"Street Critique"-Patrick O'Hare, Chief Market Analyst at briefing.com
Wednesday, March 25, 2009PAUL KANGAS: Tonight's "Street Critique" guest has some thoughts on dipping back into this volatile market. He's Patrick O'Hare, chief market analyst at briefing.com and Pat welcome back to NIGHTLY BUSINESS REPORT.
PATRICK O'HARE, CHIEF MARKET ANALYST, BRIEFING.COM: Hi, Paul. Great to be back with you.
KANGAS: We had one of those volatile days today. How do you view these rallies that we're seeing? Are they bear market rallies or the laying of a foundation for a new and lasting bull market?
O'HARE: Well, given what we had all been witnessing, it certainly encouraging to see rallies like this although given the scope of this recent move, it seems likely to see a period of consolidation here. We do think that the pull backs will be relatively short and shallow at this juncture for three reasons in particular. One, we think there will be less attention now to trying to pick the absolute bottom of this bear market and more conviction in adding to or initiating core positions on a cost basis. Two, the velocity of the recent rally exposed that it can be harmful to hold excessive levels of cash earning close to nothing and three, there's a burgeoning sense that it's becoming less easy now to hold short positions and be successful for a lasting period. Whether it's a bull market or a bear market rally, I think that the end of the day here this should not be construed as the start of a new true bull market. Time will ultimately show that this is likely to be just a rally within a secular bear market.
KANGAS: Is a comeback in the economy in the cards here? Is it helping?
O'HARE: Well, it seems to be helping the sentiment here in the near term as the economic data has been less bad than feared. It's still early to declare that we've hit a bottom in the economy but just the fact that it's less bad can help improve sentiment. You've seen that reflected in stock prices of late.
KANGAS: Sounds to me like you might be tiptoeing back into the market. Do you have any particular recommendations to buy?
O'HARE: We do. You know, we think that the Spider S&P 500 exchange- traded fund trades under the symbol SPY is a good way to do it. It's meant to mimic of the performance of the S&P 500 Index. At its low on March 6, it was down about 57 percent from its October 2007 high. It's come back about 23 percent since then. So it's probably going to pull back here a little bit but the history of past bull markets has shown that it has paid handsomely to hold an index fund for a multi-year period coming off bear market bottoms. We have those, the ETF (INAUDIBLE) traditional investment because it trades like a stock and it has a lower expense.
KANGAS: And it yields almost 3 percent. Do you personally own it, Pat?
O'HARE: No, I do not, Paul.
KANGAS: All right. Unfortunately we're already out of time. But I want to thank you for being with us once again.
O'HARE: Thank you, Paul.
KANGAS: My guest Patrick O'Hare of briefing.com
