Tuesday, March 25, 2008
Morgan Stanley 'Bear Market Model'
"We think we may well already have made the index low associated with this earnings recession, but the bear market will continue for as long as earnings are falling.
Tactical asset allocation: overweight equities."
"Bear markets tend to reach their low point early on in
the recession and we think last week was probably
that low point. The low point is reached early on,
followed by a bear market rally, and then followed by
directionless markets for a year or more. See for instance
The Nature of Bear Market Rallies, February 4, 2008 for
Essentially, earnings are still in freefall so there will be no bull market. But the index may be done going down. (fchris)