Posted By Prieur du Plessis
When I first started working in investments in 1984, a standard item on my reading list was Martin Pring’s [1] InterMarket Review, which served an extremely useful function with its prescient analysis. Almost 25 years later, I am still paying close attention to Martin’s views.
Martin has written 14 best-selling books, including his seminal [2] Technical Analysis Explained. He was the winner of the 2007 Traders’ Hall of Fame Award and also the recipient of the 2004 Market Technicians Association Annual Award.
My view is that one should not expect a quick convalescence period for stock markets, short-term rallies aside. Although I am not in the Armageddon camp, I have republished two fairly gloomy interviews in recent weeks, namely those with Louise Yamada ([3] Bearing Up) and James Montier and Albert Edwards ([4] Market Fundamentals are Appalling).
For the sake of balance, and because his arguments certainly deserve more than a cursory glance, I would also like to share with you Martin Pring’s latest report, in which he argues the bullish case for equities. Over to Martin.
“Yes, the financial news gets worse every day. Yes, the average stock is down more than 25% over the past 13 months. Yes, the housing market is still reeling and foreclosure activity is rising. Yes, the price of gas is skyrocketing. And yes, this too will pass, and the economy and stock market will begin a new expansion and sustainable bull market, as all business cycles have.
“Over our several decades of investment management experience, we have witnessed many business cycle recessions and stock market declines. They all have one thing in common. In the midst of the most negative financial news, the stock market begins to move higher in anticipation of the next economic recovery.
“We believe the market has more than discounted all the bad news out there and is putting the finishing touches to the bottoming process for stocks. Yes, a significant advance is set to begin that will take stocks much higher in the year ahead.
“Considering all the negative financial headlines, is it any wonder investor psychology has reached a gloomy extreme? Legendary value investor and philanthropist Sir John Templeton made a career (and fortune) taking advantage of bargains that showed up during recessionary periods and bear markets. His foremost investment discipline was geared to wait patiently for stock prices to ‘reach the point of maximum pessimism’ and then he invested. It is somewhat ironic that this pioneer of value investing, who began his career in the 1930’s, would pass away this month at the age of 95, just when the markets have hit an emotional low point. We know Sir John would be buying stocks during today’s financial turmoil. Investor psychology has reached that pessimistic extreme and conversely sets up the year ahead to be a very profitable one.”
Please click [5] here for Martin’s full report in which he expands on four reasons to support his optimism.
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