All Things Bullish

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

– Sir John Templeton

Dogs bark, birds sing, stock markets (and stocks themselves) fluctuate. Bonds, commodities, currencies, and all else that moves in the economic world will fluctuate. Only the economic market, however, transforms into a new beast when it changes direction to become a bull or a bear. Oddly, though, it’s not easy to objectively define either one: Observers see whichever they prefer to see.

Academic research has consistently pointed out that perma-bulls and perma-bears make far less profit than those who are cautiously optimistic. It’s key to remember that a wide world of economic opportunities lurks out there – you’re not forced to choose just your home-country stocks. Indeed, a home-country bias can be problematic.

Today we’ll look at reasons to be bullish on the equity markets, but I’ll also teach you a thing or two about trading. In my managed Mauldin Smart Core Portfolio, we are still basically long equities, but we have more and more exposure outside the US. And while for regulatory reasons I can’t discuss the details of my system in this letter, I can give you some simple guidelines that will at least help you to be in the market when you should be and to get out before disaster strikes.

As we noted last week in “All Things Bearish,” bearishly oriented investors see many reasons to be cautious now and little grounds for optimism. Others are stalwartly bullish. Naturally, I have friends on both sides of this debate, people with deep knowledge and experience. Problem is, they can’t all be right. The stock market will move up or down (or possibly sideways), and some of us will be wrong.

Now, let’s see what the bulls have to say.