An Ear to the Ground
Friday, November 26, 2010 at 11:15AMBear markets make people a lot of money: they just don’t know it at the time. ─Shelby Davis
I got really excited on November 10 after @fledgingtrader pointed me to the following blog post written by Curtis Faith Be Careful – Market in Danger Zone.
Faith predicts a bear market that might retest the 2008 bear market low. Most big market predictions like this one usually turn out to be wrong. However, Curtis has been right before and there is something to say about keeping an ear to the ground and verifying if his prediction is unfolding.
Here is a passage about the timing of bear market from our e-book In Praise of Speculation!:
When stock prices do not rally beyond the prices at which they were before the break occurred, it is a sign that the turning point has been reached and that the bear market has started, although the majority of people do not realize this until a long time afterwards.
I recently wrote the post titled Why Our Investment Blog Is Boring. This post explains why we love bear markets so much.
What do you think? Are we on the verge of a big bear market? If so we have the cash, and are ready for it!
Written by Michael Bigger. Follow me on Twitter and StockTwits.
Reader Comments (2)
I read Curtis' blog also and was not swayed. Just because he has gotten things right before does not mean he will get it right again. He gave no reason in his blog why he thinks the market will turn for the worse----he just said he had a "gut" feeling. Well you know, I've had millions of gut feelings and alot have turned out wrong. I even left him a comment. He just said you have to trust your gut after so many years of experience. I guess that's true but I cant trust someone else's gut.
As for my prediction on the market: I believe we are going higher, MUCH higher. We will be at all-time highs within a few years. Just because we stopped rallying straight up, people start thinking the worst. Market needs a break. It is taking a break. This is very healthy. As long as the $SPX stays above 1050 on the monthly chart, I will continue to be bullish. Bears are overrated haha.
"Most big market predictions like this one usually turn out to be wrong" So I agree with you. But I am willing to listen to the market and see if the market validates his thesis. It does not cost me much and it keeps my thinking open to all kind of scenarios. The last thing I want to do as a trader is the believe strongly in one scenario. I keep a little room in my head to think about the unthinkable.