Stock Market Double-Header?
by Bill Dunbar
On the long side it's easy to make money in stocks at the beginning of a well-defined bull market. If
you pick your issues by throwing darts or consulting your astrologer, or even listening to your investment
advisor, you can hardly go wrong. The chances are on your side. But it's possible to improve your
performance if you're in the right industry group. Usually all groups rise during the first few months of
the bull market, but then some go on to higher ground, some start pitching about and some keel over and
slide down the river. If you pick your issues from industry groups that are perceived as having the most
favorable business climate, then your chances are enhanced. At least that's the conventional logic and I
have an idea how I could check it against reality but that will take some time. For the present, if you
accept it as a true truism, then this article may make some sense. If not, it won't.
The Non-Carryover Hypothesis
The following quote was taken from the Wall Street Journal (ref. 1) soon after August 1, 1984. "We don't
believe it's the beginning of a bull market," says Joseph H. Barthel, director of technical strategy for
Butcher and Singer, Inc. He cautions against believing that the August 1982 bull market is being
duplicated: "One of the ear marks of any bull market beginning is a change of market leadership." He
says the 1978-80 bull market was led by oil stocks, while consumer-oriented stocks took control in late
1982 and into 1983. "The same (consumer-oriented) stocks are doing it again, so there is no change in
leadership," Mr. Barthel concludes.