Mutual Fund Research Newsletter
Copyright 2010 Tom Madell, PhD, Publisher
Nov. 2010. Published Oct. 30, 2010

Stock Market Up Over 77% Since March 2009, Yet to Many the Sky is Gray

By Tom Madell

While acknowledging that events in the future, including the eventual path of the stock market, remain subject to unknown happenstance, I feel more confident than usual that the prospects for stocks remain good.

Predicting in advance the results of an upcoming sports match-up may be a good analogy to anticipating a positive or negative outcome in the stock market: While which side will win can never be known for sure ahead of an actual match, available past performance data as well as knowledge of the current backdrop can certainly give good reason to believe that one competitor will likely prevail over the other. While such data can result in setting odds in a particular direction, events in real-time or unanticipated surprises, can crop up to alter expected outcomes.

If I were to base my predictions primarily on the stream of facts as well as commentary regularly reported in the financial world, such as high unemployment, excessive debt, political and global uncertainties, and well, you name it, it would clearly lead me to have a far more pessimistic view of what appears to lie ahead for stocks. Red warning flags would most likely predominate, although some might, at best, be yellow. Green or go-ahead flags, I'm afraid, would not likely be part of the picture at all.

So why do I think the prospects for stock investors seem much more positive than one might otherwise conclude?


Click here to see Steve Shefler's article concerning whether investors should assume Fed policy will lead to significantly lower long-term interest rates and higher bond prices.