BULL AND BEAR?

Due to the Labor Day yesterday the markets did nothing; they are pretty flat and stayed at the same level more or less. So, we have time now to look at the bigger picture.

We collected below some argument for bulls and some argument for bears. Bulls think that the markets are ready for more gain and still there is a huge room on the long side. Bears think stocks area about to tumble. All in all that is good if we see many concerns around us and the sentiment is not euphoric. The investors always need something to be scared of. Will the bulls or bears be stronger? We bet on bulls. There are many fundamental and technical reason for that, but it is good to know always what are the weaknesses and what is the interpretation of the other group.

Bull’s arguments:

• Strengthening the US economy. The companies are performing well and hiring more and more people. The U.S. GDP growth might be 1,5% in 2014. 
• Stock buying back programs by companies. They are buying back their own stocks. It creates more demands on the buying side. 
• Future profit gains are good in the main street. 
• Low interest rates. Historically low and it makes stocks more attractive. 

Bear’s arguments:

• US interest rate could rise soon by FED, realistically in 2015. 
• Stock rallied a lot and they are pricey by now. 
• P/E ratio is around 20, which is relatively high. The 10 year average is 14,1. 
• US and European economy will shrink thanks to the Ukranien conflict and the embargo on Russians. 
• China will slow down shortly.
• Many geopolitical turmoils around the planet. 

The BFM Assets Team.