Light at the End of the Tunnel?

Bear markets behave a lot like bears: while they're around, they are unpredictable, but eventually they go back into hibernation. Although trying to predict when that will happen is a pointless exercise, several market watchers see some signs that the days of the bear may be numbered. One bullish sign, they say, is the amount of money sitting on the sidelines. Big-money institutional investors are sitting on piles of cash, which market gurus believe will fuel a sizable rally when it starts coming back into stocks.

Bear markets behave a lot like bears: while they’re around, they are unpredictable, but eventually they go back into hibernation. Although trying to predict when that will happen is a pointless exercise, several market watchers see some signs that the days of the bear may be numbered. One bullish sign, they say, is the amount of money sitting on the sidelines. Big-money institutional investors are sitting on piles of cash, which market gurus believe will fuel a sizable rally when it starts coming back into stocks.

Another bullish indicator, according to the experts, is that the mass media has discovered the issue. As one stock analyst put it, “When the bear market makes the cover of Time or Newsweek, it’s probably about over.” The same thing happened 5 years ago, after the dot.com bubble imploded. In 2002, just as the mass media was predicting a doomsday scenario, stocks moved into a lengthy bull market.

Rounding out a list of positives are blue-chip stocks at attractive fire-sale prices that are encouraging investors to buy, several well-respected fund managers turning bullish, and an increase in the number of insider stock purchases versus insider sales. When corporate executives turn bullish on their own companies, say market mavens, it’s usually a “buy” signal.