The Deipnosophist

Where the science of investing becomes an art of living

My Photo
Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

18 February 2009

'Structural' markets

I keep quoting Dorsey Wright at you... which is due to their fine explanations and graphics. Such as the one below...

The graphic below should at least take some of the mysticism out of the markets. The markets are not an enigma and are not always shrouded with uncertainty, but they do historically spend large chunks of time in a structural phase that isn't bullish (or bearish). This is why we began talking about the concept of a "structural fair" market back in 2001, and explore other asset classes. 2008 was tough because very few asset classes worked, so an investor that was diversified may not have lost an arm, but had deep cuts all over their body. We have to continue to look for areas that are providing leadership, and currently that leads us into assets such as . There are some areas of the stock market that continue to hold up relatively well, but equities as an asset class continue to operate within a negative trend for now. If history is a guide, structural markets can last much longer than we have seen since the Dow Industrials began to plateau back in December 1999; on average the market phases for the Dow shown below have lasted about 14 years. (Sound familiar? -- dmg)

[click on graph to enlarge]

Really, you should consider a subscription to obtain the total value of what Dorsey Wright offers, not limited to the snippets I share.
-- David M Gordon / The Deipnosophist

Labels: , , , , ,

who's online