Paul Price Tribute: My friend Paul Price is calling for a Bullish 2009.
Don’t Call it Early
Searching Google (GOOG) I found some comparable market calls:
Welcome to the Bear August 12, 2007
False Bottom 1 March 16, 2008
False Bottom 2 July 30, 2008
Why I think we are in a Bull Market
Reason 1. Based on Vanguard’s definition of a Bear Market, where a 20% decline in major indices indicates bear market territory, it makes sense to me to have a 20% similar appreciation indicate the death of Bear 2008 and the birth of Bull 2009.
So, from the bottoms of November 20th 2008, how far have we come?
Looks to me like we’re breaking the 20% barrier. Doug Short’s been looking at this against the previous Bear Markets.
click to enlarge
Reason 2. Lots of investors are looking for the return of their money and not the return on their money. There’s been a bubble in US treasuries that is screaming negative expected inflation over the next 10 years. My best guess is that since the Fed has pretty much doubled the supply of dollars… inflation will happen. The cause of the bubble can of course be explained by game theory, as can most of the manic depressiveness of market cycles.
Reason 3. The market rallied friday and Cramer didn’t say sell into the gains, even though it rallied on insignificant volume. There’s a lot of money sitting on the sidelines. Game theory indicates that sidelines money will come into play ball when they start to think that they’re going to miss the boat.
Sidenote. There’s been a lot of talk about this thing called the January Effect. Studies show that when an effect is made public, it ceases to exist. The reason we’re seeing this effect this time is not because of the old story of year-end tax purposes. We are seeing an inflation of horror story hedge fund sell-offs, that is all. I don’t like it that we might be in a Bull Market. I was hoping to see the S&P 500 and DOW fall a lot further than they have. If they start falling, I’ll start playing negative, but until then the outlook is positive.