Tuesday, June 14, 2005


A new reader wants to know, "What is a Bull Market?"

A bull market is a market that wants to go up no matter what the news! Many folks try to define bull markets by the length of time the market has moved or by what percent it has moved. Others define a bull market in relation to the past moves; such as breaking out past old highs. The reality is that a BULL MARKET is felt not defined.

To be a BULL, a market does not need to go up every day or even every week. Markets are frustrated beasts and they are made to frustrate humans. A popular blogger wrote a few weeks ago that Boeing, BA, has gone up too far too fast. He indicated that he might short the stock. I wrote at the time that Boeing is a late cycle stock on a roll in a BULL market. I hope the gentleman decided not to short the stock as it is up several more points. A friend wrote that she was tired of the volatile market and was selling one of her big winners. I said that it is typically a mistake to sell a big winner during the middle of a BULL market. The stock is up 15% in a few days.

Currently there are mountains of cash sitting in money market style accounts. Many advisors are telling folks to buy on dips or to wait for a buying opportunity. In a BULL market, the dips do not seem to come. No doubt there has been rotations. Groups that were on fire, such as steel stocks have made the roller coaster ride. However, this market does not offer substantial corrections to allow investors to climb on board.

As a general rule, investors are under-weight in stocks. Even traders are playing around with only a portion of their portfolio while letting serious dollars sit wasting away in bond funds, money market funds and high fee mutual funds.

Now is the time to have your maximum allocation in stocks. Own 25 different stocks for safety but own stocks. It is not the time for convertible bonds, preferred stocks, balanced funds, variable annuities or other hybrid vehicles. Stocks will make you money. The ride will be a bit bumpy at times but you will make money. Stocks are cheap; buy stocks.

Today was another BULL market day. The average stock went up. BUY THE BULL!