“Our clients come to us for advice on how to protect their future. We take that level of trust very seriously.”
- Dan Junkin

Is It Real? - First Quarter, 2009

Dan Junkin

Is the current stock market recovery for real? Is the bear market over? As we have all learned - indeed rather painfully - predicting is difficult. If you are going to try to predict the market, the best advice we have heard is predict often!

Prior to this leg up, we had what were two other positive moves. Last Fall, there were two what turned out to be false positive starts. Over the past several weeks, the Dow rose 21%, before falling back a bit.

If the most recent low was the bottom, then the Dow has lost more than half of its value over the past 17 months. Over the last century or so, bear market losses generally have been in the 30% range. And bear markets have lasted only about 12 months. So, this decline is longer and deeper than "normal". This is reassuring - in that we have gone further down for a longer time period - since bear markets are normally followed by positive periods.

Economically, there are glimmers of daylight in the housing and credit markets. The Treasury and the Fed have injected a good bit of stimulus into the economy. Finally, it is clear that a big issue for many investors was the nature of the bank toxic asset plan. That has been released in detail and the markets responded positively. So, here is our prediction: we have seen the low in the stock market - and while it won't go straight up - the trend between now and the end of the year should be positive.

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