Maybe. On the other hand, bear markets tend to have a lot of false bottoms. The only sure way to tell a market bottom is in distant hindsight. Paul Krugman makes the same point about broader economic indicators.
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The market is rallying because of hope and faith in the Obama administration. Hope and faith, however, are not substitutes for actual production. Newly minted currency is also no substitute.
Eventually the market will have to correct to the actual indicators, and that would mean two or three thousand points off the Dow.
No.
Even if it turns out that last month was a bottom, hardly anyone seems to have called it. So you won't be alone in having been silent.
Someone once pointed out that the market in the long run follows the trend of currency in circulation. Hmmm.... that might have been the bottom for a long while.
And a year from now, every analyst from coast to coast will have successfully called the bottom, if a new one isn't seen.
Yeah, you should have called it, because any Joe with a brain should be able to time the market, right? Each generation has its geniuses who have it figured out, the "smartest guys in the room" so to speak. Sorry, but the Stock Market is a long term investment vehicle, always has been, and always will be, because it is only over time that the psychology gets washed out and the state of the economy is represented. Time in the market is all that matters. Sorry, but as smart as you think you are, like the rest of us, you are reduced to nothing more than a run of the mill dollar cost averager.
Jaybird, that's my problem...I normally am a DCA'er piling up little by little, consider the ant.
However, I'm sitting on a pile of cash that's smaller than it should have been because of a forced sale during a down, and I'm not a sell low kinda gal.
And the research says that the best time to invest the money is when you have it. I.e. don't DCA a large pile into smaller pieces.
Time in the market matters if the market goes up, but I don't want to catch a falling knife, either...already have.
So, consult your crystal ball and tell me if the dead cat is resting on the floor. Thanks.
Liz...you asking me for financial advice? Seriously, I mindlessly put money into a mutual fund (a low cost,no load index fund) every 2 weeks, but I've been doing it for about 22 years, with another 10 to go. Thing is, I think you have to park your money someplace, and historically, the market's been the best long term performer. Real Estate? Bonds? Au++? I guess you need a little of each....but my point was that even the smartest folks like Megan (cough, cough) aren't going to know the day and the time...sorry for that religious metaphor at the end
John Stewart called the bottom when he went after Cramer on his show. Classic counter-indicator.
A false bottom makes me think of the derriere version of a breast implant.
Anyways, absent some new avalanche of bad news, I expect we're recovering. It's easy to forget we're sitting at the peak of human civilization, atop mountains of productivity improvements and a knowledge base that just keeps growing.
You did the right thing not calling the bottom.
Sometime in late 2000, as NASDAQ was plummeting from its now-mythic high (5132.52 on 3/10/00) to less than half that value, I happened to be invited to a smallish "Washington dinner", one of the few times that ever happened to me in all my years of living in DC. (The friend who invited me happened to be well-connected both with Congress and with the Bush White House.)
Talk turned to the dot.com collapse and the fall of NASDAQ, and since I was a techno-geek, people asked if I had any insights. When I mentioned that I had gotten completely out of the stock market in February 2000 -- mostly because it was blindingly apparent to me that the whole dot.com boom was going to have a very ugly end (speaking not as an economist but as someone who has raised venture funds and done software startups) -- I instantly had some credibility around the table.
Someone asked me when I thought the NASDAQ would recover. I told them that I had no idea if and when the NASDAQ index would ever break 5000 again and expressed my opinion that it would probably bounce between 2500 and 3500 for some time to come. Most people at the table thought that was a terrifying prediction.
They were right, of course, but in the wrong way. The NASDAQ has never broken 3000 (and has barely broken 2500) in the almost-a-decade since then. I wonder how many of the people at that table held onto their stocks hoping to sell when the NASDAQ index got high enough.
So, no, don't call the bottom. No upside to it, other than slight bragging rights at some future date, and a lot of downside to it. ..bruce..
the very fact that all you smart folks (and i bet y'all are mensa-level IQ's like myself, no joking here) have such a hard time with the crowd/groupthink function of pricing in equity markets should be the stimulus to exit or vastly reduce your exposure to same - i am not against the fundamental that one should be able to sell fractional ownership of a business, but in aggregate, and with all the retail/mainstreet-voting aspect, the fundamental is swamped, nevermind absentee/incompetent boards of directors and the dodgy financial reporting (not saying CFO function is crooked per se, but we all know the organizational gaming that goes on in large cap firms) - therefore, until there is way less mainstreet in equities (and ofcourse after they leave, multiples will be lower (in favour of the buyer, clearly)), i am not putting my savings there - some of you may subscribe to the "lottery ticket" sentiment of investing, hoping that results from investing may someday release you from the requirements of daily toil - if that were the case, there'd be no 60yr-old stockbrokers - so for now, it's bonds and and moneymarkets (not just usd either, but keep it to the G7) - btw, the best hedge against inflation is to be earning income and to have kids (which will hopefully become future earned income)
i forgot to mention it explicitly, but it is implied, that a low enough multiple will entice me to risk savings despite absentee/incompetent boards of directors and gamed CFO outputs - i have very little expectation of THOSE shortcomings being remedied, *ever*
I don't think you should be calling market bottoms or similar at all, frankly. You aren't an oracle, and it plays right into the hands of your most frivolous critics to try to be.
If last month was the bottom, then the stimulus bill was a bad idea. Except for the tax credit part of it, most money will start being spent as the economy is growing, being in effect pro-cyclical and fueling the next boom&bust cycle.
Even accepting the arguments for the stimulus means that the money should have been spent 3 months ago not in 3 months.