And that folks is the real question. Are we in a new secular
bull market, or just a tactical rally within a trading range stock market that
we have envisioned?
During times of high volatility and great economic
uncertainty, it pays to remember that stocks represent partial stakes in
operating businesses. Therefore, as long as the businesses you own are
producing satisfactory results, it is best to ignore the market’s temporary
appraisal of your holdings. It is worth noting that during secular
bull-markets, stocks outperform bonds and cash.
A secular bull market has to be backed by a productive
driving force... a new technology or industry that employs people, expands real
production, and increases standards of living. We have seen none of that since
2000. Both the housing bubble and the current stock rally have been
liquidity-driven, not productivity-driven. Until the next big technology takes
root, we are destined to see repeated cycle of large rallies followed by
failure to lower lows, and the efforts of the Fed & ECB to counteract the nature
forces of recession will do nothing but accentuate those swings.
Since (unlike some people and/or groups) I tend to buy low
and sell high - this hurts me how???? Every completed cycle sees my portfolios
larger. Even if the system crashes - dividends tend to stay ahead of inflation.
- Dividends were one of the very few things that were able to stay relatively
ahead. My Portfolios will also do well in this environment. Even a secular Bear
has quite a few up cycles in it - it is not really a problem IF you are
prepared. As I said before "Bear markets simply put good stocks on
sale." I believe this is a quote from "The Contrarian Investment
Strategies" and is fitting at this point.
last few years??? I do not know about how anyone else did .The
dividend paying stocks that I bought on sale were largely responsible for this
performance. By the end of the year - not only was I ahead, but my portfolios
had hit a new high and are still hitting new highs this year with no (or very
little - I would have to check to make sure) cash added from my pocket.
Out of my being curious - what kind of hedges do you use? My
main "hedge" is my trading portfolio.
Thanking You
Atul Sikrai
Sr Vice President
WiTdom investment advisory
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