Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Great News! This Bull Market Is About to Collapse

Stock-Markets / Stock Markets 2016 Feb 01, 2016 - 05:08 AM GMT

By: Investment_U

Stock-Markets

Matthew Carr writes:By now, I’m sure you’ve heard that the East Coast was hammered by a Godzilla-sized snowstorm last weekend.

Ignoring the milk, bread and toilet paper, my wife and I loaded up on liquor, cookie dough and junk food in preparation of being snowed in for a few days. We made a list of all the movies we missed in theaters that are now On Demand. We took video of our dog spazzing out in the backyard.

All things considered, it was a pretty great weekend.


Then we were forced back to reality... and the 30 inches of snow that had been dumped on our neighborhood.

Which leads me to a bold prediction...

I can say now that I’m extremely bullish on the future of snowblower sales in the region. Because the cost of snowplow service has spiked to criminal levels.

My best friend who lives down the street was quoted $1,200 to have his driveway plowed on Sunday.

$1,200!

In all fairness, he does have a long driveway. But last winter, the cost was $150.

Demand drove prices into the realm of absurdity. Just think: You can buy two quality snowblowers for $1,200 - his and hers.

Most of the folks I know realize this and are content to wait. Let the temperatures rise above freezing, and the surge pricing will fade.

This certainly applies to what’s happening in stocks.

Fact is, all markets experience these crazy upswings - bullish movements that eventually price themselves out of existence.

Remember real estate? Home prices were supposed to gain 6% per year until infinity. It was madness.

Remember crude? Oil was supposed to stay above $100 indefinitely. I warned it was oversupplied in 2013 and would collapse. You could see the writing on the wall. And already this year, crude is down 20%!

And let’s not forget gold. Remember how it was supposed to go to $5,000 per ounce?

Now we’re looking at a brand-new bull market - one that has completely lost its grip on reality...

A bull market in negativity.

I wrote last week about how bullish sentiment has fallen to levels below the peak of the financial crisis. In fact, it’s fallen to the lowest levels in a decade.

Really? Is it that bad out there?

Now, admittedly, small caps on the Russell 2000 are in a bear market. They’re down more than 20% from their peak last June - and down 10.5% just in January.

Biotechs are in a bear market, down more than 27% from their peak last July. They’re down 14% since the start of 2016.

But just like their bull brethren, bear markets are self-perpetuating.

We can use Benjamin Graham’s theories to test the idea of betting against pessimism. Graham is considered the father of “value investing.” In the simplest terms, this is the idea of investing when negativity surrounding a stock or sector is high.

Graham’s famous proof of this was to create two portfolios: One with the lowest price-to-earnings (P/E) ratios on the Dow... the other with the highest P/E ratios on the Dow.

Expensive stocks - those with a high P/E - are en vogue, with lots of investor exuberance about their futures.

Cheap stocks - with a low P/E - are hated, full of negativity.

The results of Graham’s test were emphatic...

Over a 32-year period, a $10,000 investment in stocks with low P/E ratios grew to $66,900. An increase of 569%.

Meanwhile, $10,000 invested in stocks with high P/E ratios grew to just $25,300 - a 153% gain.

In other words, the most hated stocks on the Dow outperformed the most popular stocks nearly four times over.

At the moment, bearish sentiment toward stocks is continually increasing. The AAII Investor Sentiment Survey shows nearly half of all investors harbor a negative outlook toward the markets over the next six months.

Most investors make the mistake of selling when negativity is at a premium - instead of buying. Then they plow into stocks when optimism is at nauseating heights.

Right now, we’re in a bull market of negativity. Like all bulls, this one will eventually meet its end. But in the meantime, you should view investors’ rampant pessimism as a signal to buy.

Good investing,

Matthew

Source: http://www.investmentu.com/article/detail/49283/investor-sentiment-bull-market-about-to-collapse

http://www.investmentu.com

Copyright © 1999 - 2016 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.


© 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