Investing strategies and secular bear markets

[Footsie]

Hoop the statistics might not show it yet, but this is a "world recession".
how much worse does it have to be, to not be a world recession.
Sure perhaps Peru might not be, but i'm sure you get my drift.

Roubini, Marc Faber and Nicolas Taleb, forget Peter Schiff (he is a negative doomsday man).
THese guys cut the crap and know what they are talking about.

Most are calling for a U shaped slow recovery beginning in 2010. Based on that when would the next bull begin... who knows.

Question i have,
Does the market bottom at the inflection point where the bad news stops getting worse and there is less bad news?
Or does the market bottom only once there is good news?

Both of the above are likely to be well before a statisical recovery in employment and GDP stats.

[Hoop]

......Question i have,
Does the market bottom at the inflection point where the bad news stops getting worse and there is less bad news?
Or does the market bottom only once there is good news?

Both of the above are likely to be well before a statisical recovery in employment and GDP stats.

Yeah I agree that the statistics inform us of the better times much after the recovery has already begun.

Researchers agree that Equity Markets recover much earlier, usually during the worst last half of a recession.
Taking all the recessions and the equity bear markets into consideration throughout history, researcher have found that Equity markets recovery commences on average 58% through a recession...so the rule of thumb is, expect a recovery to begin halfway through a recession.

I have mentioned this in my #177 and #185 posts as an bottoming indicator. The tricky part of course is defining where a recession halfway point is when an Equity market bottom has not yet been confirmed.

Dow noticed that at the mature end of a bear market cycle ...the market becomes immune to the continuing bad news.... I think we are at this point or nearly there.

Footsie quote...."...Most are calling for a U shaped slow recovery beginning in 2010. Based on that when would the next bull begin... who knows...."

Interesting comment that most seem to be more negative now and very positive in 2010.
I'm a little bit positive now and negative later in that I am expecting a slight upwards curvy L-shaped recovery or a "reversed J - shaped" with one or two retesting of the bottom. Remember many markets have entered into a secular bear cycle. The USA has been in one now for 8 years so an U-shaped recovery is the absolute best scenario you can ever have during a secular bear market cycle (supercycle). You'll never get a J-shaped recovery in a secular bear market cycle (supercycle).

[Footsie]

hoop

I have been running similar sets of indicators to you (based on Russell Napier;s book) and not one has triggered yet.

I believe that whilst this bear remains alive there is a chance of the dow going to 5,000
at 5,000 you have a Q ratio of 0.30x

[Hoop]

hoop

I have been running similar sets of indicators to you (based on Russell Napier;s book) and not one has triggered yet.

I believe that whilst this bear remains alive there is a chance of the dow going to 5,000
at 5,000 you have a Q ratio of 0.30x

Hmmmm... interesting post...

Foostie can't comment about your indicators because I haven't seen any yet.

I posted mine earlier for posters to see and for them to add more to the list, or if enough posters agreed to delete some which didn't quiet fit the requirements.
Out of the 3000 members only you Foostie have been active in giving me constructive criticism (which I do appreciate). It takes many different viewpoints and many collective brains to be able to construct any sort of system of value...so any type of feedback is important. It seems most posters are happy just to sit back and see if I land on my feet or on my backside ...

Either way I'm mobile, (I do listen to other peoples opinions) I have again cashed up some in the rally and taken my profits , and some losses and await this new downturn to bottom for the usual buy back ins. (Still using my Bear market Investment Strategies). The only sad thing for me is I'm now getting half the amount of interest than before in my holding account.

I can't comment much about the Q Ratio either... I'm not sure that I totally understand it...so I'm probably missing the point here with my comment below, (Footsie you may help me here)...... but as I see it, valuing the worth of the going concern of a company in times of uncertainty and negativity to obtain the Q ratio seems a very hard assessment to do with accuracy...harder still using the DOW index (30 companies) and near if not impossible for S&P500 index (500 companies)

[Hoop]

Footsie. I take your point and know of no sector that is "creaming it".............

Check out Delegat's half year annoucement

[Footsie]

I wrote a massive reply then got "timed out" and lost the lot.

http://advisor.morningstar.com/artic...asp?docId=3903
refer to this article.
the best time to buy equities was when the p/e was less tan 10x but we can't all wait decades.

You just have to use your judgement.

Re the best time to buy
I dont want to make predictions

I have a view, but it's flexible as nothing is certain.
Hope for the best, prepare for the worst - should be the motto of bear markets

PS re my indicators - they match Russell Napier's top half dozen.

[Hoop]

* Commodities Count. The end of commodity price declines also marked all 4 major equity lows, with copper playing a prominent role as it preceded or coincided with every equity rebound. Russell Napier

Copper update

[impacman]

I was looking at the LME Copper charts today as well and although I have no real understanding of TA the charts did seem to at worst indicate stabilisation of prices and at best an upward trend.

In addition some of the shares I have been watching and expecting to retrace don't seem to be doing so - or at least not much over the last month or so. (BOW, AOE, STO, CSL, etc). Others like PNA are trading big volumes and holding their position. Certainly intra sector factors are distorting things to some extent e.g. CSG plays, but I am not seeing the big retracement I would have expected given poor reporting results for year end on the ASX and worsening global environment. Could this indicate a bottom?

To be honest I have no idea and other than observation my musings above have as much validity as throwing darts Just thought I would throw my thoughts into the mix.

[Footsie]

GRR it happened to me again

timed out and missed my whole post

here is the gist

My target to the downside for the Sp500 is 500

There were four massive stock bubbles in the 20th Century: 1901, 1929, 1966, and 2000. During each of these bubble peaks, the S&P 500 neared or exceeded 25X on professor Robert Shiller's cyclically adjusted P/E ratio. After the first three of these peaks, the S&P 500 PE did not bottom until it hit 5X-8X. We're still in the middle of the last one.

Based on Professor Shiller's latest numbers, we're at about a 12X P/E. (Prof. Shiller's last update was at 805 on the S&P 500, which produced a 14X P/E. Plugging in today's 700 on the same earnings number, we get about a 12X P/E). The 12X PE compares favorably to the long-term arithmetic average of 16X, but it's still way above the historical troughs of 5X-8X.

Using Professor Shiller's latest earnings data, here's where the numbers would fall out if the market just kept dropping and 10-year average earnings didn't grow from today's level:

P/E S&P 500 Level
10X 575
8X 460 (highest previous trough low)
7X 400 (average previous trough low)
6X 350
5X 300 (lowest previous trough low)

[tobo]

I find this analysis very interesting.
Based on this, the question is :
will this particular trough go real low, like the all-time low (because this crunch is just so "global" compared to past ones, because of the internet etc),
or will it not be not so bad because of all the frantic (and "informed?") machinations of goverments.

One thought is to have a look at interest rates at each of those cycles, to see if there is a relationship to the PEs.

Not sure if i know where to look. US Bond rates?
(ie can't consider some sort of average global interest rate because this a nonsense what with differing soverign risks). We are comparing with US not global stock market anyway?