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)
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-- David M Gordon / The Deipnosophist