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How Long Can the Bull Market Run?
Posted by: Charles Sizemore (IP Logged)
Date: May 10, 2013 06:39PM
The Dow over 15,000…the S&P 500 over 1,634…the Nasdaq at highs not seen since the 1990s Tech Boom… Any way you slice it, we’re in a bull market.
Alas, we’ve been here before, and it didn’t end well. So, is it time to worry?
My answer is “no,” or at least “not yet.” The conditions are simply not in place for a major bear market.
Morgan Stanley chief investment strategist David Darst, whose book The Art of Asset Allocation I keep next to my desk, recently listed his “bear market checklist” of things to look for. And by his estimation—as well as mine—none are showing signs of warning:
And Europe? For the best gauge of what’s happening in Europe, check out Spanish bond yields. Since the beginning of the year, the 10-year yield has slipped from over 5% to just barely over 4%, and the downtrend remains firmly in place. Bond investors are clearly warming to the country that is viewed most at risk of “blowing up” the Eurozone.
The Spanish private sector is still is deep recession, and small and medium sized businesses are being starved of the capital they need by a zombie domestic banking sector. These are problems that are not going away tomorrow. But judging by the reaction of the bond market, they are problems that are known and under control.
My advice? Stay invested. If you’re nervous, rebalance your portfolio and take some small profits. But maintain an aggressive portfolio, and if you’re adventurous add some European exposure. My favorite ways to play Europe today are via the iShares MSCI Spain (EWP) and iShares MSCI France (EWQ) ETFs. I hold both in my Tactical ETF portfolio.
Plan on holding for the remainder of 2013, or until something significantly changes in the checklist above. I would recommend something along the lines of a 15-20% trailing stop.
Stocks Discussed: SPY, EWP, EWQ,
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