Submitted by Anonymous on
This topic centers around the debate as to whether we're currently experiencing a genuine bull market rally or just observing a short-lived bear market.
Provided are two news articles about the opinions of well known hedge fund managers, George Soros and Crispin Odey.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aNR3f9WE2L9s&refer=us
http://www.reuters.com/article/ousivMolt/idUSTRE53E22220090415
Although the articles may be roughly two months old, the managers' beliefs remain concrete. To summarize, Soros believes that we are going through a bear market rally, while Odey thinks otherwise, that this is actually a new bull market.
The current financial situation is pretty dismal, but there seems to be a small but positive recovery.
However, how will we truly know if this is a bull market, provided that in the late 1920s and early 1930s, the Dow rallied enormously, only to have plummeted in 1932? With the same situation occurring during the late 1960s and early 1970s? Or the numerous bear market rallies that have controlled Japan's Nikkei, bringing the stock index down from roughly 39,000 points in 1989 to just 9,500 today?
From the data, bear market rallies can last months or years. So, as the title of the topic states, "Are We Riding the Bulls or Running from the Bears?"
Any thoughts?
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William replied on Permalink
I forgot to add to my
I forgot to add to my previous post that market commentator, Aaron Task (as much as I disagree with him on some points), initially called the March rally a bear market rally, but then changed his views to a bull one. This is just another view for this topic.
William
tom replied on Permalink
Riding with Bulls or Running from Bears
Thanks for the comments William.
First, I have no ability (nor interest) whatsoever in making calls on short-term marketing movements. I think it's a complete waste of time.
The business and cash flow generating intrinsics of the actual businesses are what matters. Buying at prices that are at a discount to that intrinsic value is what makes sense if we are talking about common stocks, bonds, etc.
Difficult enough to get a good handle on what a particular business looks like in this regard. More difficult IMO to make this type of assessment for a sector or industry.
All of the above said, I would be hard-pressed to make a case that the general business environment is healthy. It just does not seem to be a robust business environment now or in the near-term.
There are always attractive assets I guess--both public market and private. Just a matter of finding them.
Buffett laid the foundation for some phenomenal returns in a similar environment in the early 70s.
Anyway, I guess I would focus more on whether there are attractive businesses selling at attractive prices. The dash for trash over the past couple months has sort of ignored some of the highest quality, U.S.-based businesses that are now selling at attractive prices (i.e. highest quality large cap). See Brett Arends recent Wall Street Journal article.
Anyway, if I am absolutely forced to offer an opinion on the market I would say 10-15 year secular bear market that began in 2001. I would be longer term bullish on developing markets, energy, commodities, TIPS, healthcare contingent on reform outcomes, and highest quality US large caps.
For broad market commentary and asset allocation opinions I really like GMO and Jeremy Grantham.
Anonymous replied on Permalink
tell me more about GMO and
tell me more about GMO and Jeremy Grantham. what do you like about them? can you share some resources?
Tom C replied on Permalink
Tell me more about GMO
GMO is a large investment management firm that has been around for many years.
Jeremy Grantham is a co-founder of GMO and is involved in their asset allocation group.
He publishes / shares his thoughts frequently--much of this can be found here: http://www.gmo.com/America/MyHome/default