Maybe, maybe not. We don’t know and no one else does either. At least not today.
Nonetheless, it’s tempting to say that Tuesday’s intraday low of 1200.44 for the S&P 500 certainly looks like the trough–for the moment. Yesterday’s bounce skyward already has some pundits speculating that a return of the good ole’ days is imminent. And, of course, there’s a few select bits of news to support that notion, including a sharp drop in oil prices, a confidence-boosting announcement for the battered financials by way of a dividend hike for Wells Fargo, and some better-than-expected news on business conditions for three stalwart names in the Dow Jones Industrials.
Of course, we could easily counter the upbeat reports with bearish ones. In fact, that’s always true. There’s never a shortage of reasons to worry, or to hope. Depending on your mood, you can find corroborating evidence to support the forecast preference du jour.
Alas, there’s virtually no chance of calling bottoms or identifying tops, at least not in advance, or ex ante, as the academics say. The rear-view mirror, on the other hand, is always reliably lucid. No wonder, then, that looking backward tends to have an oversized influence on investor sentiment today. The problem is that the past, sans an informed and thoughtful historical perspective, is of little help to the strategic-minded investor.
Indeed, developing strategic perspective is an unnatural act for the human species. That’s not to say that it can’t be learned. But the path of least resistance is one of extrapolating from the very recent past as a basis for anticipating the very near future. That may work for traders and sail boat enthusiasts checking the weather at sea, but it’s bound to lead you astray eventually when it comes to finance.