|
|
Enron Mail |
Wednesday afternoon, October 10, 2001
New Research Report From Dr. Ed Yardeni: ****************************************** STOCK MARKET CYCLES: BOTTOM FISHING http://www.yardeni.com/public/mktcycle.pdf During bear markets, stock investors and investment strategists are constantly on the lookout for the bottom. This time is no different. Indeed, many of them thought they caught it at the beginning of April this year. They were wrong. Picking the exact bottom can be very rewarding, of course. Since 1960, there have been nine major troughs in the S&P 500, following declines of 15% or more and averaging minus 24%. After these cyclical lows in stock prices, the average 12-month gain was an impressive 28%. In this special issue of the Global Strategist's Handbook, I present numerous charts relating key economic and financial indicators to the cycle in stock prices with the focus on finding the ones that are most useful in picking bottoms. My conclusion is that many of the ones that have worked best in the past are currently suggesting that the panic-selling low of September 21 was probably "the" bottom for this cycle. There are no guarantees: Past performance does not indicate future results, as we say in the investment business. The low might be retested. A lower low might still be in the cards. Moreover, even if it was the bottom, the rebound in stock prices over the next 12 months may be well below the average, in my judgment, because stocks are not as undervalued as they were at previous bottoms. One of the best times to buy stocks is during crises, when panic selling occurs. The crises usually trigger corrective policy responses, which prove the doomsayers wrong. So they present great buying opportunities for bargain hunters. Of course, this is easier said than done. For example, during the first week that the stock market was open for trading after the Attack, the right time to buy was on Friday, not Monday. By the end of the following week, most of the bargains were gone. Exhibits 3-18 in my latest research report show many of the best market timing tools, (including a few that are not as useful as widely believed): price-to-earnings ratios, valuation, the federal funds rate, bond yields, the yield curve, credit-quality yield spreads, earnings, production, commodity prices, employment, and money. Most institutional investors can't raise a great deal of cash while waiting for the next crisis to create buying opportunities. Most tend to be always fully invested, so market timing may not be a very relevant exercise for them. Nevertheless, market timing can help boost performance by identifying sectors and industries that tend to either underperform or outperform during a cyclical recovery in stock prices. Exhibits 19-48 in this report are designed to provide some insights for the selected industries where relative performance data are available for several years. You can find the complete report at: http://www.yardeni.com/public/mktcycle.pdf Dr Ed ******************** Home: www.yardeni.com Global Portfolio Strategy: www.yardeni.com/weain.asp Earnings Week & Month: www.yardeni.com/stocklab.asp#earnings Weekly Audio Forum: www.yardeni.com/waf.asp Global Economic Indicators: www.yardeni.com/ecindin.asp Stock Lab: www.yardeni.com/stocklab.asp Stock Market Indicators: www.yardeni.com/stockindicators.asp Greenspan Center: www.yardeni.com/greenspan.asp People Polls: www.yardeni.com/polls/ Multi-Lingual: www.yardeni.com/#languages Mega Trades: www.yardeni.com/megatrades.asp ********************************************** VIRUS ALERT: No attachments sent with this message. ********************************************** The information and opinions in this report were prepared by Deutsche Bank or one of its affiliates (collectively "Deutsche Bank"). This report is based upon information available to the public. The information herein is believed by Deutsche Bank to be reliable and has been obtained from sources believed to be reliable, but Deutsche Bank makes no representation as to the accuracy of completeness of such information. Deutsche Bank and/or its affiliates worldwide may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Deutsche Bank and/or its affiliates or their respective officers, directors and employees hold or may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Deutsche Bank's judgment and are subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. This report is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction in which such an offer or solicitation would violate applicable laws or regulations. The financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. If a financial instrument is denominated in a currency other than an investor's currency, a change in exchange rates may adversely affect the price or value of, or the income derived from, the financial instrument, and such investor effectively assumes currency risk. In addition, income from an investment may fluctuate and the price or value of financial instruments described in this report, either directly or indirectly, may rise or fall. Furthermore, past performance is not necessarily indicative of future results. Unless governing law permits otherwise, all transactions should be executed through the Deutsche Bank entity in the investor's home jurisdiction. In the U.S. this report is approved and/or distributed by Deutsche Banc Alex. Brown Inc., a member of the NYSE, the NASD and SIPC. In the United Kingdom this report is approved and/or distributed by Deutsche Bank AG, which is regulated by The Securities and Futures Authority (the "SFA"), is not for distribution to private customers (as that term is defined under the rules of the SFA) and no financial instruments referred to herein will be made available to any such private customer. In jurisdictions other than the U.S. and the U.K. this report is distributed by the Deutsche Bank affiliate in the investor's jurisdiction, and interested parties are advised to contact the Deutsche Bank office with which they currently deal. Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Deutsche Bank's prior written consent. Copyright 2001 Deutsche Banc Alex. Brown Inc., all rights reserved.
|