Nick McDonald: Global bull market ripe for picking


Investors awash in tales of economic gloom could be missing a golden opportunity

Surprising as it may seem, we're in the midst of a bull market in stocks worldwide yet the media globally is not talking about it much at all - even more surprising when you look at the market movements over the past few years.

When the Dow Jones fell from an early 2008 high of 13,279 at the start of that year and proceeded to more than halve in value to a low of 6469 in March 2009, the press was all over it. These market falls led to many predictions of pending economic doom, coined the "Global Financial Crisis" (GFC) - a term that will go down in the history books.

So if it was such big news when the market fell, where are the doomsayers to provide their balanced reporting now?

The fact is, we are in a raging bull market and have been since the markets turned upwards in early-mid 2009, as the facts clearly demonstrate:

•The Dow Jones has rallied over 100 per cent from its lows of 2009 and is just a stone's throw from its high made in 2007.

•The Nasdaq has smashed through its 2007 high and in fact surpassed it nearly two years ago, in late 2010. The Nasdaq trades today at levels not seen for 12 years since the late stages of the tech boom.

•Even our local NZX50, the NZ stock market, has risen strongly. Comparing the NZX50 to the Dow Jones over a five-year period it has bounced back comparatively and with the US markets heading up, our NZ top 50 is destined for new highs also.

The example of the NZ stock market rising, in spite of a bullish NZ dollar, helps at least partially rule out the argument that the Dow Jones is only rising due to the weak US dollar. While there is undoubtedly a correlation between stock and currency markets, it is nowhere near as strong or as simple as many would lead you to believe. But that's another story.

Why does this bull run matter?

Stocks are part of a balanced portfolio for investors around the world. Investing and trading is definitely not for everyone but the key thing for those who know what they are doing is timing. By the time something is heavily reported in the press it is usually over, or very close to over, and the money has been made.

Where was the press at the most bearish during the GFC? The answer is right at the lows and for a long time after the lows were made. The part-time investor who waits for the media to tell them when we finally have a bull run could be waiting years yet by which time, once again, the move will have happened and the money will have been made.

Predicting bottoms and tops is not smart investing but looking at strongly trending markets and targeting the piece in the middle - that is smart. Unfortunately most of the part-time, Mum and Dad investors who follow the press and not the markets, tend to catch the market moves right at the end, the exact point when it's too late.

Economic doomsayers are still saying anyone buying stocks right now is a fool; Warren Buffet one of the richest people on the planet included. Buffet has been buying stocks through all the turmoil of recent years while analysts and market commentators on five-figure salaries without a cent invested in the markets criticise his actions.

These pessimists will tell you that another major bankruptcy is on the cards, that Lehman Brothers will look like small fry compared to the news that's coming and that Europe is destined for certain financial collapse ... watch out below!

Any of this "might" happen but the fact is that it's not happening now and predicting these things is a gamble. Unfortunately bad news seems to make the best news. It serves to paint things as worse than they are and scaring the "Mum and Dad" investor's away from stocks until it is too late - once again. More evidence for the masses that stock investing and/or trading does not work.

The truth is that stock trading and investing does work, it's just the people who know what they are doing that make the money.

We're in a bull market and in case you think I might be on the hindsight bandwagon, check out a clip on TV3 News in 2009 where I stated that the bear market was over and stocks (as well as the kiwi dollar) were likely to go much higher. I will state now, the world's stocks markets have much higher to go. Only a major bankruptcy, war, terrorism or some other unforeseeable event is likely to stop this bull run continuing.

Stock market investing is certainly not for everyone. It takes experience, there is risk and that means investors/traders need both the skill, the capital and the risk management skills to participate. For those who tried investing in stocks and got scared out in 2008, now might be a good time to start reconsidering with the markets approaching fresh highs rather than waiting for the mass media to finally catch up with what is going on.

For those with some spare cash who are looking to take control of their own investments now might be a good time to start small and begin their stock market education before we reach yet another high and have another missed opportunity.

Nick McDonald teaches everyday people around the globe how to become a trader through his company

- NZ Herald

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