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Revisiting Bob Farrell’s rule #9

Posted By Prieur du Plessis On August 13, 2009 @ 10:25 am In Investment,Markets,Money | No Comments


I published “Bob Farrell’s rules for investing [1]” and “More on Bob Farrell’s rule #8 [2]” a few days ago, and these posts attracted a large number of readers, obviously in search of some guidance at this juncture in the markets.

Today, I consider rule #9, “When all the experts and forecasts agree, something else is going to happen”, in the context of the current situation.

Firstly, David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates [3], quoted a CNBC poll of Tuesday showing that 90% of Wall Street economists believed the recession had ended. “It is highly unlikely that 90% of the economics community can be right on the same thing at the same time,” he said. Also, a Bloomberg survey showed that the consensus sees real US GDP expanding at annual rate of at least 2% for the next four quarters, leading Rosenberg to warn that a lot of good news was already ‘out there’.

Secondly, the latest survey among investment advisors by Investors Intelligence [4] shows that the proportion of bulls has just moved up to 49.4% – the highest level since December 2007. The bears dropped to 21.3% – the fewest negative advisors since October 2007. The spread of +28.1% is regarded as a negative from a contrarian point of view.

“It does appear that we have some groupthink to consider – at this stage virtually everyone is bullish on the market. This could mean that we are not going to get a lot more buying power to propel this equity rally over the near-term as it means we have a lot of good news priced into the market,” concluded Rosenberg.

Be careful out there.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail. [5]

More on this topic (What's this?) [6]
Measuring the Performance of the Ivy Portfolio [7] (Phil’s Stock World, 12/1/12)
The Secret to Long-Term Investing [8] (Investment U, 2/15/12)
These Four Investing Lessons Mean Everything Today [9] (Money Morning, 1/10/12)
Read more on How To Invest [10] at Wikinvest [11]

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URL to article: http://www.investmentpostcards.com/2009/08/13/revisiting-bob-farrell%e2%80%99s-rule-9/

URLs in this post:

[1] Bob Farrell’s rules for investing: http://www.investmentpostcards.com../../../../../2009/08/07/bob-farrells-10-rules-for-investing/

[2] More on Bob Farrell’s rule #8: http://www.investmentpostcards.com../../../../../2009/08/10/more-on-bob-farrell%E2%80%99s-rule-8/

[3] Gluskin Sheff & Associates: http://www.gluskinsheff.com/

[4] Investors Intelligence: http://www.investorsintelligence.com/

[5] Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.: http://www.feedburner.com/fb/a/emailverifySubmit?feedId=921608&loc=en_US

[6] (What's this?): http://www.wikinvest.com/blogger/wikinvest_wire

[7] Measuring the Performance of the Ivy Portfolio: http://www.philstockworld.com/2012/12/01/measuring-the-performance-of-the-ivy-portfolio-77

[8] The Secret to Long-Term Investing: http://www.investmentu.com/2012/February/long-term-investing.html

[9] These Four Investing Lessons Mean Everything Today: https://moneymorning.com/2012/01/10/these-four-investing-lessons-mean-everything-today

[10] How To Invest: http://www.wikinvest.com/wiki/How_To_Invest

[11] Wikinvest: http://www.wikinvest.com

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