The bear market will not last for ever, so we need to look out for signs that a new bull market has begun.
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Another bank bites the dust. Last week shares in US mortgage giants, Fannie Mae and Freddie Mac, lost almost all their value after they were effectively nationalised by the US government.
Last week I looked at £-cost averaging as a strategy for dealing with bombed out stock markets. Another approach when stock markets are falling is to stay out until there is a clear buy signal.
A feature of the UK stock market in 2008 has been the total collapse of share prices for companies exposed to the UK housing market.
In a recent issue I wrote about the Coppock indicator, a useful way of spotting when a new bull market has began. So far we have not had any buy signal.
I said recently that my short positions needed an exit strategy and suggested three possible options.
We may have seen the bottom of the bear market, but there are plenty of reasons to remain cautious.
Investors are rapidly running out of homes for their cash, house prices are tumbling and share prices are volatile.
My big and highly successful innovation in 2008 has been short-selling.
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