Did We Hit the Market Bottom?
Are we there yet? That is the bottom? Have we lost?
The inevitable question about the market is buzzing again, on the waves of the treatment chamber in bars, where the newly unemployed brokers are contemplating their future.
Speculation is interesting in the way a race or a pennant hit streak is interesting. But if you are an investor who is concerned that you may “lose” a big change, we need to relax.
For many years, I’ve never heard of someone who has a fortune, and retained by the capture of a market bottom. On the contrary, many have lost a chance to try – not – time to market.
Professional investors, the most intelligent, trying to see the screenshot at the bottom of a market the way you see professional poker players drawing within a right: Madness.
August 2007, it appears that low for some time after the Federal Reserve intervened to help banks and pump more liquidity into the system, global markets, according to Factset, increased 18% in two months. And a year ago last weekend, when the implosion of Bear Stearns, which cleared a lot of pessimism. Global markets have increased by 13%. Very intelligent people through the bottom of the market in July. Many thought that struck in November. If you really want to get philosophical, one could argue the current bear market actually began in 2000 – in this case, in October 2002, could also be called a false bottom.
During the last six months have been the investors to consider two powerful, but the facts in dispute. On the one hand, many are incredibly cheap. For long-term investors during the period of May, in time, you can buy his life. Moreover, the economy went from bad to much worse. And, of course, kept below the pressure.
It is very difficult to keep the emotions of the market. The environment is obviously a little brighter than it was two weeks ago. Maybe this rally indeed signs that the economy begins to fall regularly. (Wall Street is generally considered to lead the economy in six to nine months, but this is more a rule of a very reliable.) Or maybe it’s just another case of what I I called hypnosis effective market: “The market up 10%, things will be fine!”
But before anyone gets too carried away by the last wave, a few caveats. Remember that the news behind this event: the reassuring comments of bankers and government officials. Have we not heard that one before?
Officials of the administration, in particular, have a great interest in talking about the economy now that the leadership has adopted the bill. Also note that there are a lot of short covering going on. In early March speculators had placed huge bets on the continuation of the declining stock market. Whenever the market goes, many of them have to rush to buy shares to protect themselves. That drives the market even higher. You can continue for some time without a new bull market.
These are good times to invest long-term venture capital. As I have said repeatedly there are many stocks which are really cheap. Historically, this has always been the case, is usually proved to be a good time to make long-term investment. But as always, there is no guarantee that things are not cheap, even before they are made.
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I guess it’s not the bottom.