Templeton Calls Bull

It’s true that no one may ring a bell to tell us that the stock market slaughter is over, but one brave soul working for Templeton Asset Management named Mark Mobius spoke up on Friday:

The next “bull-market” rally has begun and there are bargains in every emerging market following a record slump in stocks…

“You are going to see a lot of bouncing off the bottom because there’s a tremendous amount of uncertainty in the market,” Mobius said, “But I have a feeling we’re at the bottom and now we’re building a base for the next bull market.”

Bloomberg Article

Bold words to be sure, but they come with a few qualifiers. Templeton’s Mobius sensibly recommends stocks paying high dividends who are sitting on a lot of cash, and he leans towards corporations in developing countries.

Rival brokerage Fidelity, it seems, wasn’t amused with the prediction. Portfolio manager Tal Eloya shot back, “No one can call the bottom in the stock market. No one managed to do it. We can’t do it. We don’t have a crystal ball”.

Still, it’s hard not to wonder how long the bear market will last. Is this one long bear market that started in 2000? Can we expect the markets to go nowhere for another decade? How high do blue chip dividend yields need to get before investors will happily accept the risk of buying stocks instead of investing in no-yield treasuries?

No matter what the stock market does, it’s much easier now to figure out what the dollar will do – it will decline. At some point, the relentless decline of the dollar will bouy stock prices enough to at least apparantly end the bear market. But if the Federal Reserve continues to follow reckless policies, it seems possible that the stock market could explode upwards while we remain in a bear market – be on guard!

In any case, Mark Mobius is probably feeling pretty good today with the markets up another 7%.