RSSBull Market Somewhere?
By Roger Nusbaum | November 18, 2008 | 3:07 PM | 0 Comments
Earlier this week Justin and Paul over at Bespoke noted that the Shanghai Composite was now in a bull market because it was 20% above the low. Since then Shanghai came back down a little and I'm not sure if they still think of it as a bull market but the preciseness of that comment is not the point.
China was one of the first markets to roll over. Using simple logic China might be one of the first to come back and to Bespoke's point maybe it has already started. The point though is that when markets do start to recover and they each will at different times there might be very little notice paid to the initial recovery. It is not uncommon for bull phases to start very quietly much the way they end; quietly.
Regardless of whether China or any other market is now starting to recover they are not going out of business. If you were lucky enough to take defensive action early on and you do not think this is the second coming of the great depression you need to start to think about getting back in now that many of these places are down 50-60%. Those sorts of bear market declines do not happen that often (twice in a decade for the US is an anomaly) and they should not be missed entirely.
China is going to be what stirs the drink for a while. That does not mean there will not be excesses and cyclical declines but the declines are more likely cyclical in nature than the potentially secular or structural problem in the US.
I believe this thinking can be applied to many different countries. How many places do you know where either the story on the ground is really happening or places that have a lot of what the world needs? Where do you think those places willbe five or ten years from now?
Anyone who is a long term investor and has cash built up needs to start building toward their target allocation in emerging markets if they have not already done so. Start building does not mean buy them with both hands, this is a time of uncertainty and there is nothing wrong with some dry powder but buying a little down here will not be the dumbest thing you ever do.
| 
|
