Jonas Elmerraji

Those Calling for the Death of Value Investing Are Wrong

Eric - the idea that long term investing can't be judged on a one year basis is the part of the point I'm trying to make. Also, the S&P index is used as an example of the market as a whole, not as an example of a good value investment.

The point is that value investing has been misapplied over the last decade; now some are saying that value investing is deal as a result. That's just not true.

Has the Market Actually Bottomed?

"And AFTER that it could go either way.

You're entitled to your opinion but if you would deal with reality and and do some real research you would see that the future of the stock market over the next two decades is all but set in stone."

Fred, this is a technical piece; it takes a look at short-term trends (notice that we're looking at a 6 month chart) to take a look at where the market will be in weeks and months, not years.

If you think that it's out of the question to see a 20% swing in the next few months after the market jumped 23% in the last three weeks, that's your opinion, but it's one that I have some trouble resolving to.

The fact of the matter is that we're looking at a different kind of market; that's both scary and exciting. My subscribers - some of whom have been in the market since the 1960s - are saying the same thing. Still, it's an exciting market because there are myriad opportunities to make smart investments right now. Our track record is proof of that.

The fact is that the market has been irrationally exuberant for a long time doesn't mean that everything's ready to change now. To quote John Maynard Keynes, "...the market's ability to stay irrational often outlasts our ability to stay liquid."

Investor sentiment and economic fundamentals are changing on a daily basis, and right now, and that's going to dictate where the market goes much more directly than the P/E ratio of the S&P 500.

Maybe that'd be a good topic for a future article. Stay tuned.

Has the Market Actually Bottomed?

Exactly... but that is a big IF. If you want to take the technical trade, wait to see what happens after SPY hits that thick red resistance line. Until then, it could go either way (see the "bounces").

Has the Market Actually Bottomed?

schlumpf - You're right... it's the fact that everyone is long now that should make SA investors nervous. As great as March was, the chart in the article shows that we're still in an unquestionable downtrend.

If stocks break out above the trendline, we'll likely see the short-term uptrend continue in a sustained way, but from a technical perspective I think that the 200-day moving average (currently around 1000 for the S&P) is going to pose a serious ceiling for stock prices.