The Bull is Back!

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9/16/09

Yes, the bull is back! I believe we are in the early stages of a new bull market. Even with all the bad news still on the table, this bull is showing some sturdy legs.

It has finally moved up after a near free fall from late 2007 to it’s current up position. This to me signals a new bull market, and it’s time to buy.

But just a minute. This market has had a remarkable run-up since its’ early March lows. The S&P 500 is up 50% since that time. Could we be buying at too high a price at this stage? Are we due, even overdue, for a significant correction? Aren’t we approaching the dangerous time of historical market corrections of early autumn?

In time Mr. Market will tell us the answers to those questions.

We have moved cautiously, in stages so far this year. We bought high quality bonds many months ago, and a S&P 500 index stock fund in early March.

Our plan is to continue to be cautious but at the same time more aggressive. We’ll begin selling our more conservative bond holdings and replace them with more aggressive ones. We did just that recently with the purchase of an emerging market bond fund.

We’ll likely continue that process by replacing our high quality bond funds with high yield, both municipal and corporate.  We’ll continue to be patient and as market corrections take place over the next few weeks and months we’ll use those as buying opportunities. We’ll buy domestic and foreign stock positions, both mutual and exchange traded funds.

If this turns out to be just another short lived “bear market rally” we’ll sell based on our protective “stop loss” points. However much we may believe this is the beginning of a new bull we will always remain vigilant and protect our clients’ assets.

Having said all of the above it’s worth pointing out this market faces some daunting obstacles. The usual suspects include an extremely weak economy, rising unemployment, still rising foreclosure numbers and so on.

One of the more worrisome statistics to me is the decreasing volume of stocks being traded on the major exchanges. It could be the summer doldrums, or it could be a lack of confidence in the longevity of this bull. We shall wait and see.

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