Where This Leaves Us

Shane Oliver of ANP Capital Investors in Sydney,Australia thinks we are 85% through the bear market.We are probably near the bottom of share prices.Stocks are very cheap now.Mr.Oliver likes the telecom and consumer staples sectors.Peter Redward of Barclays Capital(BCS) says the Federal Reserve is doing all it can to make sure that Lehman Brothers unwinds its positions systematically.Ultimately,the market has to work as well.Earnings multiples have to come down because of widening credit spreads.At this point,financial markets are leading the economy.Before,it was the other way around.In consequence,the economic dynamics we've had are unlikely to continue.Countries such as South Korea and India are vulnerable because of their current accounts deficits,Mr.Redward feels.Today the Federal Reserve releases its interest rate decision.This could be a market-mover.In any event,shares of McDonalds(MCD) and Johnson and Johnson(JNJ) were up this morning.

The Last Bear

The last bear market was from 2000-2003.It lasted a total of 31 months.During that bear market,there were six rallies,which lasted from two to four months each.The current bear market arose about a year ago.It could extend as far as 2010,given the depth and breadth of the financial crisis,and the difficulty of owning up to it.

What Kind of Bear Market?

Q2 has just ended,and earnings reports will soon be rolling in,so investors are wondering what lies in store for them.Analyst Phillip Roth of Miller Taback notes that we just completed a bear market in May,and we're on the way down again.It's an average bear market,which means going down to 1175 on the S and P 500 Index.It's not a killer bear like the market of 2000-2002,but the commodity markets haven't weakened at all.It could take a while before long term rates drop,which is the condition for a new bull market.If we get down near my target and we see no break in long term rates,I'm going to lower my target,Mr.Roth promised.In a bear market,there may be good days interspersed with the legs down.