Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Six Reasons Why the Stocks Bull Market Could Keep Charging

Stock-Markets / Stock Markets 2011 Feb 27, 2011 - 07:44 AM GMT

By: Investment_U

Stock-Markets

Best Financial Markets Analysis ArticleLouis Basenese writes: After the stock market sold off this past Tuesday, it’s time to address a question that I keep getting asked:

Is the market overdue for a correction?


You don’t need to be Sherlock Holmes to figure out what the mainstream financial press wants us to believe.

  • Negativity Alert #1: Headlines abound, touting the fact that the S&P 500 index has already doubled from the 2009 lows. Oh, and that’s the quickest double on record since 1936, they add.
  • Negativity Alert #2: In addition, Bloomberg reports that over the last 120 days, we’ve enjoyed the fewest 1% pullbacks (14) ever for a market that’s risen by more than 30%.

Based on these stats, the pundits would like us to believe that this bull market is unlike any we’ve ever seen – and is ready for a retreat. But that’s a lie, so don’t buy into it…

Why the Pundits Are Wrong About This Bull Market

If you take time to dig deeper, history indicates that stocks could run higher still. Consider, for example:

  • Short-Term Performance: Market historian John Harris identified nine earlier stock market rallies just like this one. Each one lasted over 120 days, with gains between 25% and 35%, and without a 5% dip. The longest lasted 146 days. In almost every case, though, when the streaks finally ended, the bull market didn’t. On average, in fact, stocks went on to rise another 32%.
  • Intermediate-Term Performance: Based on the past six months, we’ve seen five other times in history when the market has enjoyed a similarly strong rally. In all five instances, it continued to rally for another year. And by as much 37%, according to Bespoke Investment Group.
  • Long-Term Performance: Although the current bull market surpassed the 700-day mark earlier this month, 11 other bull markets have lasted longer. Much longer. In fact, nine of the 11 prior bull markets lasted for more than 1,300 days. Do the math and it’s possible that we’re only a tad more than halfway through this bull market.
  • Valuation: Despite the impressive run-up, stocks aren’t grossly overvalued. The S&P 500 trades at a price-to-earnings ratio of 15.7. The long-term average is 15.4 since 1930. Stocks aren’t expensive on a price-to-book ratio (P/B), either. They currently trade at a P/B of 2.2 times, compared to a long-term average of 2.44.
  • Presidential Cycles: The S&P 500 has never declined during year three of the presidential cycle. Instead, it rallies by an average of 17%. So with extra emphasis, we’re thankfully in year three of President Obama’s term.
  • “Smart” Money vs. “Dumb” Money: Institutional investors (i.e. the “smart” guys) are all about this bull market. The monthly Bank of America/Merrill Lynch Global Fund Manager survey registered its most bullish reading in its 10-year history last week. However, everyday investors (i.e. the “dumb” guys) still haven’t bought into the bullishness. Only 37% of their assets are currently invested in stocks, compared to a historical average above 50%. If you want a clear sign of a top, wait until the “dumb” money pushes all their chips into stocks.

Swap Your Crystal Ball for Trailing Stops if You Want Maximum Profits

So have the markets run too far too fast? Based on history – and not the lopsided media reports – the answer is clearly a resounding, “No.” Stocks could rally much longer.

Notice I said “could.” I’m not saying they definitely “will.” As the mantra goes, “Past performance is no guarantee of future results.”

So consider this a public service announcement.

I don’t want you to get spooked out of stocks prematurely, based on the misinformation being spread by the mainstream press. Doing so means you could be nursing regret – instead of enjoying fatter profits – if this bull market continues like its predecessors.

Or more simply put, forget about the latest crystal ball predictions and start using trailing stops. Then – and only then – can you protect your downside and enjoy the ride as long as it lasts.

Good investing,

Louis Basenese

Editor’s Note: In a world of liars, the truth starts here. Whether it’s Wall Street, television pundits, politicians, bankers, or brokers, our brains have been conditioned to go along with the con game.

But the truth is out there – and here’s your chance to get it. It comes from a brand-new letter called Wall Street Daily, set to launch very soon. With Louis Basenese at the helm, it will dissect the daily economic and investment news, challenge conventional “wisdom” and reveal the truth behind the headlines and the real motivations of the biggest players.

And crucially, it will expose the profit trends that others can’t see. Simply put, getting you clued in is our top priority. So if you’re serious about investing, you owe it to yourself to get genuine, 100% unbiased investment research and market commentary – i.e. the truth. Just sign up here.

Source: http://www.investmentu.com/2011/February/six-reasons-this-bull-market-could-keep-charging.html

by Louis Basenese , Advisory Panelist

http://www.investmentu.com

Copyright © 1999 - 2008 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules