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MARKET COMMENT
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Unless you have already capitulated, you're probably wondering when this bear market will finish. Of course, nobody knows just low the stock market will go. And as such, only monkeys pick bottoms. However, investors can still look out for anecdotal evidence that indicates the worst may be over. Here are three tell-tale signs of a new bull market. 1. Proven gurus are buying Proven stock pickers always invest when things are gloomy. For instance, Sir John Templeton once said: "The time of maximum pessimism is the best time to buy". And Warren Buffett wrote: "We simply attempt... to be greedy only when others are fearful." Keeping an eye on these and other renowned 'contrarian' investors could prove rewarding. For instance, Buffett quit investing in 1969 (just prior to the Nifty Fifty bull run), only to reappear four years later when the bear had enveloped world markets. He bought Washington Post (NYSE: WPO) in 1973, which has since turned into a 100-bagger. Although he was unable to quit the market this time around, Buffett's now sitting on $40b of cash and bonds. When he puts it into shares, take note. 2. The mainstream press capitulate Sad to say, but the investing public generally suffers from Recent Event Syndrome (the placing of undue emphasis on what's just happened). Unfortunately, the eager-to-please mainstream press also adopts this conventional stock market attitude. For example, the dreary markets have seen share pundits John Urbanek and Paul Kavanagh long since depart from the Sunday Times. Instead, the paper (with many of its rivals) now covers buy-to-let, cash savings and investing in art, wine and collectables. But the Sunday broadsheets have yet to give up entirely on the stock market. "Shares to beat the bear", "why you need to trade more frequently" and "how to short" are all equity topics at the moment. This suggests that there is still some lingering interest in shares amongst private investors. However, when the papers start writing the stock market's obituary, telling you of a "new era" of declining equity prices and advise under no circumstances should you venture into the stock market, then you'll know the last retail investor has been flushed out and market is set to turn. (Note: Penny share pusher Tom Winnifrith was spotted on GMTV the other week talking about shorting. A bullish sign.) 3. The fall of the last share 'safe haven' Remember the end of the bull market, when any tinpot firm with an Internet connection saw its shares go through the roof? In retrospect, when investors started scrambling for crap businesses at any price, you knew there were no more shares left to buy and the top wasn't far off. Turning that on its head, when sellers start to flog their quality holdings at any price, the market bottom isn't far away. Of course, a 'quality holding' is in the eye of the beholder. But companies involved in such steady industries like food retail, tobacco or alcohol are probably as good a quality as it gets these days. So when the bear finally gets too much and investors are seen frantically selling Tesco (LSE: TSCO) and Gallaher (LSE: GLH), even though both may be yielding 7% at the time, it's time to pile in.