What Does A Market Bottom Look Like?

We are often asked, is this the bottom? When is the bottom? To which we reply, we don't know. We let the market go where it wants to go.

A secular bottom in most asset classes - the kind that long-term investors should be most interested in buying - does not look like a V. It does not occur over days, weeks or even months. It often takes years or decades.

A true secular bottom occurs not only when prices have collapsed, but when there is zero interest in the asset. Investors won't be asking where the bottom is, because they won't care. They will have long moved forward.

That is not say that there isn't money to be made in sharp V bottoms. There is, but these are usually trading bottoms. Investors should be nimble, and prepared to sell when the market shows them a good profit.

For secular bottoms, we have yet to find a piece that sums it up as well as this one. And the author was right. Investors piling into Miami real estate in the fall of 2007 have been carried out. Prices continued to collapse. Not to mention the condo fees and taxes on buildings that sit 25% occupied.

http://www.dailywealth.com/archive/2007/oct/2007_oct_22.asp