Contact Us Disclosures Blog
 
Make an Appointment Contact Us Podcast Blog
Market Commentary Audio Archives Book Shelf InvestAbility Center

Patterns

September 12, 2011 – 4:59 pm

In a recent Wall Street Journal article Professor Richard Sylla a financial historian from New York University completed and reported on his study analyzing patterns in stock prices going all the wayback to 1790.

In 2000 he predicted a decade of overall declines so the Journal wanted his thoughts for the next decade. He does not try to predict, he instead looks for long term patterns. As we all know we are in a Secular Bear Market. He says that if the long term pattern holds that by 2020 the Dow Jones will be up 84% to 20,250 and the S&P 500 will be up 99% to 2,300.

This will mean we will be returning to the long term Secular Bull market. These patterns ignore the topic of day, such as Greece’s debt and the woes of European banks.

No one can predict the direction of stock prices on a day to day basis but long term patterns are clear and current stock prices are low in historic terms. At some point soon, we will return to normal valuations as patterns are very predictive.

Buying weakness is what the smart money is doing. Just look at Warren Buffet has been doing.

Good Trading
Steve Peasley

Post a Comment