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Calling a Stock Market Bottom

Posted by: Ben Steverman on August 12, 2008

When people make predictions about this stock market, I don’t know whether to congratulate them for their boldness or question their sanity.

Still, Jeremy Siegel — the famous Wharton School professor — says stocks reached a “selling climax” on July 15, which he believes will be seen as the bottom for the current market.

Meanwhile, this WSJ article quotes Thomas Lee, an equity strategist at J.P. Morgan Securities making a similar prediction. He “thinks stocks have seen their lows, thanks partly to retreating commodity prices,” Tom Lauricella writes.

Floyd Norris suggests the recently crazy volatility in the stock market might be one sign stocks have hit bottom. He writes:

This kind of wild volatility is often seen near market turning points, although this volatility is not quite the equal of what we saw as the 2002 market low arrived.

“Random” Roger Nusbaum thinks stocks “may drop more,” perhaps not turning higher until the first quarter of 2009. However, he wisely notes:

There will be a bottom at some point, maybe when I think it will come or more likely at some other time and then there will be a new bull cycle of some sort.

Though he’s not ready to buy yet, Roger spends the rest of the post showing he’s made some serious plans for which stocks and sectors to buy when he thinks the time is right.

The bottom might have been in mid-July, or it might be in mid-2010. But Roger’s right: Eventually, it will come.

Evidence suggests there is a lot of money sitting on the sidelines these days. I assume many other investors have planned their shopping lists as carefully as Roger has.

If so — and if the economy and the market give investors sufficiently clear signs of hope — the new buying power in the market could lead to a quick, ferocious rally for certain stocks. But how long will investors have to wait (and how much more will they have to lose?) until then?

Reader Comments


September 4, 2008 12:18 AM

October 2010


September 12, 2008 1:55 PM

Michael Douville also looks toward 2010 in this piece entitled "Beyond 2010, Strong Demographics for Housing" Team

October 13, 2008 7:24 AM

This blog is really nice and informative. We are pleased to know this blog is really helping people and it’s our pleasure to post informative content on this useful blog created by webmaster.

Here’s our market view on American stock market for 10th October, 2008

The stock market has collapsed - since Sept. 19 the DJIA is down 25% and the S&P 500 is down 28% and down 42% from a year ago.

How can this happen so quickly and so dramatically when so many good things have occurred? Oil is down to $82 a barrel; interest rates are very low; the dollar is up; valuation levels are extremely attractive among many blue chip stocks.

What's the real problem? The problem that is killing the stock market is a lack of hope about the future.

Hope springs from optimism that is based on facts and history. Look at the history of America and really all of mankind. Life is full of setbacks and problems - that's just the deal. But this too shall pass, as all scary periods have.

Doomsayers have been around forever and their batting average is zero. Buying stock is based on hope - hope for the future. If one doesn't have hope, they shouldn't be in this business.

So what is the best service we, as professionals, can provide for our clients?

First, discuss the fact that we are dealing with serious problems but it is not at all like 1929. The Federal Reserve and the Treasury Department are doing many things to restore confidence in the financial system. There is global coordination in attacking the problem, which is lack of confidence.

Tell your clients to look at history of our great nation and what has happened since 1776 when we faced very serious problems. The stock market actually rose steadily about six months after Pearl Harbor and until the end of WWII even though the outcome was not at all clear for several years.

No one knows when the stock market will bottom and a new bull will commence. We do know that stocks and mutual funds offer the best values we have seen since Black Monday, Oct. 19, 1987.

Almost all Americans have hope about the future of our nation, but they need help to control their normal fears. Team
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trading for a living

March 12, 2010 4:11 PM

I really like this blog post, it has some great info. Thank you and keep up good work.

trading for a living

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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