Market Gores Bear That Was not pessimistic as S & P 500 Rebounds 20%

Investors who attended the warnings about falling home sales, record deficits of the EU budget and the devaluation of U.S. dollar may regret the nurse after the bear market of 2010 did not.

500 Standard & Poor's gained 9.8 percent this year through last week and 20 percent since hitting its low of 2010 on July 02, defying the naysayers by Robert Prechter to Albert Edwards and Nouriel Roubini, who expected economic slowdown hurt equities. The Bulls, who looked like losers when the benchmark for U.S. stocks fell 16 percent between April and July, were claimed by the rebound that added $ 2.6 trillion in value.

Expansion of factory production, retail sales and earnings that topped forecasts and the Federal Reserve's commitment to buy 600 billion U.S. dollars of Treasury bonds drove the progress of the economy continued to recover from the worst financial crisis since the Great Depression. investment funds to U.S. equities at least $ 1 billion in assets returned a median 7.7 percent in the last five months.

"You still have an investment culture that is still too immersed in the most recent experience rather than rationally based on the evidence of the day," said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management Inc., which manages $ 342 million. "We had a terrible crisis of '08," he said. "It is amazing to me that the slowdown in recovery brought first-deflation depression mentality of revenge."

Economic disappointments

The pessimists gained a proof of its concern this summer. Economic surprise index Citigroup U.S. fell below 64.3 in August from 43.4 in April positive and debt crisis of Europe calls on speculation that slower growth. readings of negative economic reports mean missing forecasts.

A. Gary Shilling, who predicted the collapse of the housing market, said in August that the economy "has much more gas" and may enter into a second recession. While the gross domestic product growth slowed to a rate of 1.7 percent in the second quarter, accelerated to 2.5 percent in the third quarter, according to Commerce Department data.

The economy must be expanded by 5 percent, given the depth of the recession, and investors should avoid stocks to corporate revenue growth accelerates, Shilling said last week.

"We are in a period of slow growth, probably, deflation, and quite a few problems in other places like Europe than the U.S. dollar and Treasuries will be the safe havens," said Shilling, president of investment research firm A. Gary Shilling & Co. in Springfield, New Jersey. "Stock markets have been anticipating a much faster growth ahead of what is likely to get, and there could be some disappointment."

Expanding Economy

U.S. grow by 2.7 percent in 2010, 2.5 percent in 2011 and 3 percent in 2012, according to the median of 63 estimates of GDP in a survey. The National Bureau of Economic Research September 20, said the biggest decline since the 1930s ended in June 2009.

The S & P 500 is up 8 percent in September from Prechter recommends keeping cash, because pessimism lead people away from investors. Technical analysis, or the process of using price charts to forecast investment, shows that the S & P 500 will fall, said last week. Investors must wait six years before the purchase of shares, he said.

The S & P 500 fell 0.1 percent to 1,224 at 10:26 am in New York.

"Bottoms are usually acute, while the tops often take time to play out," he wrote Prechter, Executive Director Elliot Wave International in Gainesville, Georgia. "It's perfectly normal that an increase in GDP after the stock rises. You can not use the GDP to make the purchase and sale decisions in the stock market."

The drop to 450

Edwards, global strategist at London-based Societe Generale, which warned this year that the world was entering another recession and deflation was a possibility, said in August that the S & P 500 would fall to about 450. It increased 17 percent since then.

"The structural bear market has not reached the final," Edwards wrote in a note dated 26 August, a day before Fed Chairman Ben S. Bernanke signaled he could buy more bonds. "The stock market has shrugged off many of the weaker data is abundant, and has not joined the bond market in motion perception. The stock market when they collapse like a house of cards it is."

Edwards did not respond to an e-mailed request for comment last week.

Manufacturing Report

The Institute for Supply Management's report last week showed that U.S. manufacturing extended for a month 16 in November. Pending sales of existing U.S. homes unexpectedly rose by a record 10 percent in October, the National Association of Realtors said on 2 December. While the Labor Department said December 3 that the American non-farm payrolls expanded by 74 percent below the median economist estimate, the S & P 500 rose 0.3 percent.

Roubini, co-founder of Roubini Global Economics LLC, who recommends selling shares before the S & P 500 fell to 57 percent from its record high in October 2007, said in July that the market will fall and has occupied its bearish outlook on the world economy during 2010. The economy will suffer as Americans cut debt, spend less and save more, which means an "anemic" recovery, said last month.

"Roubini Global Economics is not called the markets, but comments on the fundamental direction", according to a statement of 03 December the company based in New York.

The S & P 500 rose 3 percent between November 1926 and 03 December, the biggest weekly advance in a month.

"Many think it bears too obsessed with the age-old problems facing the economy and ignoring the cyclical upturn," said Alan Gayle, senior investment strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees U.S. $ 63 billion. "At the end of the day, if you are involved with the action or not, the answer is: 'Yes, you should."