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.
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.
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?