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Mark Hulbert
April 7, 2011, 12:01 a.m. EDT
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By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) "” News flash!
The Great 2007-2009 Bear Market never happened.
It instead was a correction within an ongoing bull market.
No, this is not a cruel April Fools' joke. It's what Richard Russell told his clients earlier this week.
Russell, of course, is the editor of the Dow Theory Letters advisory service. Russell has been publishing it since 1958, which makes him the grandaddy of the investment newsletter industry.
/quotes/comstock/10w!i:dji/delayed DJIA 12,374, -52.34, -0.42%
He's seen a lot of bull and bear markets, and his market timing advice has had long streaks of brilliance. Though his track record over the last decade has been below-par, according to the Hulbert Financial Digest, his timing of the market's primary trend during the 1980s and 1990s was at the top of the risk-adjusted performance rankings.
This is what he wrote to clients Wednesday evening: "It's time to clear the record and to make my current thoughts clear... We've been in a primary bull market and we're still in one. The costly and brutal decline from the 2007 high to the 2009 low was, in fact, an almost unprecedented correction in an ongoing bull market... I mistakenly took the vicious decline of 2007 to 2009 as a turn in the tide and a bear market."
Other than responding with incredulity, you might wonder if Russell's re-categorization is anything more than an academic splitting of hairs. After all, a loss is a loss, regardless of how the loss is characterized.
$( function() { embedPlayerByVideoId('{911BC844-CB35-48D9-97D9-189F21C1CFCE}', 'video_911BC844-CB35-48D9-97D9-189F21C1CFCE', '162', '287'); }); News Hub: Stocks End Higher on Tech, FinancialsStocks ended moderately higher Wednesday, led by gains in financials and tech stocks. Joe Bel Bruno has details.
But, at least in Russell's mind, the categorization makes a big real-world difference. Since he now thinks that we are, and have been, in a primary bull market, he believes we should be looking for optimal times to get into stocks rather than when to get out. For example, in contrast to before, he now says that "any forthcoming correction should serve as a buying opportunity."
Cynics with long memories will remember that Russell's announcement this week is reminiscent of a similar pronouncement he made in May 2007. Up until then, Russell had been bearish, classifying the entire rise over the previous four and one-half years to be a bear-market correction.
But he then "” like now "” changed his mind, concluding that the great primary bull market of the previous decade was still in force and that the 2000-2002 bear market was actually just a bull-market correction. In changing his tune, Russell began to forecast that "an unprecedented world boom lies ahead" and that the "best is yet to come."
That boom lasted just a few months, of course, and then the 2007-2009 credit crunch ensued.
The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 12,374, -52.34, -0.42%) today remains nearly two thousand points below its all-time high "” and nearly a thousand points below where it stood when Russell declared that the best was yet to come.
We can only hope that he will ultimately be proven right.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
Add Comment › · Recommend (2) · Post: Alert Email Print More Mark Hulbert April 5, 2011 A bullish six-month forecast April 4, 2011 In search of higher yields April 4, 2011 Seasonal trading patterns battle for dominance April 1, 2011 Should you sell in April and go away? March 31, 2011 The market's first quarter, by the numbers Explore related topics Dow Jones Industrial Average Comments Screener About Mark HulbertMark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD became a service of MarketWatch in April 2002. In addition to being a Senior Columnist for MarketWatch, Hulbert writes a monthly column for Barron's.com and a column on investment strategies for the Journal of the American Association of Individual Investors. A frequent guest on television and radio shows, you may have seen Hulbert on CNBC, Wall Street Week, or ABC's World News This Morning. Most recently, Dow Jones and MarketWatch launched a new weekly newsletter based on Hulbert's research, entitled Hulbert on Markets: What's Working Now.
First Take Will Raj take the courtroom throne?The prosecution has made its case. Now, Rajaratnam and his legal team need to decide if the Galleon Group founder will make a direct appeal to the jury.
11:57 a.m. Today11:57 a.m. April 7, 2011
Most Popular Most readMost commented U.S. stocks slide after quake hits Japan Don't buy stocks and don't buy bonds Why the government should shut down Japan struck by single 7.1-magnitude earthquake Japan hit by 7.4 quake, gets local tsunami warning The best laid plans ... Gold hits new record; silver just short of $40 Federal shutdown would disrupt IRS operations Rep. Paul Ryan's magic job creation Why the government should shut down Find a Broker Partner Center » MktwHulbert's Latest Tweets"Mark Hulbert: A big change of heart http://on.mktw.net/enWwjn" 11:28 p.m. EDT, April 6, 2011 from MktwHulbert
"Mark Hulbert: A bullish six-month forecast http://on.mktw.net/frjnKr" 11:40 p.m. EDT, April 4, 2011 from MktwHulbert
"Mark Hulbert: Seasonal trading patterns battle for dominance http://on.mktw.net/gOiuiZ" 11:04 p.m. EDT, April 3, 2011 from MktwHulbert
"Mark Hulbert: Should you sell in April and go away? http://on.mktw.net/fwG08W" 11:01 p.m. EDT, March 31, 2011 from MktwHulbert
"Mark Hulbert: The market's first quarter, by the numbers http://on.mktw.net/ggrYI7" 6:34 p.m. EDT, March 30, 2011 from MktwHulbert
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}); bio.init(); // if present, canonical link is preferred var p = '/story/a-big-change-of-heart-2011-04-07'; var cl = $('link[rel=canonical]'); if(cl != undefined && cl.length > 0) { p = $(cl).attr('href'); } var _sf_async_config={uid:17409,domain:"www.marketwatch.com",path:p}; (function(){ function loadChartbeat() { window._sf_endpt=(new Date()).getTime(); var e = document.createElement('script'); e.setAttribute('language', 'javascript'); e.setAttribute('type', 'text/javascript'); e.setAttribute('src', (("https:" == document.location.protocol) ? "https://a248.e.akamai.net/chartbeat.download.akamai.com/102508/" : "http://static.chartbeat.com/") + "js/chartbeat.js"); document.body.appendChild(e); } var oldonload = window.onload; window.onload = (typeof window.onload != 'function') ? loadChartbeat : function() { oldonload(); loadChartbeat(); }; })();He's seen a lot of bull and bear markets, and his market timing advice has had long streaks of brilliance. Though his track record over the last decade has been below-par, according to the Hulbert Financial Digest, his timing of the market's primary trend during the 1980s and 1990s was at the top of the risk-adjusted performance rankings.
This is what he wrote to clients Wednesday evening: "It's time to clear the record and to make my current thoughts clear... We've been in a primary bull market and we're still in one. The costly and brutal decline from the 2007 high to the 2009 low was, in fact, an almost unprecedented correction in an ongoing bull market... I mistakenly took the vicious decline of 2007 to 2009 as a turn in the tide and a bear market."
Other than responding with incredulity, you might wonder if Russell's re-categorization is anything more than an academic splitting of hairs. After all, a loss is a loss, regardless of how the loss is characterized.
Stocks ended moderately higher Wednesday, led by gains in financials and tech stocks. Joe Bel Bruno has details.
But, at least in Russell's mind, the categorization makes a big real-world difference. Since he now thinks that we are, and have been, in a primary bull market, he believes we should be looking for optimal times to get into stocks rather than when to get out. For example, in contrast to before, he now says that "any forthcoming correction should serve as a buying opportunity."
Cynics with long memories will remember that Russell's announcement this week is reminiscent of a similar pronouncement he made in May 2007. Up until then, Russell had been bearish, classifying the entire rise over the previous four and one-half years to be a bear-market correction.
But he then "” like now "” changed his mind, concluding that the great primary bull market of the previous decade was still in force and that the 2000-2002 bear market was actually just a bull-market correction. In changing his tune, Russell began to forecast that "an unprecedented world boom lies ahead" and that the "best is yet to come."
That boom lasted just a few months, of course, and then the 2007-2009 credit crunch ensued.
The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 12,374, -52.34, -0.42%) today remains nearly two thousand points below its all-time high "” and nearly a thousand points below where it stood when Russell declared that the best was yet to come.
We can only hope that he will ultimately be proven right.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD became a service of MarketWatch in April 2002. In addition to being a Senior Columnist for MarketWatch, Hulbert writes a monthly column for Barron's.com and a column on investment strategies for the Journal of the American Association of Individual Investors. A frequent guest on television and radio shows, you may have seen Hulbert on CNBC, Wall Street Week, or ABC's World News This Morning. Most recently, Dow Jones and MarketWatch launched a new weekly newsletter based on Hulbert's research, entitled Hulbert on Markets: What's Working Now.
The prosecution has made its case. Now, Rajaratnam and his legal team need to decide if the Galleon Group founder will make a direct appeal to the jury.
11:57 a.m. Today11:57 a.m. April 7, 2011
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