| The Next Bull Market - How To Be Fully Invested At The Bottom |
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| Written by Dave McLachlan |
| Sunday, 07 February 2010 22:53 |
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If you are an investor, you will know that a Bull Market is when prices in the stock market are rising, and rising consistently. Many people dream of being able to know in advance when the next bull market will happen.
If you are an investor, you will know that a Bull Market is when prices in the stock market are rising, and rising consistently. Many people dream of being able to know in advance when the next bull market will happen. Your financial planner will probably tell you it is impossible - and your stock broker will probably just tell you to keep buying, advocating a long-term approach. But what if there was a way to know that the next Bull Market in stocks was looming, and to know when to be fully invested? It is here that unemployment holds the key to finding a new bull market - and it was first brought light by Ken Fisher in his book "The Wall Street Waltz". Fisher knew that when the stock market and economy are riding high, people will be working, jobs will be plentyful and companies will be making solid profits. But when an economic recession hits, as many people will know from the 2008 bear market and recession, the reverse happens as unemployment starts to rise and people spend less, the stock market declines. This is where Ken formed his "1 Percent Rule" - where if unemployment figures rise by more than 1 percent, this is a good time to start putting money back into the stock market. While it is hard to pick the exact bottom of a new Bull Market, Ken says this rule will get you in the ball park and ready to take advantage when it comes along. To put it more simply - major stock market lows over history have never happened without first a rise of at least 1 percent in unemployment. Let me give you an example: Stock market prices had been falling for two years since 1968, when unemployment rose sharply as 1970 started. In May of that year a new bull market began. And not just in 1970, but in every other major low since. There is one caveat however - the unemployment rate is not as reliable when it comes to predicting peaks in the market. This is because the stock market actually leads the over economy anyway in that regard. But Ken did find that a major peak in stock markets rarely happened without unemployment falling (jobs up) for two years. Why is this information important? Well next time we are in a bear market and unemployment rises by more than 1 percent, we'll know it's time to get ready for a new bull market - it could be just around the corner. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn how to avoid downward markets and make more with your investments. Dave's site www.asxmarketwatch.com has free courses, free research and a free weekly market watch. |