Investing strategies and secular bear markets

[Heavy Metal]

Whats happening now

In December 1999 the DOW was 11497 - currently 12486 -- up 8.6% over the last 7 years is some effort eh .... see what I mean about a secular bear market .... about half way one through I guess.

Since and inc 2000 the DOW has had 3 up years and 4 down years.... this year prob a down so the score is 3/5 ... see what I mean about a secular bear market

The current downturn is only adjusting for the recent 'bull market' correction that occurs during secular bear markets - and this downturn is only 10% off a high so probably has a lot more to go

Both the NZ and Aust markets have performed much better over the last few years and are currently valued at PEs seen at the highs of market valuations ..... nowhere where they end up at an end of a secular bear market.


Result of all - as of today nearly cashed up .... and not embarassed at all

In claiming we're still in a bear market you use a very convenient time frame to make that assumption. Using the same analogy gold has been in a secular bear market for the past 27 years - price still lower than in 1980, more down years than up.

Three of the four down years occurred in 2000-02. That was a bear market. Since then the market has three out of four up years. That is a bull market.

The Aust market is nowhere near a valuation high. Current PE of 13 is lower than the 15 year average.

Being able to move to 100% cash might be easy and realistic and comforting for a small time investor, but if you have large sums of money invested across the asset classes (incl property), it is far more difficult to achieve this.

[Halebop]

The Aust market is nowhere near a valuation high. Current PE of 13 is lower than the 15 year average.

You've just committed the very same crime you accused W69 of.

The Australian market is now made up of a quite different earnings mix thanks to a multi-commodity boom. This boom hasn't been in play for most of the last 15 years (Quite literally the opposite). On average the earnings of mining companies just don't get valued as much as the earnings of service companies because they are capital intensive and much more cyclical and much more volatile (i.e. in an uncertain world they represent a sector with one of the least amounts of certainty). So a quantitative measure of PE doesn't encompass the qualitative factors of earnings mix, sustainability and volatility. Have a look at service companies... insurers, retailers and the like and PE ratios are hardly enticing.

...and conversely even if we ignore the mining factor the overall PE might just be measuring the market's view of future earnings, future inflation and future discount rates.

[winner69]

In claiming we're still in a bear market you use a very convenient time frame to make that assumption. Using the same analogy gold has been in a secular bear market for the past 27 years - price still lower than in 1980, more down years than up.

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I would contend the secular bear market in gold you mention ended in mid 1999 ...... during that period gold went from $850 to $250

Since then I would say in the early stages of a secular bull market ..... rising from that $250 to you never know ..... one of the characteristics of a secular bull market being that the bull market periods have greater gains than the bear market periods (like the years you mentioned)

Anyway as with aspects of technical analysis (as this is what this) everything is open to interpretation. Like some might also say that that the secular bull market in US stocks that most say ended in 2000 is actually still in existence becuase new highs are being reached

What you have pointed out about gold confirms what Mick pointed out - stocks and commodities always seem to go their opposite ways


By the way your other point that closing positions can be difficult is true .... and this does to a certain extent eliminate many stocks as a possible trade if I keep the number of stocks held down to a preferred number of 5 with a max of 10 ..... even the biggest exposure I have had in this respect is that I managed to move a sizable parcel of TRS a few weeks ago without too much difficulty (prob sold a few of shares to Fisher funds over the years)

[Heavy Metal]

Yep interpretation is everything. One can choose the time period to validate their arguments.

You say Dow is in a 7 year secular bear market, I say Dow is in a 4 year secular bull market after a 3 year bear market, some say gold in 27 year bear market, Dow in 25 year bull market etc etc.

Interesting re TRS - great stock but very illiquid. No problem moving $10K worth but what if you bought $1M at IPO and/or accumulated $1M over the time since the IPO? Ditto housing, you have to wait months to try and sell if things go sour, or have a fire sale. And this correction has only lasted 4 weeks!!!

Also interesting to compare this correction vs a similar credit crunch episode in 1998 (LTCM/Russian debt crisis). Market retreated 17% but recovered its losses within 5 months. The 1998 correction started around the same time of year too.

[living2]

Can someone else interpret this???Does this indicate writer believes $US will continue down,gold goes up and DOW goes up????http://biz.yahoo.com/seekingalpha/07...5_id.html?.v=1

[Mick100]

Can someone else interpret this???Does this indicate writer believes $US will continue down,gold goes up and DOW goes up????http://biz.yahoo.com/seekingalpha/07...5_id.html?.v=1

I think he's saying that everything is going to depreciate against gold -USD, DOW, commodities. He say's even if prices of DOW etc keep increasing they will still depreciate against gold

Although I agree with some of what he says, I'v become rather weary of the gold bug writers in general.
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