Are you missing out on the bull market?
Bespoke Investment Group wrote on Thursday:
The current bull market is different than any other on record because there has actually been a large contraction in p/e ratios. At the start of this bull in October 2002, the p/e of the S&P; stood at 29.06. It is currently at 17.84. There have only been two other bulls that saw contractions, but they were very small. This data bodes well for those arguing that this bull still has legs.
Then, on Friday, “Today’s run to new highs in the S&P; 500 officially erases all the declines we saw during the summer credit crisis.”
As expected here in The Kelly Letter, the credit implosion story has lost its fear factor. The market rose strongly last week against a backdrop of bad news from the credit and housing sectors, because the economy remains strong.
Warnings from financial companies came as a relief since they clarified the extent of losses from sub-prime. Citigroup, for instance, warned of a 60% drop in 3Q earnings because of a one-time write-down. One time. The problem won’t last forever and had little effect on anybody except those in high finance. Few waste tears on their paper losses.
Those fearing a recession missed out on a big part of this fall’s rally. There are still some calling for a crash of epic proportions this month. The market appears to not share those concerns yet.
It’s now been one month since we changed from our medium-term cautious stance to a medium-term bullish stance. I am proud of that courageous call, and subscribers should be proud to have followed it.
In the past month since we went bullish, amid forecasts of recession, a global credit crisis, and a housing meltdown:
> The Dow gained 7.3% and the Nasdaq gained 9.8%
> Our Dow One strategy gained 29.3%
> Our Double The Dow strategy gained 14.4%
> Our Maximum Midcap strategy gained 14.0%
Less than two weeks ago, a reader named Brent attacked my bullish call. He pointed out warnings from Marc Faber and Enzio von Pfeil, the latter having just gone on “red alert” for the month of October. Brent told me to “wake up.”
I concluded my response:
While I welcome all viewpoints around here, the most important remains my own and I continue to believe that we’re not entering a recession, that the housing “meltdown” just means a great time to be buying a housing stock, and that any weakness in October is another chance for those slow on the uptake to get their money into the market.
You can see the article here.
The fact is we’ve been right, and that’s making people who sat on the sidelines angry. They’re looking for ways we got lucky, why the odds were against the market rising and how it was foolhardy for us to have bought in.
Don’t pay attention. The best times to buy almost always look the way they did a month ago: scary, lots of emotion, a lengthening list of reasons the market couldn’t possibly go up, threat of recession, inevitable systemic collapse, and so on.
Such times are often shrill with the warnings of eminent commentators, people with impeccable credentials who are nonetheless proven wrong.
We haven’t seen the end of volatility. I’m sure any whisper to the downside will blare trumpets of “I told you so” from the cowering crowd, but you’ll know the truth.
When it was time to buy, they didn’t. My subscribers did, and they’re richer for it. That makes them investors.
If you’d like to join the ranks of the knowing and have a penny to spare, try the letter’s one-month trial. If you like it and continue, it’ll only run you five bucks a month — and you can stop that at any time, too. Odds are you won’t, though. A full 85% of those who try the letter keep receiving it forever.
It’s easy to see why. We’re good.
Our permanent portfolios destroy almost every other service and are the very picture of relaxed investing. Just look at their performance since inception in 2002, and consider that as of last Friday they’re up 27%, 23%, and 23% so far this year. They’re so good that they’re the subject of an upcoming book.
But the permanent portfolios are just part of the letter. Each weekly missive includes market commentary that cuts through the media fog that misleads people, as it did in the past month. It also includes our portfolio of individual positions that gooses performance beyond the core portfolios. We do well there, too.
If you join us today, you’ll get the straight skinny on the housing market. We’ve been watching it for months now for a good entry point on beaten down homebuilder shares. Last week, Citigroup sent the whole sector flying nearly 20% higher as it called the bottom. We don’t buy it for a second, partly because Citigroup issued the same call for a bottom last December — and then watched the stocks lose another 60%. Be careful who you listen to.
Start by listening to me. I’ll send you this weekend’s note tonight, which includes the scoop on housing, a peek at Yahoo’s pending recovery, and a look at whether gold is a good hedge against inflation.
As I mentioned, it’s only a penny, you can cancel at any time, and you just might finally join the ranks of those who beat the market, without all the silly fretting that goes on elsewhere.
See you soon! Click here now to join.
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