly drivers of consumer spending, which represent the front end of the economic cycle."

..

Biscuit wrote this post a year ago...

The best thing for me was to wait use a current example...

Employment rate is a driver to consumer spending..

OK.... If I had a time machine and went from Jan2015 (time of biscuit writing the post) to Jan 2016 collected up this employment data chart below and returned to Jan 2015 with it...how would you think investors would react to this future news?..What prediction would they give to the S&P500 between 1/1/15 to 1/1/16.....eh?....I would assume as those investors are already bullish with the Bull Market rising rapidly in 2014, this future news would've made them ecstatic...

OK.... we have got to 1/1/16 and sadly the S&P500 for the year ended 2015 about the same level as it started 2015... with a 2015 high only 5% above those points...
Yet the chart below showed a growing economy..

Those investors would be scratching their heads saying "What went Wrong?"...probably blame all sorts of things..eh?

Proof Biscuit.... that the Economic cycle and the sharemarket have a poor correlation

[winner69]

Hoop said - ... Contrary to main stream media belief, research has shown that Economic (business) cycles and the sharemarket has a surprisingly poorish correlation overall...

The very good presentation linked below said

Real GDP Rose Equally During Both (bull and bear) Secular Periods, Averaging Near 3% Annually

http://www.crestmontresearch.com/doc...esentation.pdf

Is worthwhile looking through this presentation on a regular basis - even just to remind oneself what you read in the paper isn't always the full story.

[Hoop]

While reading some historic newsletters today (My mission...to date my list finding out who are the best people and firms to believe in what they write about) I came across Equity Compass Strategies who issued this newsletter in March 2009.....Remember...Hindsight now tells us this period marked the bottom (death) of the last cyclical Bear Market cycle...
The newsletter tells not to sell now (March 2009) ...a very courageous move considering the market irrationality and its extreme doom and gloom behaviour among those remaining wounded and blooded investor survivors...The reasoning and subsequent summary was secular cycles and the cyclic cycles within them..Theres a very good easy to read summary of how Secular cycles operate and the average age one can expect these cycles to last (Bull.. are you reading this) It lists the 10 most severe DJIA declines since 1900..and Stock Market as % of GDP Table....

A quote from the Newsletter PDF file..."However, secular bear markets produce the most powerful cyclical bull markets..........".

(On the ST Black Monday thread I said Buffett listens and probably acts to cycles....e.g Buffett Indicator (His favourite supposedly) to gauge how over or undervalued the Wall St Stocks are...
Notice... the strong correlation of the Wall St stock market cyclic reversals of 2000 2007 and 2015!!!!!!
Also notice... how overvalued the equity market is in 2015 (2nd highest in 65 years chart)...We all now in hindsight that the 2000 market was extremely overvalued.

If the media publishes tomorrow that Buffett is fully invested at this moment in time and it turns out to be true then I'll eat my hat.

Ditto to those that try to tell us the 2015 and current Wall St market is not overvalued

[winner69]

Good post above hoop

This is good advice from Jarred -

1 - Always have a fair percentage of cash in your portfolio to make the most of opportunities (at market/cycle bottoms)

2 - Trends take a lot longer to play out than you think.

http://www.mauldineconomics.com/the-10th-man

Always worth reading is Jarred

[Baa_Baa]

Major Stock Bear Awakening
Adam Hamilton January 15, 2016

http://www.zealllc.com/2016/mstbeara.htm

[BIRMANBOY]

Anyone done anything similar to NZX? Or what relationship can be drawn between overseas markets and local. My feeling (admittedly unsubstantiated), is that there has been a growing and substantial gap between "us" and "them". In fact. I could lay down a hypothesis that overseas investors fleeing US markets may look to other more stable markets like NZX to park funds at favourable exchange rates as well.

While reading some historic newsletters today (My mission...to date my list finding out who are the best people and firms to believe in what they write about) I came across Equity Compass Strategies who issued this newsletter in March 2009.....Remember...Hindsight now tells us this period marked the bottom (death) of the last cyclical Bear Market cycle...
The newsletter tells not to sell now (March 2009) ...a very courageous move considering the market irrationality and its extreme doom and gloom behaviour among those remaining wounded and blooded investor survivors...The reasoning and subsequent summary was secular cycles and the cyclic cycles within them..Theres a very good easy to read summary of how Secular cycles operate and the average age one can expect these cycles to last (Bull.. are you reading this) It lists the 10 most severe DJIA declines since 1900..and Stock Market as % of GDP Table....

A quote from the Newsletter PDF file..."However, secular bear markets produce the most powerful cyclical bull markets..........".

(On the ST Black Monday thread I said Buffett listens and probably acts to cycles....e.g Buffett Indicator (His favourite supposedly) to gauge how over or undervalued the Wall St Stocks are...
Notice... the strong correlation of the Wall St stock market cyclic reversals of 2000 2007 and 2015!!!!!!
Also notice... how overvalued the equity market is in 2015 (2nd highest in 65 years chart)...We all now in hindsight that the 2000 market was extremely overvalued.

If the media publishes tomorrow that Buffett is fully invested at this moment in time and it turns out to be true then I'll eat my hat.

Ditto to those that try to tell us the 2015 and current Wall St market is not overvalued

[Hoop]

Anyone done anything similar to NZX? Or what relationship can be drawn between overseas markets and local. My feeling (admittedly unsubstantiated), is that there has been a growing and substantial gap between "us" and "them". In fact. I could lay down a hypothesis that overseas investors fleeing US markets may look to other more stable markets like NZX to park funds at favourable exchange rates as well.

The NZX50 chart with the NZ GNP overlay copied from the "Are NZ Stocks too Expensive?" thread....shows a similar relationship to the Buffet indicator chart.. Both charts measuring Equities with their SD boundaries .... also comparing Equities growth with the Country's Economic growth..

How much bleed over of investors from Wall St to NZX I have no idea