Poll: Have We Found a Market Bottom Yet?

Written by FrugalTrader on Apr 7, 2009 filed under Stock Investing

With the markets rallying, it may seem like we have found a bottom in the markets. However, there is a lot of opinion out there. Some believe that this is a bear market rally which will result in more down ward pressure. Others believe (fewer) that this is a turn around as the markets tend to turn around faster than the economy.

I personally would like to believe that this is a real bull rally, however, with no real good news on the horizon,I think that there is more down side to come. No one really knows, so only time will tell.

With the recent article on irrational market pessimism, I’m curious as to your opinion? Have we found a market bottom yet? Please vote in the poll below (feed readers, click here to vote).

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36 Comments, Comment or Ping

1. Matt

I think there is definitely more downside to come. If you look back at the tech bubble burst, this was the time for a market correction. Our current correction is fixing the bubble of the last 8 years or so that was created from lower interest rates and easy money. I think we have one more correction to go to adjust from 1982-2000 markets. After this watch our for interest rates and inflation to take off.

Also we have a commercial mortgage bust in the works and no end in sight to job losses (although this is a lagging indicator).

I think long term we can expect results much like Japan for the last 25 years – up and down riding the waves. I think the days of buy and hold are over for the long term.

Matt

Apr 7th, 2009 @ 9:23 am
2. Chuck

I feel there’s more downside coming as well. A number of industries have yet to trough, though I’m most concerned about the auto industry.

A lot of this is part of the low interest bubble, but I feel the other component is the “Wal Mart” economy bubble. We’ve outsourced so much production to the third world (namely China and India) all in the name of keeping consumer prices low, that we’re now bearing the economic brunt of the trade deficits.

Apr 7th, 2009 @ 10:52 am
3. Canadian Capitalist

I have no idea and I live by the Jason Zweig motto: “I don’t know and I don’t care”. Actually, I do care. It would be nice if stocks go lower from here… we have a nice tax refund due this year and I would love to put that to work in the market.

Apr 7th, 2009 @ 11:27 am
4. 209

I heard an economist say on talk radio a few weeks ago that “if your house is worth the same as it is today – but in 10 years you have done well.” I think that the real estate market has yet to see the full impact of a significant price correction. Housing prices have been out of control for a long time…the industry is a mess. I predict a 15-20% decline country wide….worse in some markets (Van, Cal, TO).

Apr 7th, 2009 @ 12:08 pm
5. 209

Just to add on my gloomy real estate prediction…I don’t see this correction as a bad thing. It’ll mean first time home owners are not leveraged as much as we are (provided the spend within their means). It just sucks that those of us early into our mortgages risk owing more than our home is really worth. And to be honest…this is just my guess…I have no clue what is really going to happen. For all I know the market may rebound and the price of my home may go through the roof…hopefully not due to hyperinflation.

Apr 7th, 2009 @ 12:47 pm
6. Ray

I agree with CC on this one, I hope it wont pick up till about September because our wedding spending will be done by than and I’ll know how much I can put back into the markets :) We have earning season over the next couple of weeks so let’s see how much earnings support the latest rally.

Apr 7th, 2009 @ 1:20 pm
7. Charles in Vancouver

I don’t know what the market will do, but I think we are already seeing a rush back into the market. A lot of market-timer types seem to be announcing that they’ve bought in.

I believe a lot of latent investors are sitting on the sidelines watching their moving averages and other such indicators. In about a month or two, the 200-day MA of all indices will have “forgotten” the highs the market fell from, and many more people will take that as a “go-ahead” signal. And once the big crowds are saying it’s time to buy in again, it’s usually too late, isn’t it? ;)

Apr 7th, 2009 @ 2:39 pm
8. Geoff

The people who couldn’t see this coming are now calling an end. Why believe them now? They have no credibility.

Find out who predicted this mess and see what they have to say about the market having bottomed.

Apr 7th, 2009 @ 3:11 pm
9. Dividend Growth Invetor

I don’t know what the market is going to do next. I keep putting money at solid dividend growth stocks and keep reinvesting my dividends.

Apr 7th, 2009 @ 4:00 pm
10. Al

The only positive idicators we’ve seen since the big market drops are based on optimism, some people believing the worst is behind us. What we haven’t seen is any objective positive indicators.

Items of concern:
1) Record breaking job losses
2) Continuing private mortgage defaults
3) Commercial RE loans
4) High levels of personal debt
5) Government intervention and growing deficits
6) Corporate bankruptcies due to inability to refinance
7) Mark to myth accounting for US banks
8) Further undiscovered Madoff-Ponzi schemes

I don’t believe that I’ll recognize the “all-clear” signal, but until a few more problems get worked out, I’ll hapily sit on the sidelines.

Apr 7th, 2009 @ 4:01 pm
11. GK

Geoff
I completely agree with you. The question is “Who predicted this mess?”

Apr 7th, 2009 @ 6:40 pm
12. mojo30

I was watching BNN today with 4 bears, Sprott and 3 others. One guy (name?) was predicting DOW at 1000 and gold at $4000. That is as bearish as I have heard in the last year. As the financials start coming out for Q1 the market will tank again. Nothing but an emotional roller coaster. At every Q announcement we will see some type of move..for now it’s down.

Apr 7th, 2009 @ 8:23 pm
13. Hollie

More of a downside to come, wanted to let you know that you made my list of Top 10 Canadian Blogs that Help You Save Money.

Apr 7th, 2009 @ 9:32 pm
14. Scott

I say the bottom has yet to come. Why? I am so far from being any kind of “expert” it’s not even funny (although I’m quite sure any one of us could have run a multi-million dollar mutual fund in the ’90’s just as well as any “professional” banker…but I digress…) but my theory is this: all the fraudulent value has yet to be worked out of the market.

By fraudulent I mean dictionary definition: 1. obtained, done by, or involving deception, esp. criminal deception [Madoff et al]; 2. unjustifiably claiming or being credited with particular accomplishments or qualities [NINJA mortgages anyone?].

The market is still still in process of working out 20-25 years of unsubstantiated valuations in a wide variety of areas — equities, commodities, real estate, etc. The reason we have NOT reached bottom (which would be nice at some point!) is because of all the governmental (emphasis on the mental) meddling. They are still trying to hold the house of cards together. It’s them vs. the market; guess who will win.

As for consultation of those who predicted the fall to tell us when and where the bottom lies, I don’t think that will work. It was quite easy to see things were out of control and were going to end badly. The reason the predictors can’t inform us of the bottom is that all the corruption has yet to be revealed, so the market can’t truly value anything. No one really knows just how much things are really worth. Current market forces are STILL greed and fear.

As a side note and thought on several articles I’ve read, do any posters of a younger generation feel…ripped off, shall we say, by a certain Baby Boomer (Boom, Bubble, & Bust!) generation who may or may not have had the greatest influence on what is currently happening economic-wise? Just wondering.

Apr 7th, 2009 @ 9:37 pm
15. Canadian Finance

I’m hoping we at least get back to the lows from a month ago. Over the next 4 weeks there will be quite a bit of Qtr financials coming out, enough bad news might scare some of the prices back down.

Apr 8th, 2009 @ 12:39 am
16. Victor

To those asking “Who predicted this? Who was right?” I will give you one place to start: Peter Schiff.

http://www.youtube.com/watch?v=2I0QN-FYkpw

I’d be curious to hear what others think of his opinions.

Apr 8th, 2009 @ 5:58 am
17. Scott

Ah, Schiff…he’s having a hard go of it lately. As I stated, there were a ton of commentators who called all of this, simply by paying attention to the truth instead of being swept up in the reality. There was one guy (forget his name) who, back in 2000, called gold the “trade of the decade”, was he right? He was also involved in that ‘IOUSA’ movie that came out a while ago. It was easy to see it coming. Unfortunately, when times are booming, few of us want to listen to the nay sayers and get out!

Apr 8th, 2009 @ 11:08 am
18. Les

I think most people have irrational market pessimism. I actually only started getting into the market via the Smith Maneouver in November (about a week too early) and have averaged down a bit and am around break even excluding dividends. I think we may have already seen the bottom but we will continue to move side ways for a while and I am actually hoping for some more lows to buy up some more. Meanwhile the TFSA is a great vehicle to make short term gains.

Apr 8th, 2009 @ 2:34 pm
19. GK

Yes, Peter Schiff is definitely a place to start.
It is one thing to see that things were out of control, it is another to have the guts to say that. Any other brave souls who manage to predict the storm, when the water was still calm?

Apr 8th, 2009 @ 7:27 pm
20. Matt

Peter Schiff is a good place to start for sure. But for a differing view google “mish Peter Schiff”. Which gentleman is correct, I do not know which is why I am preparing for both inflation and deflation.

Apr 9th, 2009 @ 8:03 pm
21. Jay Profeit

I defiantly think we’ve bottomed out. It wont be all roses from here but the worst is over IMO.

Apr 10th, 2009 @ 12:34 pm
22. InvestAssetWealth

Just when you expect this bear market rally to lose steam, it keeps chugging along upwards and forwards. Today we’re at basically 3 month highs on the TSX. Goldman Sachs reported first quarter earnings of 1.81 Billion, blowing away analysts expectations. I’ve been a bear on financials for about 2.5 weeks now, but this rally just keeps defying the odds.

InvestAssetWealth

Apr 13th, 2009 @ 8:02 pm
23. Scott

Hmmm, think G-Sachs would have the almost $2 billion “earnings” if it had not been bailed out by the US government? The odds of defiance are because of government manipulation and public ignorance (mostly by choice). As I’ve said many a time in many a post, it’s not based on truth. But people don’t care as long as they see their stock rise by 70% in one month — it’s still all about ME, and all is well with the world.

I wouldn’t worry about the bear market continuance. It will most surely happen, especially if the public, gov’t, and corps do everything they can to keep re-living the last 25 years.

Let it crash and rebuild instead of trying to pull a Frankenstein.

Apr 14th, 2009 @ 1:05 am
24. Scott

Have a look at the “stats” (or should I post this one is the ‘Technical Analysis’ article!) and tell me if you think this market is experiencing the birth of a new bull, or the bounce of the dead one:

http://bigpicture.typepad.com/comments/2005/12/100_year_bull_b.html

(sorry, not sure how to format links — just copy/paste!)

The average bear/stagnation period after a bull market (since the Great Depression) lasts 19 years — we have just begun the 9th year. Any bets on how many years are left?

Apr 14th, 2009 @ 1:28 am
25. GK

Goldman thinks that paying back funds in regards to the bailed out will loosen Uncle Sam’s grip. If Goldman is so concerned about the conditions attached to taxpayers funds, its management should never have allowed its balance sheet balloon in first place.

Apr 14th, 2009 @ 4:31 am
26. Ed Rempel

Hi Les & Jay,

It looks like we are the only 3 optimists. In general, the public opinion is normally a strong reverse indicator, so does all this pessimism support that we are in irrational pessimism?

Ed

Apr 15th, 2009 @ 1:37 am
27. GK

The real economy is still in severe recession and fiscal stimulus would be limited in effectiveness until toxic assets had been thoroughly cleansed from the banking system. How you sell back to the market all the toxic assets?

Apr 15th, 2009 @ 8:31 am
28. Stephen

I have no idea whatsoever … but my strategy continues to be buy low and sell high. I say buck the trend … “catch the falling knife” and “shoot the running horse”.

Apr 15th, 2009 @ 11:29 am
29. Ed Rempel

Hi All,

The most reliable principle in investing is: “The masses are always wrong!” Normally, the bulls vs. bears ranges between 75:25 to 25:75. Whenever, there is a very strong strong opinion one way or the other, it is considered a very strong reverse indicator.

This poll shows 90% are bearish, which is a very bullish sign.

Ed

Apr 19th, 2009 @ 6:10 pm
30. GK

Interesting recovery…..To Wall Street booking new profits by laundering risk out of bad loans with new issues of securitized paper?

Apr 20th, 2009 @ 5:43 am
31. cannon_fodder

I think we are not going to break the low of March 9, but I do believe we are going lower again. I could see a reduction of 10% off from where we are now but the markets will resume an upward trend in the last half of the year.

Apr 20th, 2009 @ 6:45 am
32. Victor

To those that are saying we are already on an upward trend that is likely to continue, I’m curious: Why? What concrete reasons can you offer as to why it makes sense that the markets are recovering now?

I certainly don’t see recovery on the employment front which is where it affects most people, or in store prices for basics or in number of houses sold.

Apr 20th, 2009 @ 6:52 am
33. Scott

As well, there are a few other economic tsunamis yet to be unleashed, with commercial real estate being the next in line. Should be fun times ahead!

Apr 20th, 2009 @ 11:16 am
34. DAvid

First sign of spring?

Finally, my RRSP mutual fund portfolio is showing some life — I’ve recovered about 25% of the losses I realized at the bottom.

DAvid

May 6th, 2009 @ 12:38 am
35. Sampson

Doesn’t it make you worried?

In the back of my head, I understand why we deserved to drop 40-50%. Credit was and IS out of control.

I cannot, for my life, understand how we can recover to the point we are at. Its not rational and earnings (although beating ‘expectations’) are still down 20-30%.

Irrational, right?

May 6th, 2009 @ 1:13 am
36. Pacific

The only thing that makes sense with the market is that it has been going up lately.
I know I also expected it to go down more.

But I also know I can be wrong.

I am willing to be VERY VERY flexible!

May 7th, 2009 @ 3:14 am