Editor's Note: Turbulent times call for rational thinking. For what it's worth, Bulls & Bears is a new weekly column at Dealbreaker featuring the perspectives of market insiders from around the world.
Jim Oberweis, President & Portfolio Manager, Oberweis Asset Management
If we had to select a single word that described market sentiment today, it would be fear. While economic conditions are indeed dire, talk of economic depression is an over-reaction. In all likelihood, we face a moderate or possibly severe recession. As bad as it seems, today's economic data is markedly better than that of the 1930s. During the Great Depression, unemployment peaked at 25%. Today unemployment stands at 6%. Back then, GDP fell 13% in a single year. So far this year, we have not even seen a negative number. It's a very good time to be buying, but whether or not we've reached a bottom is hard to say. No one can make guarantees, but for investors with long-term investment horizons and the ability to weather short-term volatility, we believe that current conditions may offer an above-average buying opportunity.
Gavin Parry, Director, Helmsman Global Trading
Over the coming week or two, the current round of selling will exhaust itself, and the bargain hunters and bulls will re-emerge. But the equity markets have another difficult 12 months ahead and even longer for the real economy. We think the chart of the S&P is spectacularly clear. The S&P smashed through our 1,100 target. However, I am expecting a quick rebound back above this level before moving lower once again. We retain our call of a final bottom of 800 mid to late next year. The charts indicate a final low of 8,000 on the Nikkei. If this down trend continues we expect Hong Kong to bottom at 11,000.
Philip Roth, Chief Technical Market Analyst, Miller Tabak
I think we've had a typical selling climax, with Friday's action completing the selling climax. Selling climaxes are not a bottom but they often start investment base-building processes. There are three stages to the buying now. The first is the short covers, then there's the traders trying to piggyback on the ride up. The important one is whether investors come back into the market, and it can take weeks to see that. Frankly, I think until there is a drop in long-term interest rates we're not going to see any big buying. This is nothing like 1929 to 1932, with the exception that we've had a selling climax. A selling climax gets you a recovery, but it doesn't say what happens afterwards.
Jeroen Knol, European Equity Fund Portfolio Manager, Fortis
The measures announced [by policymakers] over the weekend are more solid, and more impressive than I was expecting. The adjustment to mark-to-market accounting might not help in the long run, but it puts less pressure on financial institutions in Europe. But would I buy where you see dividends being kept in the banking system? Not necessarily -- I'd still prefer to stick with the safer banks that have already stood out the credit cycle so far, the more diversified international players that have not extended their lending activities.
Paul Mendelsohn, Chief Investment Strategist, Windham Financial
The psychology is that governments of the world are doing something finally, but what you don't know is how severe this recession is going to be and what moves they made this weekend to offset that. We don't know how long a duration [the recession] is going to be, and the impact on corporate earnings. I think if you are a long term investor this is a place to start picking up stock, if you have cash on the sidelines. I think it's one entry point. I've told my clients to break their money into quarters and sixths and get into the market and take a position, but don't come in at 50% or 100% into the position you want to be in. Get a foothold in the market.
Justin Uruhart-Stewart, Director, Seven Investment Management
The coordinated action on interest rates was welcome, but the fixation with a half percent around the globe seems a little too simple to me. After all, half a percent off the U.S. rate at 2% is proportionately a lot more than half a percent off [Britain's] 5% equivalent. Frankly a whole 1% would have had a more dramatic impact not just on markets, but on hard pressed consumers and the business world. In a bear market, remember the worst is believed until the opposite is finally proven.