Friday, October 16, 2009

Are the Markets Cheap?

Here we are again the same place we were March 1999, December 2003 and various points in between. We stand, for the first in a long time, with the Dow Jones Industrial Average (DJIA) rising above 10,000-10,015.86 at Wednesday's close to be exact -- and we are left wondering the same questions we did years ago: is it just a temporary rush higher or a new floor for the great heights to come? Or, is it safe to enter the market  now?  


And i am sure there will be one question in everyone's mind "Is it safe to enter the market now?"


After studying the historical charts of DJIA (below) i could get one thing clear on my mind.......let that thought be on my mind........in case if you are interested to know, mail me or leave your comment........


For your information: Over the 118 year there have been 19 bear market events in the DJIA. The average bear market drop was 37%. The rally into the next year generated an average gain of 40% from the market bottom - with 70% of the gains coming within the first half og the rally's duration.


Today we the DJ Index and Standard & Poor's 500 Index having zoomed more than 50%, from its March 6 low, the rebound is 1.5 times bigger then the typical post-recessionary rally.





I am signing-off the post, leaving the decision, to enter or not to enter the market, on to you. 


As said by the famous William Stanley Jevons (1835-1882): "As a general rule, it is foolish to do just what other people are doing, because there are almost sure to be too many people doing the same thing"...           


Happy Investing!!!


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