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‘Ten rules for finding a market bottom’

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Business Insider quoted a multi-billion dollar hedge fund manager as saying 'the market has changed,'

"[Dmitry Balyasny, the managing partner at the billion-dollar hedge fund Balyasny Asset Management] wrote in a letter to investors that the rise of passive investing and quant funds and a surge in hedge-fund assets had made the stock market more efficient, leaving fewer easy money-making opportunities… 'We think the challenges, consolidation, and changes in the industry are due to one main factor: There isn't enough alpha to make everyone happy,' Balyasny said."

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This interests me on a couple of levels. The rise of index investing has led to less 'dumb money' for pros to take advantage of. It's also the case that, as Citi credit strategist Matt King has argued, monetary stimulus never reached Main Street and there's too much money chasing too little returns in the current market.

"$12-BILLION HEDGE FUND: The stock market has changed, and we're going to have to do things differently" – Business Insider

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A terrific column by Ritholtz Wealth Management Director of Research Michael Batnick notes that nobody really buys low and sells high,

"Successful traders typically buy high and sell higher, and successful investors buy low and sell rarely. …The first rule of catching a bottom is don't try to catch a bottom. It's one of the hardest things to do in all of investing. Macy's has experienced three separate 30-per-cent rallies on its way to a 70-per-cent decline. None of them stuck. Quick traders made money. Bottom-fishing investors got filleted. … Rule #3: Wait for a higher low. Higher lows doesn't mean the bottom is in, but every actual bottom will experience these."

"Ten Rules For Catching A Bottom" – Batnick, The Irrelevant Investor

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There are a few reports on the expected growth rate of electric vehicles this morning, all with different points of view,

"The Electric Vehicle Takeover? Think Different." – Gadfly

"Global automakers call on China to ease 'impossible' electric car rules" – Reuters

"Big Oil Just Woke Up to Threat of Rising Electric Car Demand" – Bloomberg

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I will always take headlines like 'How to invest in oil with no risk' with a boulder of salt but this strategy of buying mineral rights is interesting,

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"America's drilling boom is making a hot commodity out of one of the stodgiest of oilfield assets, the monthly royalty check. Lured by the promise of steady returns without the cost of actually operating wells, companies like Kimbell are racing to acquire rights around the U.S. Private-equity giants including EnCap Investments LP and Blackstone Group LP are getting into the game as well, pouring billions into the market."

"How to Invest in Oil Without Taking a Risk" – Bloomberg

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Tweet of the Day: "@baldersdale CHART OF THE DAY: Oil fundamentals still a car crash despite what #OPEC ministers say. #OOTT " – Twitter

Diversion: "How the Mona Lisa became so overrated" – Vox

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More

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