How to predict the market bottom

market bottom
Market bottom

The legendary investor Jim Slater lived during the bear market in the 70 years of the 20th century. He gave some indications for recognizing the bottom of the bear market.

The cache is a king

At the bottom of the bear market are all traders think that the cache is the best place for their money. Even the fund managers will keep a lot of money.

You may easily find some valuable shares

Stock prices, measured by low ratios P / E, will be at historical bottoms. The average profit from dividends will be high, and the shares would be traded below the accounting value.

The interest rates fall

Usually, interest rates begin to fall from their high levels at the end of the bear market.

Money supply grows

The broad measures of money supply begin to increase if we have a bear market reversal. Money are the bloodstream of the economy. Their increasing mass leads to growth in the asset prices.

Investment advisors are pessimistic

The general attitude is bearish. If everyone believes that the market will fall, this means that is has already.

A minimal response to bad news

When the market stops falling during bad news, this may be a sign that it forms the bottom.

Very few IPOs

There are very few new IPOs on the bottom of the bear market. Entrepreneurs would rather wait for a bull market to get a higher price.

Uninterested media

Publications and TV comments become rare, while the audience lose interest about the shares. The articles are generally bearish, and the bullish ones are ignored as work of insanity.

Do not talk about shares!

Nobody believes that it is useful to hold shares in a bear market, as everyone realizes huge losses.

Change of the market leaders

Sectors that have been stagnant for many years, start to recover, which on the other hand may create new leaders for the next bull market. Stocks with high potential of growth will be traded at low P / E.

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