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I think with the current valuations, it will be possible to generate an average of 18-19% returns for the next 5 years, but I think it will be an exponential curve, meaning very little in years 1 and 2, a market return in year 3, a 1990s style return in year 4, and a record-breaking year in year 5.
Just curious about your thoughts. We've been in this bear market for 10 years even though there was significant run-up from 1998-2000 and 2003-2007.
While I agree market capitulation can be used as a buy signal there is nothing yet that tells us we have seen exactly that. We are about to see our first quarter of negative GDP and there will be several to follow, this recession is just getting started!
With that said my opinion is simply the market is heading down over time, regardless of the recent rally...
__________________ Blain Reinkensmeyer
Elite staff member, stocktradingtogo.com
Community manager, covestor.com.
I'm with aqua in that I think we might see a relief rally. But bear markets have many relief rallies within them. The banks have worked at deleveraging themselves, and they are beginning to work their way back towards some fiscal conservative workings. But that's going to take time. Now mind you - I also believe that usually, the market is the first one into a recession, and the first one out of it.
Going with Blain, in that - all of that being said? I try to keep in mind something Brian Shannon mentions. Bottoms are a process. They are not an event. It takes time for a bottom to develop, and trying to call a bottom after one day's rally? Just doesn't make sense.
I mean, I might nibble here with picking up something safe and DRIP it's dividend returns. Like adding to my JNJ positions. But at this point? It's still wait and see. Especially after the GDP numbers ...
The GDP numbers are not that terrible (for stocks I mean - for poeple it's bad of course - but stocks has already got their beating). Just what everybody expected for 6 ~ 9 months. Finaly it's there!
And it's there because the financial crisis and the domino reaction induced bankrupcies are worse than anticipated.
I don't think the stock market will move north significantly if at all before 3 ~ 6 months. After that it will depends. I think by 2010, the crisis will be history.
But we never know. The bottom might be a process (not an event), there is always a point on a chart which is lowest and from which everything rebounds sharply in amatter of days. This is a hole in the bottom. Are we in this hole, no one knows of course.
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