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Market's Message: The Tide Is Turning Bullish, Says Plexus' Prieur du Plessis
Posted Apr 06, 2009 04:12pm EDT by Aaron Task in InvestingUpdated from 4:12 p.m. EDT
There was a general sense of optimism this weekend in San Diego, where I attended a hedge fund conference and separate tribute dinner for newsletter legend Richard Russell.
Among those in attendance - and feeling at least cautiously optimistic - was Prieur du Plessis, noted blogger and executive chairman of Plexus Asset Management, a South African-based firm with about $2 billion of assets.
The market's message is "the tide is turning," says Plessis, who cited the same valuation argument as BCA's Martin Barnes as well as these recent trends:
- Outperformance of small-caps stocks over large.
- Strength in growth-oriented sectors like tech, basic materials and consumer discretionary.
- Strength in commodities and emerging market stocks.
These are the kind of signs "only would typically expect at a bottom," says Plessis. Even if the recent rally - over 20% for the Dow and S&P in the past four week - is a case of "too much too fast," the money manager believes the S&P has established a new trading range between the March lows (666) and January highs (935).
While the global economy remains "murky" and America's banks the "elephant in the room," Plessis believes a "bottoming area" has been established. He expects emerging markets, notably China and resource-rich nations like Brazil will continue their recent outperformance.
Update: On any near-term pullbacks, Plessis recommends investors play this "reflation" trade via ETFs including:
- China: iShares FTSE/Xinhua China 25 Index (FXI)
- Brazil: iShares MSCI Brazil Index (EWZ)
- India: iPath MSCI India Total Return Index ETN (IPN)
- Materials: iShares S&P Global Mat. Sector (MXI)
- Gold: SPDR Gold Trust (GLD) and Market Vectors Gold Miners (GDX)
- T.I.P.S.: iShares Barclays TIPS Bond Fund (TIP)
"I suspect this is a trade that will be perpetuated over the next few years," he says.
Editor's note: Stay tuned later this week when we'll publish our exclusive interview with Richard Russell, who is not so favorably disposed - as anyone who's followed his recent work knows.
58 Comments
Yahoo! Finance User - Monday April 06, 2009 04:20PM EDT
Gov't ironing out creases in financial blanket!!
Yahoo! Finance User - Monday April 06, 2009 04:23PM EDT
It looks like the interview takes place at a "Conartist's Convention".
LGB - Monday April 06, 2009 04:27PM EDT
It seems hard to believe, that We have seen the worst. I´dlove to believe it but I think there´s more debt around that hasn´t surfaced. What is Your personal opinions knowing what You know Henry and Aaron. Have we seen the worst? Where is the sucker´s rally at this point? Thank You great job
Yahoo! Finance User - Monday April 06, 2009 04:27PM EDT
Bullish as BS. What cr_ap.. no pun intended. All the makings of a sucker's rally goin' on right now..
Yahoo! Finance User - Monday April 06, 2009 04:28PM EDT
I've been "conned" by more people in suits than people in blue jeans.
franck s - Monday April 06, 2009 04:29PM EDT
Sure these guys want to pump their own game, but they would be better advised to learn how to grow peas.
Reedersong - Monday April 06, 2009 04:33PM EDT
yeah, it'll probably go up tomorrow....even if the news of the day is bad.
Nick - Monday April 06, 2009 04:34PM EDT
To all of you folks warning of a sucker's rally....by all means, stay on the porch! You can't run with the big dogs. As I look back at my own life so far I have to ask myself, how many times have I seen these market dips? Too many to count. And every time the same thing happens...the market sets new highs. By all means, keep your money in your money market accounts, earning 1%. As for me? I look forward to 8% a year annualized returned in stocks for the next 5 years. You think that is hard to do? Well guess what? Even IF stocks return 8% a year for the next 5 years, that still will only bring us up to about 14,000 on the DJIA. Hard to accomplish in 5 years? I don't think so!
Yahoo! Finance User - Monday April 06, 2009 04:41PM EDT
Anyone who is either Bullish or Bearish is Foolish.
Yahoo! Finance User - Monday April 06, 2009 04:42PM EDT
If I had my money invested in Prieur's $2 billion in assets, I would pull my money out in a blink of an eye.
Yahoo! Finance User - Monday April 06, 2009 04:45PM EDT
Anyone who is overly either Bullish or Bearish is Foolish.
Yahoo! Finance User - Monday April 06, 2009 04:50PM EDT
I sold in Apr 07. Just before the "Big Dogs" ran over the cliff. Dumb ass "Big Dogs".
Yahoo! Finance User - Monday April 06, 2009 05:00PM EDT
The view on the economy is 'murky'. I agree, an economy based on smoke and mirrors does not recover, it just fades to black.
Allen - Monday April 06, 2009 05:17PM EDT
its all a big make us feel good propaganda fueled by the goverment and continued greedy johnny ikes and wall steet. they know that consumer spending accounts for 75% of ecoomy, without it we are doomed.
Dustin - Monday April 06, 2009 05:18PM EDT
an economy can hit its bottom before unemployment stops rising.
Yahoo! Finance User - Monday April 06, 2009 05:34PM EDT
Dustin: Don't bother explaining how the market has behaved for the last 150 years, the people who troll these message boards are part of the crowd of sheep who buy high and sell low.
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Yahoo! Finance User - Monday April 06, 2009 04:19PM EDT
Yeah right. Tell that to the 15.5% unemployed that are running out of benefits with no job in sight.