Is the worst over for the stock market?
So far in 2008 and at the beginning of 2009 we have witnessed one of the most severe bear markets of all times as we were near the collapse of the financial system and we saw the beginning of a severe worldwide recession.
Since March 2009 the stock market recovered from its all time lows.
So, is the worst over? Is this the beginning of a substantial market recovery or is it a bear market rally and will we see another severe market correction?
The problem is:
predict the short time gyrations of the stock market is next to impossible.
A lot of experts and economists recently predicted another correction, but the market moves up slowly or holds steady.
An intelligent forecaster once said to Peter Lynch: „If you must forecast, forecast often!“
(cited from „One up on Wall Street“)
Certainly, a partial market sell off caused by window dressing activities of investment funds before the HY 2009 deadline of June 30th is possible.
But otherwise there is still a lot of institutional money waiting on the sidelines to be reinvested in the stock market.
So please follow the best possible advice: Do not ask!
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Invest in companies not in the stock market.
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Invest for the long term.
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Do your due diligence and buy quality companies at reasonable prices.
But anyway, if you are interested in market timing why don’t you start looking at companies with cyclical businesses?
Even the most severe recession will end some day and the stock market is a leading economic indicator:
it generally starts rising about 6 months before the end of a recession!
Be prepared!