Some good news for the people who invested in stocks: Taken from NY Times, comments in blue.
Last week, US stock market’s bull (upward market; counterpart is the bear market) did something that only 4 other stock market rallies since 1942 have accomplished: it lived to see its fifth birthday on Oct 10. AND it doesn’t mean that this bull is much closer to being put out to pasture. Bull Markets do not die of old age, an analyst said, nor do they tire in their twilight years. “It’s sort of like human demographics,” said Sam Stovall, chief investment strategist at S.& P. “You know how they say that if you make it to age 65, there’s a great chance you’ll live to at least 85? Well, if a bull market makes it through Year 3, and then Years 4 and 5, the sixth year turns out to be very, very good.”
However, Chief Investment strategist at Wells Capital Management said that this market still has a way to go. Although the bull has staying power, it is not terribly strong by historical standards. This also is now the second-longest, correction-less rally in stock market history. (Corrections are basically the market’s way to pull down the exaggerated price to its right price. It’s a small price to pay if we don’t want a downward trend)
It may seem counterintuitive, but corrective sell-offs can be crucial to the longevity of a bull. Think of them as tiny tremors. Small sell-offs in the market, like tremors, are thought to alleviate some of the pressure that builds up in the market. If there are enough of them, a big quake could be prevented. “The longer you go without a correction of at least 10 percent, the greater the probability that any future correction will turn into a bear market,” At the end of the day, bull markets aren’t killed by market forces. Instead, it’s the underlying health of the economy that determines the market’s longevity.
Well, first things first, we are looking at the US economy because how they fare will affect us. If they had a bad day in the stock market the previous night, our stock market will also be bad today.
Well, the Philippine economy is good so far. And I hope that our market is mature enough in case the US goes to a bear market (Related Article Excerpt: When the midsummer credit crisis unfolded and global stock markets sank, emerging markets were praised for their resilience. Their comparative strength was taken as a sign that economies in the developing world could make it on their own and were no longer dependent on exports to the West. – NY Times).
