Yeah Them Market Call Bragging Rights!

LOL!

Love it. Absolutely.

On MarketWatch.com. Who wants bragging rights?

• By Mark Hulbert
  
  May 13, 2009, 10:42 a.m. EST
  
  Who wants bragging rights?
  
  Commentary: It doesn't much matter what we call the rally since March 9Explore related topics
  
  ANNANDALE, Va. (MarketWatch) -- Whoever finishes with the most money wins.
  
  That may seem unobjectionable enough -- even obvious.
  
  Yet, try injecting this thought into the debate over how to classify the market's rise since March 9. You'll get lots of objections from investors who consider it to be of the utmost importance whether or not we're in a new bull market, as opposed to a mere bear market rally.
  
  But how important is it, really?
  
  If you can make money from it, does it matter what you call it? Doesn't this debate boil down to little more than just bragging rights?
  
  Giving these questions added urgency: It's possible for an adviser to win bragging rights and still lose a lot of money.
  
  Just take Harry Schultz, editor of the International Harry Schultz Letter. Fellow columnist Peter Brimelow named it Newsletter of the Year for 2008 because of a prescient prediction in the fall of 2007 that the investment markets faced an imminent "financial tsunami."
  
  Schultz was spectacularly right, of course.
  
  And, yet, according to the Hulbert Financial Digest's calculations, the newsletter's model portfolio lost 76.1% during 2008, more than doubling the 36.7% loss for the Wilshire 5000 Total Market Index .
  
  Who needs bragging rights like those?
  
  Imagine, for a moment, the Dow Jones Industrial Average rallying another five thousand points to reach the 14,000 level, and then commencing an extended decline that takes it below the March 9 low of 6,547. Would the entire rise to the 14,000 level -- a 114% increase -- be considered a bear market rally just because the Dow did not reach a new high before it reached a new low?
  
  It's surprisingly difficult to answer this question with a precise definition that fits all of what we in the past have considered to be bull and bear markets. It's reminiscent of the challenge the Supreme Court faced when discussing pornography: They conceded that they didn't know how to define it, though they insisted that they knew it when they saw it.
  
  One definition that I have often relied upon in my columns is the one devised by Ned Davis Research, the quantitative research firm. According to them, a bull market requires one of three conditions to hold: (1) at least a 30% rise in the Dow in 50 calendar days, (2) at least a 13% rise in the Dow in 155 calendar days, or (3) at least a 30% reversal in the Value Line Geometric index .
  
  This definition strikes me as eminently reasonable. And, according to it, the market's rise since March 9 is indeed a bull market.
  
  Note carefully, however, that if you adhere to this definition, you also must classify as a bull market the rally from late 1929 to early 1930. That rally began on November 13, 1929, following the 48% loss for the Dow that occurred over the previous three months. Between then and the subsequent April 17, the Dow rallied 48%.
  
  Not surprisingly, investors' mood became markedly cheerier during that rally. President Hoover's Treasury Secretary, Andrew Mellon, stated in February 1930 that "there is nothing in the situation to be disturbed about."
  
  Yeah, right.
  
  Over the 26 months following that high of April 17, 1930, as we now know all too well, the Dow lost 86%.
  
  The lesson to learn, I think, is that regardless of whether the Dow's 48% rise between November 1929 and April 1930 is called a bear market rally or a new bull market, profiting from it required nimble footwork. Agreeing on what to call it made little difference.
  
  You could be right and still lose a lot of money, just as you could be wrong and nevertheless turn a handsome profit.
  
  I would apply that same lesson today.
  
  So be my guest: Call the rally since March 9 either a bull market or a bear market rally. The important question is what to do with your portfolio to maximize returns and minimize risk.

And more importantly... how now Brown Cow?

Would You Buy This Stock Pullback? and reckon that Sell In May And Go Away An Unwise Option This Year?. Look at them investors getting so bullish now!

But if they are so bullish, why are the Insiders disposals at record highs? Why are the major shareholders disposing their shares like crazy? Are they in need of money so desperately that they are willing to forgo the market rally? Hey even the blog on WSJ is highlighting this issue, Insider Selling Adds to Cautious Tone

And what about the uncle with the bow tie? Why is Jim Rogers warning on stocks and why is he calling an end to USD rally?

What is all that talk about US Government is inflating the market? Why is Whitney calling this "The great government momentum trade"? Why?

Even some bloggers are noting some 'sell' signals. Three 'Sell' Triggers out of Four

On FinancialSense, Ryan Puplava wrote Recipe: Bear Market Bottom

• Everything is pointing towards an improvement to our economic environment; however, the market has gotten ahead of itself in this rally with a return of 39.6% from a March 6th low to a May 8th high. We have one part improved expectations, but we’re missing the follow through of those improved expectations into retail sales and an increase in industrial production. The technology sector signaled a short-term correction last week with its shift from sector lead to sector lag. The advance-decline line is rolling over. The S&P 500 bullish percent index is rolling over. All technicals are pointing towards a short-term top, but we have the potential this summer to confirm the March bottom in stocks and point towards a recovery in the economy in the second half of 2009 which would mix to create the recipe for a bear market bottom.

Remember Whitney's strong words on the financial sector? I Would Not Own Bank Stocks: Meredith Whitney

• "At a core basis, I would not own these stocks," Whitney said in a live interview. "Their business models are not going to come back."
  
  Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
  
  "This is the great government momentum trade," Whitney said on why bank stocks had seen some improvement lately. "But the underlying core, earnings power of these banks is negligible."
  
  Whitney also said that consumer spending is still going to remain slow. "There's a massive retraction in consumer liquidity," said Whitney. "Credit contraction is happening at an accelerated pace. Consumer spending is going to be less than people expect going forward."

Well, if Whitney is correct, then legendary investor Bill Miller could be really dead wrong! Miller Wrestles Whitney in Showdown Over Bank Stocks

How now Brown Cow?

* whistle *