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By Bernard Lo and Michael Patterson
Oct. 6 (Bloomberg) -- Sustainable economic growth and low interest rates worldwide will spur a “multi-year” bull market in equities, led by developing nations, said Fidelity International’s Anthony Bolton.
“Low growth means low interest rates, and actually that’s one of the best environments for stock-market investing,” Bolton, president of investments at Fidelity International, which oversees about $141 billion, said in an interview on Bloomberg Television in Hong Kong. “Anything that can show growth in this low-growth environment is going to be bid up by investors. It’s very pro the emerging-market world versus the developed world.”
Policy makers in the U.S. and Europe will keep interest rates low for another year even as Australia’s central bank unexpectedly raised rates today, Bolton said. He’s “particularly optimistic” on Chinese stocks because the government will foster sustained economic growth without fueling inflation.
Bolton’s view contrasts with New York University Professor Nouriel Roubini and Elliott Wave International Inc.’s Robert Prechter, who have said shares are poised to retreat. Pacific Investment Management Co.’s Bill Gross predicted low economic growth will restrict annual stock returns to 5 percent, while Nobel Prize-winning economist Joseph Stiglitz said investors have been “irrationally exuberant” about an economic recovery.
Stock Rally
The MSCI Emerging Markets Index has climbed 62 percent this year on expectations that developing nations will lead a rebound in the global economy from its worst recession since World War II. Emerging-market economies may grow 6 percent next year, compared with 1.8 percent growth in advanced nations, according to HSBC Holdings Plc.
The MSCI emerging markets gauge climbed 1.5 percent as of 12:23 p.m. in London as higher commodity prices boosted earnings prospects for producers and HSBC said its purchasing managers’ index for developing economies posted its biggest gain in more than a year. The MSCI World Index of developed nations, up 21 percent this year, gained 0.9 percent today.
Bolton, Fidelity’s first fund manager in Europe, said on March 11 that the U.K. equity market was at or near its lowest point. The nation’s benchmark FTSE 100 Index, which tumbled 31 percent in 2008, bottomed on March 3 and has since rallied 45 percent. Bolton dumped his holdings of telecommunications stocks in the first quarter of 2000 at the height of the industry’s bull market.
Bolton’s Special Situations Fund beat the FTSE All-Share Index on an annual basis by 6 percentage points from 1979 through 2007, according to Fidelity. Fidelity International is the London-based affiliate of Fidelity Investments, the world’s largest mutual-fund company.
To contact the reporter on this story: Bernard Lo in Hong Kong at blo2@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.
Last Updated: October 6, 2009 07:58 EDTSporeguy ( Date: 06-Oct-2009 23:51) Posted:
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When talking about 'entering the market', one needs to specify whether it is to buy or to sell ...
Because when there are two persons deciding,
One will be happily buying, and the other will be happily selling... 
risktaker ( Date: 06-Oct-2009 22:08) Posted:
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Relax, this is just some correction, not mkt crash nor end of the world yet.
For your reading n info:
Oct. 1, 2009, 12:01 a.m. EDT · Recommend (1) · Post: 
Is October correction inevitable?
Commentary: Not if you study patterns of crash years
By Ethan Anderson
GRAND RAPIDS, Mich. (MarketWatch) -- Most investors seem braced for a big correction, but in my experience the majority is usually wrong.
In order to predict the future, one must consider the past and research similar market cycles to come up with a probable forecast for the future. After studying comparable periods to the one we are experiencing today, investors will realize that an October correction is not likely.
Consider the following:
We have not yet recovered fully from 2008. The market rebound after the crash of 1987 did not see a correction of 10% until 1990, which is more than two years later. Moreover, that correction was after "only" a 35% drop from top to bottom. At present, we are only six months removed from a 55% drop in the market.
TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.
• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
• Eliades: March lows may come back
• Hennessey: Not as bad as everyone thinks
October may be a negative month, but it's usually more in the range of 3% to 5%. The Octobers of 2008 and 1987 were the two biggest October sell-offs of the last 30 years, but each was preceded by a negative September. This year, September was positive.
During past October sell-offs, the month didn't represent the first wave of the attack. May and June often paved the way. October then stepped up to wipe out the survivors who believed the worst was over. Again, we did not see major selloffs in May or in June. In fact, this past June marked the fourth consecutive month of gains.
If we do sink lower in October, the catalyst can easily be the lack of top-line growth in earnings reports. However, if top-line growth is present, it can be another factor driving the market up in October.
To play devil's advocate, I must point out that six months after the market bottomed in 1987, the market was 21% higher. After the 2002 bottom, it was 24% higher. Today, we are 58% higher than we were in March. This is a significant jump.
To prepare investments for October, consider diversifying with a prudent amount of truly non-correlated asset classes like Treasury Inflation-Protected Securities (TIPS), commodities such as precious metals, managed futures and inverse funds.
If you have already pulled significant assets out of the market and are sitting on the sidelines, get back in but not all at once. Dollar-cost-average back into a diversified portfolio in order to avoid buying in on the worst day of the year, and consider tactical asset allocation programs for a small percentage of your portfolio.
On the fixed income side, TIPS is a good way to get some income and inflation protection. The Fidelity Floating Rate Bond Fund /quotes/comstock/10r!ffrhx (FFRHX 9.32, -0.01, -0.11%) still looks attractive. Blackrock Global Allocation /quotes/comstock/10r!mdlox (MDLOX 17.30, -0.25, -1.43%) is a wonderful fund with multiple asset classes.
For equities, Tom Soviero and some of the rest of the folks over at Fidelity Leveraged Company Stock Fund /quotes/comstock/10r!flvix (FLVIX 25.65, -1.12, -4.18%) are some of the best in the business, as is the team running the Kinetics Paradigm Fund. /quotes/comstock/10r!wwnpx (WWNPX 19.19, -0.57, -2.89%)
In conclusion, it is inevitable that a correction will occur in the market at some point, but research shows that an October correction is unlikely. A 3% to 5% pullback is conceivable for October, but do not prepare investments for a major selloff. You will regret it.
Ethan Anderson is a senior portfolio manager with Rehmann , one of the largest accounting, financial services and consulting firms in the Midwest. Anderson sits on Rehmann Financial's Investment Research Committee and has been recognized as a "5 star" portfolio manager by Morningstar Inc
freeme ( Date: 06-Oct-2009 17:55) Posted:
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Are you in the rally, or out of it?
Commentary: It's time to make a choice
By Tom Lydon
NEWPORT BEACH, Calif. (MarketWatch) -- These days, no matter what the markets do, there are still those naysayers who are sticking to their guns with admirable tenacity.
Heard any of these before?
"This rally is overheated."
"Any day now, the bear is going to be back."
"There's no way this is going to last. I'm staying out of it."
Despite a rally off the market's March 9 low that has continued with just a few pauses and hiccups, the skeptics are still out in force. How history repeats itself.
TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.
• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
• Eliades: March lows may come back
• Hennessey: Not as bad as everyone thinks
Following the bear market of 2000-2002, investors had a similar tone. Everyone said the 2003 rally couldn't continue and that, sooner or later, the markets would go "splat" once again. But that scenario never materialized. Instead, major markets recovered nicely in the last three quarters of 2003 and made those looking for an September/October correction look silly.
Will this time be different? Is this rally for suckers?
When this recession hit, investors began a mass exodus from the market that ultimately sank the major indexes to their lowest levels in nearly a decade. By 2008, they were practically trampling each other in a race to the exits as Bear Stearns and Lehman Brothers collapsed and the government stepped in with a massive bailout package designed to prop up what was clearly a critically ill economy.
Since the market's low earlier this year, investors have been slowly but surely returning. Despite how many rally doubters remain, some of them already have thrown up the white flag of surrender and taken equity positions. Yet most investors don't believe this recovery is real.
Missed opportunity
Still, to sit out and pooh-pooh the rally is to miss a major opportunity for gains, as well as a missed opportunity to make up what was lost in their battered portfolios. Investors hiding in the safety of money market funds aren't making anything from those paltry yields.
The markets have been steadily improving for much of this year, and all signs say that while the recovery may be a long, slow one, it will still be a recovery.
Why? There's $4 trillion on the sidelines, and as that money trickles back in, the rally should continue. Earnings season is just around the corner, and while many corporate forecasts are on the cautious side, their actual numbers could be better than expected
Federal Reserve Chairman Ben Bernanke has said the recession is "very likely over," and the Fed also is keeping interest rates at record lows for now in order to continue the pace of the recovery.
While a full recovery in the United States could be months away, there are many areas that have been delivering handsome returns for months.
Big gains
It's important to pick your spots so you don't miss opportunities to participate in potential long-term uptrends. In this recovery, keep an eye on both those areas that are likely to perform well as countries begin to build up again, as well as those areas that were hardest-hit in the recession:
Emerging markets: iShares MSCI Emerging Markets /quotes/comstock/13*!eem/quotes/nls/eem (EEM 37.95, +0.10, +0.26%) is up 84.1% off the market low
Steel: Market Vectors Steel /quotes/comstock/13*!slx/quotes/nls/slx (SLX 50.31, -2.42, -4.59%) is up nearly 130% since the low
Basic materials: iShares Dow Jones U.S. Basic Materials /quotes/comstock/13*!iym/quotes/nls/iym (IYM 52.62, -2.18, -3.98%) is up nearly 90% since the low
Banks: Financial Select Sector SPDRs /quotes/comstock/13*!xlf/quotes/nls/xlf (XLF 14.29, +0.01, +0.07%) is up almost 140% since the low
Real estate: iShares Dow Jones U.S. Real Estate /quotes/comstock/13*!iyr/quotes/nls/iyr (IYR 40.91, +0.05, +0.12%) is up almost 90% from the low
There's no way to predict whether this rally really has legs longer than a supermodel's, or whether it's going to stop short tomorrow. If you make the decision to begin taking part in it today, look for those spots trading above their 200-day moving averages and protect yourself on the downside with a stop loss.
Otherwise, sit back and enjoy the ride.
Tom Lydon is the editor of ETF Trends and president of Global Trends Investments, an investment advisory firm. Website is at www.etftrends.com .
freeme ( Date: 06-Oct-2009 17:55) Posted:
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Oct. 1, 2009, 12:01 a.m. EDT · Recommend · Post:
No reason to be spooked by October this year
Commentary: But markets should be wary of Iran
By Robert Maltbie
LOS ANGELES (MarketWatch) -- While some might get spooked by an often-volatile October, signs are that the markets are in strong shape.
Just the facts: My indicators are as bullish as they have been since March 2003, preceding a 26% upside surge in equity averages that year. Four out of five of our market indicators are bullish and one is neutral.
Let's start with the bear case:
The market is fully valued at 17 times earnings and it is too late to get in the market. But price-to-earnings is a backward-looking measure. If we use projected forward estimates, a different picture emerges. If we value the S&P 500 using 2010 estimates, which call for a 20% or greater increase in earnings, we find a more reasonable price-to-earnings ratio of 14, far below 19 where the market topped in 2007.
TRADING STRATEGIES: OCTOBER
Will the bull survive?
October is best known for spectacular market crashes. At the very least, the month's volatility can spook many investors. But many of our experts say there's good reason to remain in the market, despite whatever jitters you may have.
• Karabell: What about the China effect?
• Is October correction inevitable?
• Time to take a stand on rally
• Eliades: March lows may come back
• Hennessey: Not as bad as everyone thinks
As for our neutral indicators, they are "sentiment" indicators showing that volatility and possibly fear have greatly diminished. This is evidenced by the CBOE volatility index /quotes/comstock/20m!i:vix (VIX 28.27, +2.66, +10.39%) which has retreated to 23 from a high of more than 80 a year ago when we were in free fall. Offsetting this is a bullish AAII pundit survey showing investment advisors are bearish, perhaps bracing for "seasonal harshness," by 39% bulls to 45% bears.
Our remaining indicators are all currently solidly bullish -- technical indicators, monetary data, liquidity measures and valuations. Our Ouiji board swigglies and charts show positive, lead by a strong breadth and upside volume that is recently supported by expanding new 52-week high-to-low ratio.
A final anchor of positive support is that the Dow, the S&P and Nasdaq all have broken decisively above 200-day moving averages and held their ground. These are characteristics of a market with healthy internals, good days are better and exceed bad days and more stocks are starting to participate.
Monetary Indicators: This is our most powerful market force, also called "Don't fight the Fed." Money stock is expanding at near 8% annual rate. The real rate is higher considered against the backdrop of a deflating economy which is what we have had for nearly two years now.
The yield curve is also very steep and positive in its slope. This is a powerful 1-2 punch for the market, the fed is pumping money into the markets and economy and rates are staying low. These two factors have been important catalysts of every major bull market since 1920.
Liquidity or the directionality of money flows is another bullish sign that is just getting started. After freezing up with the cataclysmic events hitting markets over the last year, corporate M&A is rebounding, stock buybacks are returning, and money is starting to flow back into equity funds, including exchange-traded and hedge funds.
Big-time mergers by Walt Disney Co. /quotes/comstock/13*!dis/quotes/nls/dis (DIS 27.46, +0.10, +0.37%) , Abbott Labs /quotes/comstock/13*!abt/quotes/nls/abt (ABT 49.47, +0.79, +1.62%) and Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 15.26, +0.12, +0.79%) are starting up again, as these and buybacks have pulsed to nearly $50 billion in September. Meanwhile, money markets have experienced a $54 billion outflow lately.
These add up to more than $100 billion in possible additional demand for equities. Offsets of insider selling and IPO issuance although increasing, are still at non-threatening or neutral levels.
Last but not least, we must not forget valuations. This is also bullish both on absolute and relative levels. While we are at the onset of a new recovery in earnings, more stable indicators such as market capitalization-to-GDP and price-to-sales provide evidence of reasonably cheap valuations.
The market is at a 20% discount to GDP and relative parity to sales. In 2000, the market traded at 1.8 times GDP and the price-to-sales ratio was 2.3. It seems we've worked off a lot of excess over the last 10 years.
Our relative valuation measures are positive lead by an earnings yield to quality corporate bond yield ratio of 1.2, a spread last see in 1982. Stockowners are getting paid or reinvesting back in the company more than high-grade bond owners, and stockowners should see this earnings stream significantly grow over the course of he next two years or so.
Also, cash dividends on the S&P at a 2.1% tax-favored yield far exceed treasury yields out to 10 years. Cap this off with the fact that the Leading Economic Indicators index is now at 104 following four successive monthly increases.
With easy earnings comparisons and no inflation on the near term horizon we expect the Dow Industrials to break 10,000 in October -- barring geopolitical events.
| Score | Percent | Current | |
| MARKET SENTIMENT | 50.00 | 0.10 | 5.00 |
| TECHNICALS | 71.88 | 0.20 | 14.38 |
| LIQUIDITY | 62.50 | 0.20 | 12.50 |
| VALUATION | 78.13 | 0.15 | 11.72 |
| EARNINGS MOMENTUM | 70.00 | 0.15 | 10.50 |
| MONETARY POLICY | 77.78 | 0.20 | 15.56 |
| 1.00 | 69.65 |
Robert Maltbie is a CFA and principal of Millennium Asset Management, a California-based registered investment advisor that provides investment management services to high net worth investors. He is also Managing Director of Singular Research, an alternative independent research provider focused on small cap stocks for institutional investors. See his Web site at www.stockjock.com.
freeme ( Date: 06-Oct-2009 17:55) Posted:
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