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Experts: Forget the Bears; We Are Still in Bull Market
Aspire | 11 December 2015
By: Lim Si Jie
Articles (169) Profile

As we edge closer to the date of the FOMC rate decision in December, market participants continue to second-guess the Fed, with the chances of a December rate hike by the US Federal Reserve looking more and more likely.

Gartman: We Are Still In Bull Market

Commodities king Dennis Gartman explained that while the US economy is “sluggish, slow pace”, it is still moving forward. He predicted that there was a slightly more than 50 percent chance that Fed policymakers would opt to hike rates at its December meeting.

Gartman, who has been repeatedly cautious on stocks this year with several forecasts of sharp drops for U.S. benchmarks, has reiterated his belief that we are “still in a bull market” for equities until the “trend lines are broken.” He believes that short sellers who continue to try to sell it short will find themselves scrambling for their lives in due time.

Baron: Economy, Interest Rate, Oil Price 

Gartman’s view is echoed by billionaire buy-and-hold investor Ron Baron. Baron sees three factors driving the stock market in the long term: the economy, low interest rates and low oil prices. He believes that the economy should grow “very nicely” over the next 20 years, pulling the stock market along because the Dow Jones industrial average historically tracks the economy.

Baron, Cashin: Oil Driving Economy

Ron Baron commented that the economy is in the process of deleveraging. The idea that interest rates are going to go up a lot anytime soon is a fallacy. While the short term interest rates will go up, it will not be a lot.

In the case of oil, Baron predicted that cheap oil will continue for a long time because decades of prices way above the cost of production has led to a boom in exploration and discovery of new stores of crude in the US and around the world.

According to Art Cashin, US markets are being driven by the fall in oil, acknowledging that the economy in general is correlated to oil stocks and energy stocks.

Baron, Gartman: Market Normally Priced

Against the backdrop of higher rates and global turmoil created by a slowdown in the Chinese economy, the US stock market took a dive over the summer after a relatively stable first seven months of the year. The steep drop for stocks during the summer was enough to show that equities were oversold and that they would soon rebound. As such, Baron and Gartman acknowledged that the stock market is currently “normally priced.”

Investors Takeaway: Track US Economy with Index ETFs

With strong bullish calls from financial experts who have gone through ups and downs in the market, investors should feel confident to invest in the market. However, there is one major caveat: Investors need to keep a long term investment perspective in mind, just like Baron and Gartman, who are bullish on a longer time frame. One of the most cost efficient ways of tracking the US economy is to long DJIA and S&P 500 index through low-cost ETFs that mirror the performance of DJIA and S&P 500.

SPDR DJI AVERAGE (D07)

ISH CORE S&P 500 (I17)

DBX S&P 500 (K6K)

Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.


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