Friday, November 27, 2009, 6:00PM ET - U.S. Markets closed early today.

Mauldin: Don't Trust the Rally, But Don't Short, Either

Posted Apr 22, 2009 02:08pm EDT by Henry Blodget in Investing, Recession, Banking

In the past few weeks, as stocks have charged almost 30 percent higher, a consensus has emerged that this is the start of a great new bull market.

Stocks always rally six months ahead of the economy, this chorus goes. Today's "green shoots" of good news will soon bloom into a full-blown economic recovery.

So buy now while you still can!

Or not.

Our guest John Mauldin, president of Millennium Wave Advisors, thinks the "great new bull market" theory is. A bunch of baloney. We're not getting out of this mess so fast, he says. The idea that stocks always bottom six months before a recovery is a myth (he's right). And he'll believe it's a new bull market when he finally sees some progress on corporate earnings.

But won't that be too late to buy?

No, says Mauldin, also author of the popular e-letter, "Thoughts from the Frontline." The great bull markets last for decades, so you'll have plenty of time. Those who bought at "the bottom" in 1974 had to suffer through the rest of the 1970s. So stop sitting on the edge of your seat waiting for that perfect moment to buy and just remain cautious for a while.

And that's the key: Mauldin isn't comfortable shorting now, either. He says the environment is too unpredictable. We all must wait and see what "the new normal" turns out to be.

From The Business Insider: Roubini: You're All Fools

125 Comments

danny
danny - Wednesday April 22, 2009 02:11PM EDT

Talk about useless info. Get off the fence dummy.

Denny
Denny - Wednesday April 22, 2009 02:17PM EDT

The Feds are buying the banking stocks with the 1.3 trillion they printed l2 months ago. The presidential plunger team is artificially propping the market. The banks are all insolvent but it is not reflected because of the phony mark to market rules suspension. Beware of this fake rally. The DOW will go below 5,000 within the next few months.

Denny
Denny - Wednesday April 22, 2009 02:19PM EDT

The Feds are buying the banking stocks with the 1.3 trillion they printed two months ago. The presidential plunger team is artificially propping the market. The banks are all insolvent but it is not reflected because of the phony mark to market rules suspension. Beware of this fake rally. The DOW will go below 5,000 within the next few months.

Yahoo! Finance User
Yahoo! Finance User - Wednesday April 22, 2009 02:20PM EDT

What kind of interview is this? This guys knows nothing, he is convinced it's going down but not enough to short the market. WHATEVER!

turb0kat
turb0kat - Wednesday April 22, 2009 02:24PM EDT

His advice seems sound, but not particularly actionable for the casual investor.

Yahoo! Finance User
Yahoo! Finance User - Wednesday April 22, 2009 02:24PM EDT

normal?

Bill G
Bill G - Wednesday April 22, 2009 02:25PM EDT

Translation... I don't know anything.

gerald
gerald - Wednesday April 22, 2009 02:25PM EDT

it might go up but then again it might go down so don't blame me if you lose $$$ and how much do you get paid to dish out this crap? Typical analyst, no better than the CEO's, all you are good at is ripping off the retail investor and now the tax payers.

Edward
Edward - Wednesday April 22, 2009 02:26PM EDT

DOW barely surface 8,000 level and some people think of BULL MARKET. CRAP....

Edward
Edward - Wednesday April 22, 2009 02:26PM EDT

DOW barely surface 8,000 level and some people think of BULL MARKET. CRAP....

Edward
Edward - Wednesday April 22, 2009 02:26PM EDT

DOW barely surface 8,000 level and some people think of BULL MARKET. CRAP....

- Wednesday April 22, 2009 02:27PM EDT

Look at the volume spikes on the S&P clearly someone is spending a lot of money to prop up the markets. unlike normal buying where you would see buying when going up, and selling going down. You see more buying as selling increases ensuring the market doesn't drop. what is going on is the clearest case of market manipulation I have ever seen, I assure you the government won't do a thing about it. 1) Pension funds have to report losses so this needs to be covered up 2) the banks have to sell equity in all their loosing vehicles in order to recapitalize. They need artificial prices for these because it is hard to get money from the government anymore 3) certain companies are making sure they buy every dip in order to make the retail customer think it is safe. Bank equity goes up, they can sell more stock, they can sell more crap at inflated to prices to us 4) This is just another government rip off of the tax payer. The same way they didn't catch Madoff, they won't catch all the manipulation going on because it suits their and our governments needs. 5) the sad fact (as the IMF shows) our banks are bankrupt. the government is afraid to say it because there will be a panic. The public is too outraged to give money directly anymore. Therefore the government wants and will allow the market to be manipulated as a way to get money to them behind our backs. But, we are still the ones paying the bills. 6) That is what is going on, and just like Bush and Iraq where the government lied so we wouldn't know how bad things were, they are doing the same thing now.

Ray Fun Relax
Ray Fun Relax - Wednesday April 22, 2009 02:28PM EDT

Investors are NOT cautious now, they are "SCARED to DEATH". After a 60% plunge, "Cautious" is an extreme understatement.

- Wednesday April 22, 2009 02:31PM EDT

Look at the volume spikes on the S&P clearly someone is spending a lot of money to prop up the markets. unlike normal buying where you would see buying when going up, and selling going down. You see more buying as selling increases ensuring the market doesn't drop. what is going on is the clearest case of market manipulation I have ever seen, I assure you the government won't do a thing about it. 1) Pension funds have to report losses so this needs to be covered up 2) the banks have to sell equity in all their loosing vehicles in order to recapitalize. They need artificial prices for these because it is hard to get money from the government anymore 3) certain companies are making sure they buy every dip in order to make the retail customer think it is safe. Bank equity goes up, they can sell more stock, they can sell more crap at inflated to prices to us 4) This is just another government rip off of the tax payer. The same way they didn't catch Madoff, they won't catch all the manipulation going on because it suits their and our governments needs. 5) the sad fact (as the IMF shows) our banks are bankrupt. the government is afraid to say it because there will be a panic. The public is too outraged to give money directly anymore. Therefore the government wants and will allow the market to be manipulated as a way to get money to them behind our backs. But, we are still the ones paying the bills. 6) That is what is going on, and just like Bush and Iraq where the government lied so we wouldn't know how bad things were, they are doing the same thing now.

Ericandkeri
Ericandkeri - Wednesday April 22, 2009 02:33PM EDT

Many companies are beating expectations-- horrible, HORRIBLE expectations. I don't know about Mr. Maudlin, but he seems to be right here. He's not really doom and gloom, just "cautious." Ok, fine. But isn't that always a good idea? On the other hand, where is the evidence of the "turn?" Real estate, experts say, is the key. Moratorium is gone. Commerical is poised to tank. Values are still falling. Make Home Affordable is a joke. A straight, across the board 3.8% refi "mulligan" --NO refi fees--would've done more to stem these problems than all the stimulus/bailouts. Where do politicians come up with this crap? They don't write the bills, the lobbyists do. Literally. And that's why the problems with middle class will continue: we don't have any lobbyists. Everyone says the economy depends on us, which I guess is why my paycheck had $22 less TAKEN OUT two weeks ago. Thanks, Barry. I'll do my part and buy an extra dress shirt next month.

j2n272
j2n272 - Wednesday April 22, 2009 02:36PM EDT

Bravo Mauldin, your call is the right call. Can't have a recovery without good earnings and we a far from good earnings. One cannot be contrarian in this type of market. Sit on your cash. Plenty of time to buy later when the smoke has cleared.

Pat
Pat - Wednesday April 22, 2009 02:36PM EDT

I have followed Mauldin for years, but I have to admit this is a stupid interview. Absolutely no useful advice not obvious to the casual observer...wait until earnings are good two quarters in a row....wow

Brad
Brad - Wednesday April 22, 2009 02:37PM EDT

i.e. no f****** clue

Paul K
Paul K - Wednesday April 22, 2009 02:37PM EDT

Totally useless info. He doesn't know what is going to happen basically and so should get lost. Yes there is volatility but you may want to buy certain stocks if cheap. It all depends on your holding period.

Yahoo! Finance User
Yahoo! Finance User - Wednesday April 22, 2009 02:37PM EDT

How do you know the government isn't manipulating the market? How would anyone ever know????? Sure, I believe what the politicians tell me.... oh, look, pigs are flying.... wait, I'm going to be shitting a monkey out of my ass .... rrrrrrrrrright .... now....

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