The Bulls Are Back
The Dow Jones Industrial Average was up by 10.88% overnight. What are we to make of that? Is it the end of the bear market or is it just a bear market rally?
Of course it isn’t the first time we’ve seen a massive 10% gain on the Dow. And we don’t have to turn the clock back that far either. Only two weeks ago on the 13th October the Dow picked up 936 points for its biggest ever one-day points gain.
Last night’s 889 point gain was not surprisingly the second ever biggest one-day points gain.
The bad news is that last night’s move still puts the Dow over 200 points behind where it closed on the 13th. So there is still a big question mark over how solid these big points rallies are.
This morning there was another late rally. A pattern we have seen during several sessions recently. The index gained by 700 points during the last two hours of trading.
It is arguable whether long term investors are going to storm into the market with two hours of trading remaining and then drive the market up by a record amount. Long term investing is, well, a bit more boring than that.
But still, the market has to - hopefully - go up from somewhere. Maybe this is it.
Cure For Recession - Drink Beer
Over at the Daily Reckoning Dan Denning has been asking readers about the idea of Robinson Crusoe Stocks. Crusoe, having spent 28 years stranded on an island, returned to find that his investments had grown in value leaving him a rich man. Sorry to give the ending away if you haven’t read it already.
So what are the type of Crusoe stocks on the Australian markets? Stocks that you can buy today and tuck them away for the next 10 or 28 years. One of them could be anything that involves beer.
According to the Westpac Consumer Confidence survey, beer sales have been recession beaters during the last thirty years. Perfect if you happen to have bought beer stocks 30 years ago just before getting marooned.
There are a few beer companies on the ASX. Fosters [ASX:FGL] and Lion Nathan [ASX:LNN] are the two biggest. But at the small end of town you’ve also Little World Beverages [ASX:LWB] and Empire Beer Group [ASX:EEE].
