Friday, October 9, 2009

Barton Biggs: Only Halfway Through Stock Market Rebound

Presenting the bullish case: Barton Biggs.

Barton M. Biggs runs Traxis Partners, a multi-billion dollar hedge fund based in New York City. He formerly held the title of "chief global strategist" for Morgan Stanley and was with that firm for 30 years.

The market is only about halfway through what is historically typical of a bear-market recovery—and this time around, the rebound is likely to be even bigger, said Barton Biggs of Traxis Partners.

Traxis analyzed 14 past bear markets—ranging from gold to US stocks—and found that when markets dipped more than 40 percent, the average rally off the lows was about 72 percent, he said.

Since the Dow is up only about 45 percent and the S&P about 52 percent, the market still has a lot of room to the upside, Biggs said. (But if you do the math 72% above the S&P 666 low = 1145. That is only +7% from today's close; is that "a lot of room to the upside?" Seven percent is 2 weeks of returns nowadays)

"We've had a tremendous, an unbelievable decline in both the economy and the stock market, and so I just think we're going to have a bigger than normal bounce," Biggs said. "I just think we've got further to go."


One interesting note about Barton is his long term view :

Biggs is also author of the 2008 book Wealth, War and Wisdom. In this book, Biggs has a gloomy outlook for the economic future, and suggests that investors take survivalist measures such as looking into "polar cities" as safe refuges for future survivors of global warming. In the book, Biggs recommends that his readers should “assume the possibility of a breakdown of the civilized infrastructure.

He goes so far as to recommend planning adaptation strategies now and setting up survival retreats: “Your safe haven must be self-sufficient and capable of growing some kind of food,” Mr. Biggs writes. “It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson. Even in America and Europe there could be moments of riot and rebellion when law and order temporarily completely breaks down.”

But other than that he is bullish. So let us make our mad money as we await "Survivalist" camp ;)

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