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INDEPENDENT Financial Advisor / Professional Investor- with over 30 years of navigating the Stock market's "fear and greed" cycles that challenge the average investor. Investment strategies that combine Theory, Practice and Experience to produce Portfolios focused on achieving positive... More
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  • The Markets -Where We Are & My First Look At 2014 Part I 4 comments
    Nov 30, 2013 10:52 AM | about stocks: SPY, QQQ

    I was reminded today of a slogan that has stayed with me for the better part of my investment years.. The market was created to disappoint as many investors as it can, for as long as it can ..& most assuredly it does a pretty good job of doing just that ..

    In the next few days/weeks we will hear many "predictions on where the markets will go in 2014.. For me, I like to take the "small step" approach as I try to plan ahead. I am not an economist , but I do rely on a circle of friends that are. Of course , I follow my own advice , stick with the "crowd" that has gotten the story "right" . Fortunately for me these folks have had the story "right" and I made some conclusions about the facts being presented to me.. The "macro" backdrop that I have put forth from those conclusions is the "secular bull theme" that I have stated for a while.. I have not changed that stance here as we get ready to close out '13..

    There are many reasons , I have taken that approach , some can be seen here :

    And there is another fact that I have mentioned along the way ; the price action of Gold.. Over the history of the S & P , there have been only two episodes in which stocks strongly outperformed gold over a sustained period: the first, from around 1950 to around 1965, and the second, from late 1982 through 2000. The latter time frame saw the S& P surge from a close of 140 in 1982 to a close of S & P 1500 in 2000. You can do the math, its an astonishing gain. That same time period saw Gold go from 400/oz. in 1982 to 270/oz. in 2000.. A secular bull for equities and no performance for Gold .

    The upturn and outperformance of stocks and the underperformance of Gold is thus a preliminary indicator that the economic fundamentals may be shifting in favor of equities, and that, in turn, would suggest that the long-term outlook for the economy is improving. Probably not immediately, but slowly over time , in the next few months /years we could see some continued genuine improvement in the economic fundamentals. Markets are always forward looking, and this indicator (the ratio of stocks to gold) could be one of the most forward-looking of all. Combine this "early" indicator with the other reasons I have mentioned adds the evidence needed for me to maintain my secular bull story.

    Ok, we are in a secular bull , but we have had a great run , up some 170% or so from the March '09 lows..

    Now as we go into '14 the cries will begin, as many soothsayers are already arguing that at 56 months (since the March 2009 low) this bull move is long of tooth. (Bull markets average 50 months in duration ) If you measure from those March 2009 lows, there is some truth to their cries. However, when studying the last 16-year range-bound stock market (1966 - 1982) one observes the nominal price low came in December 1974, but the valuation-low (the cheapest P/E multiple, price to book value, etc.) did not arrive until August 1982. (S&P PE 7.7) & THAT date is the one used to measure the beginning of that secular bull .

    Now lets fast forward -- Similarly, the nominal price low for the recent 12-year range-bound market (2000 - 2012) was March 6, 2009. BUT given the valuation metrics used , we recorded the valuation low in October, 2011 (S&P PE 13.5) . Now measuring from THAT date shows the current bull market is only 25 months old . And that represents a quandary for the "Bear" argument ...

    It should be noted that the same folks that have predicted that this bull run will END in '13 have subscribed to the theory that the March '09 low was in fact the start of this latest bull run.. They held to that notion ALL year because of that fact. Calling tops, shorting the market , etc, etc.. They have been carted out feet first. Now, those that are left are moving the date for the END of this BULL move to early '14 citing the same "timing" element for their argument..

    The more folks that "jump' onto this notion will only bolster the facts I presented to make the case that the equity market has more to run ..

    Now, as I present and make that argument, I will be called a magician , accused of Hocus-Pocus, Magic tricks, slight of hand & distorting the truth. The truth is -- those are the facts..

    And as I take that first look & small step into '14 , I am subscribing to the theory that this bull run can take us well into 2015. I believe there are enough of other factors which I will get into in Part II that suggest we will in fact see the S & P higher in '14 than it is today ...

    These are my first thoughts on what I expect in 2014. I'll have more detail in the follow up to this commentary. Highlighting what may be in store for '14 and what in fact could go wrong .. As always I will keep my market approach dynamic in nature and be able to change if the landscape calls for such..

    Stay tuned for part II...

    Themes: Market Update Stocks: SPY, QQQ
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Comments (4)
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  • User 7415181
    , contributor
    Comments (870) | Send Message
    Well, don't keep us hanging! BTW, happy belated Turkey Day!
    30 Nov 2013, 08:58 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6782) | Send Message
    Author’s reply » User


    No I wont , :) , Hope u had a good holiday as well
    1 Dec 2013, 08:44 AM Reply Like
  • rali
    , contributor
    Comments (366) | Send Message
    In other words, the market can go either way...but you're not's okay I'm not either. Next time let me write this type of article. ok?
    22 Feb 2014, 04:58 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6782) | Send Message
    Author’s reply » Rali
    what part of this comment didn't u understand ??


    "I am subscribing to the theory that this bull run can take us well into 2015. I believe there are enough of other factors which I will get into in Part II that suggest we will in fact see the S & P higher in '14 than it is today .."


    I would love to read what u have to say so please do write for us..
    22 Feb 2014, 08:48 AM Reply Like
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