“What historically happens after a statistical bear comes out of hibernation?”
I am not sure what you’re getting at by asking that question. Plus, I don’t know what you mean by a “statistical” bear market. If we go by the 70’s, the market could lose half its peak value. All the major averages other than the NDX have penetrated their 50-WEEK (not day) day MAs; massive technical damage was done this week.
If it’s the end of Q2, there should be tape painting going on, and that isn’t buoying the market much, to my eye. Longer term, the market has been in an almost unrelenting bull since mid-2002. It could give back a lot.
Personally, I do not think the issues in the economy are going to turn around like flipping a semi stock. This oil thing is pretty relentless. It’s not clear how earnings in general will be impacted, and Wall St has undoubtedly played the “lower the bar until a cockroach can crawl over it” game. But I am not bullish here, plus there is utterly no fear in the markt judging by the VIX, which is still in the lowish 20’s. Even the other DJ-358 day, there was no massive puking of stocks. Since we haven’t got much capitulation to speak of, I don’t think any kind of meaningful bottom is in, not even close. All my indicators say “don’t be in this” (referring to a longer term, “long-only” type investor)
Thing is, this doesn’t seem like an ordinary “bearish” market to me. We have GM trading at 50 year lows, we have GE trading at less than half of where it was in 2000, the banks are below their MLK-day panic lows...and if you told me all this and asked me where I thot the DJ should be trading I think I would say sub-10K. And I think that’s where we go, my target is circa 1100 on the SPX, about equal to DJ 9500.
Wow. You seem to know a lot about this.
Any suggestions? I’m not too smart about investing so I need some advice on what to do (grin)
Your comments are noteworthy. I’ll only add that P/E ratios are not particularly low or compelling to buy. Earnings are going steadily down, so it is not as if the P/E ratios are continually getting better and better. I don’t think equities are all that cheap right now and I don’t expect them to be until the economy begins to pick up and earnings begin to rise. The economy is hurting and I think it could be a year or more before earnings really begin to pick up, if at all. The cost of everything but labor is rising, and that has to be eating into earnings as well.
I agree with everything you said, but had to add my take on the P/E ratio of the markets.