Markets on course for global five-year high

[oracle]

More bad news for the dems...

<font>Markets on course for global five-year high (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&amp;c=StoryFT&amp;cid=1054966503775&amp;p=1012571727 088)</font>
<font size=1>By Vincent Boland in New York
Published: June 27 2003 20:27 | Last Updated: June 27 2003 23:59 </font>

Stock markets around the world are on course for their best quarter for nearly five years amid growing optimism about prospects for the global economy after the end of the war in Iraq.

With one trading day remaining in the second quarter, the S&amp;P 500 index has risen 15.1 per cent since April 1. This is the strongest three-month climb since it rose 21 per cent in the final quarter of 1998, just as the 1990s bull market was about to climb to its peak.

The Dow Jones Industrial Average is up 12.5 per cent over the period. Stocks fell just under 1 per cent in the US on Friday but the underlying mood is one of cautious optimism.

The bond markets have also had a strong three months, although the US Federal Reserve's latest rate cut appears to have halted the bull market in US Treasury bonds. The Lehman Brothers index of long-term US Treasury bonds has climbed nearly 5 per cent since April 1.

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[Etaoin]

Is anyone willing to back Mr. Boland's optimism with a small wager?

I would be happy to pay a lost bet, but damned if I'd invest in his fantasy.

From a letter to which I subscribe. These people deal in facts, not fantasies.

* Investments: Business spending on equipment tumbled 6.3% in
the first quarter -- a stunning $14.7 billion on an annualized
basis. Businesses see that demand for their products is weak,
so no matter how low rates go, they are taking a cautious stance.

* Hiring: The economy lost 324,000 jobs in the past six months,
and the unemployment rate stands at an eight-year high of 6.1%.

* Consumer spending: The latest personal spending numbers came
in lower than expected, rising just 0.1% in May. This isn't the
post-war boom Wall Street had been hoping for.

* Mortgage lending: This is the one area where the Fed rate cuts
have had a big impact, but that's not what they wanted. The goal
was to encourage companies to invest, not to create a housing
bubble.

[Webruary]

Let me guess, the newsletter you are subscribing to is either :

MARTIN WEISS ( THE SAFE MONEY REPORT ) -- This guy is the eternal pessimist and is never optimistic about the US Markets

or

The Wall Street Underground ( by Nick Guarino ) -- This guy claims to have predicted the stock market crash ( what he did not mention was he predicted it in 1994 and had you listened to him, you would have missed the boom of the 1990's ). A stopped clock is correct at least twice a day.

[Etaoin]

I thought Guarino was out of business after he promised free subscriptions if his prediction of a crash was wrong.

[Etaoin]

Does that mean you are considering a small wager???

[Estragon]

The article's optimism is probably premature. We do seem to be coming out of the bear market, but this is by no means a straight-up process. The DJIA could fall again, possibly as low as 8200, before the bull market resumes in earnest.

Below is a chart of the DJIA over the last two years. http://chart.yahoo.com/c/2y/_/_dji.gif

Notice the low point last October, and the points {March '02 and March '03} on either side, which are nearly as low. This formation is known as a "Head-and-Shoulders Bottom," as it appears to make an upside-down formation that recalls a man's features. Such a pattern is strongly indicative of a market bottom. Since the economy shows signs of resurgence and the current bear market has run far longer than is normal, most analysts agree that this is a signal the market is turning around.

All is not necessarily rosy in the short term, however. See the low point after 9/11 over to the left? That point represents a key level of resistance, at about 8200, which could well be "tested" before the bull rampages. By this I mean the DJIA could fall to that level before resuming its gains. {If it should fail to "bounce" up from that point, it would be an extremely negative sign}.

So it is not a good time to throw all the cash that we, as prudent investors, have withdrawn from the equity markets in the last three years. It is a much better plan to "average in" by putting a small portion of money from cash or other investments into the market periodically, with the aim of gradually reentering a equity position up to 70% of holdings. A reasonable time frame to realize this transfer would be anywhere from one to two years.

Investors unfamiliar with evaluating equities should hedge their bets by opening several mutual fund accounts, balancing investment among a wide range of companies in various categories. A portfolio could include funds geared to blue chips, growth, growth and income, and tech/telecom issues. Precise choices and the balance between them depend upon individual circumstances like income and debt, net worth, years to retirement, and tolerance for risk.

[Webruary]

====================================
I thought Guarino was out of business after he promised free subscriptions if his prediction of a crash was wrong.
====================================

But his prediction of a crash was right. The problem was he had been predicting it since as early as 1994 when I first received his free tape and complimentary newsletter. If I followed his advise, I would have missed the late 1990's boom. Of course the market crashed in 2000 and he has not stopped predicting more crashes.

In fact his REASONS for saying that there would be a crash in 2000 was all wrong. He said it would be because of the Y2K computer bug ( never happened, and over-hyped ).

Is he out of business ? I don't think so. I just received another complimentary newsletter last month which confirms his reputation as the eternal pessimist.

Hey, I could predict anything and given enough time, I might be right sometime.

These things are constant in his letters :

1) He is always a market pessimist.
2) He is always pessimistic about the US dollar.
3) He is a gold bug.
4) He wants you to subscribe to his OPTIONS newsletter teaching you how to trade options and make money.

I have never subscribed to his newsletter ( other than the occasional twice a year free offer I read from him for the past 10 years ). Therefore, I don't know how good he is as a trader. As a long term predictor, I don't give him much credence.

For me, I still prefer the good old fashined ASSET DIVERSIFICATION strategy because no one knows the future.