A Global Bear Market or a Global Buying Opportunity?
Graphic and link to a WSJ article discussing signs of a global bear market, as $7 trillion in total shareholder value has been lost across major stock indices in the U.S, China, Japan, Russia and the U.K. Here is an additional link to data looking at stock market valuations from 1999 to present.
Looking at the data the big question is: how much of this fear and how much of it is a market readjustment based on valid economic woes, credit inflated profits, etc? Better yet, a bull market always has a degree of optimism priced in and a bear market always has a degree of fear. The trick is to separate unjustified optimism from valid assessments of a company’s future, and fear from valid economic concerns. I think that in this market it’s hard to make those assessments by looking at various markets on aggregate; instead you have to look at beaten down sectors and find those firms that are being charged guilty by association.
I’ve noticed that companies whose share price is being beaten down due to poor results will often show a slight pop after a bad earnings report, as people hunting for bargains snap up the shares in the hopes that the worse is over. Meanwhile, a peer that reported minimal issues and whose stock is “guilty by association” will show little movement, as the media/investors aren’t paying much attention to it.
Those are the stocks to buy in a market like this one, call this post a subtle hint.
Sources: graphic courtesy of the Wall St. Journal.
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