Dear IDE Reader,

The markets seldom reward the crowd. So when it comes to investing, it pays to take the road less traveled. So, where is the crowd today?

Just open the newspaper: housing crash... subprime crisis... $100 oil... the falling dollar... economic recession.

Sounds pretty ominous, right? But what if we are in the beginning stages of a bull market? In this issue, Lynn Carpenter will show you why she believes this could be the beginning of a multi-year bull run.

If you’re not familiar with Lynn, you soon will be. She will be contributing to Investor’s Daily Edge every Tuesday evening. As the editor of the Rising Tide Letter and the former editor of The Fleet Street Letter – thousands of investors have profited from Lynn’s research over the years. And I am confident that you will too.

Lynn’s specialty is finding super-charged value investments – safe stocks that behave like growth stocks. And in today’s issue, she’ll give you two of these recommendations... stocks that should have a great year ahead, no matter what happens to the economy.

Keep reading below... and look for Lynn’s contributions every Tuesday night in Investor’s Daily Edge.

MaryEllen Tribby
Publisher
Investor’s Daily Edge

That 1970's Show

	Lynn Carpenter

Everybody knows history repeats itself, but hardly anyone catches on when it’s happening.  Like now.

But if you suddenly have a strange notion that tie-dye and macramé don’t look so bad, it’s the environment.  We’re in the eighth year of a 1970s redux market.  And that is very good news for you.  You’re going to like what’s coming.  But first a little history to convince you …

The tie-dye stock market may not be fresh in your mind, I realize.  Some of us were still deciding which Pez dispenser to put our capital into in 1970.  If you’re under 40, this is your first time around.  The short story is that the market did nothing for years on end, then set up for a huge breakout that most people missed because they got tired and quit at just the wrong time.

To open the tie-dye decade, the S&P 500 closed at 91.83 on Dec. 31, 1969.  It began with a mild climb, but then it failed.  The S&P hit the yearend 1975 at 90.  Bad as that was, investors were yet unaware that the next climb was going to take them nowhere again.  At the end of the decade, on Dec. 31, 1979, the S&P was only at 108, a miserable 1.7-percent annual return.  Passbook savings accounts paid better without the risk.

We’ve just been through the same experience this decade.  Our big plunge came in the third year.  So we’re moving a little faster, but we’re running on the same track.  And like those 70s investors, we’re still upside down.  We opened this decade with the S&P at 1,460 and it’s only at 1,420 now.

The upshot of the long bear market in the 1970s was that small investors went away and left the market to those who had to be there, such as pension funds and insurance companies.  You couldn’t get anybody to talk about stocks at a party anymore.  People were not interested.  The potential for loss was obvious, and the possibility of gain was dubious.

Now come forward.  We have a new thing called the Internet, which gives the illusion that anything we want to talk about is exciting and thousands will join us.  But we’re a lot closer to the 70s than you might think.  The Internet will fool you.  Take racewalking, for example.  Hardly one person in a thousand is a racewalking enthusiast.  But go online to a racewalking blog or sign up for a newsletter and you’ll feel like you joined a teeming crowd. 

There’s even more sense of “everybody” in financial topics on the Internet.  Get out in the real world, eavesdrop a few conversations the next time you’re in a bar or at a big party, and you are more likely to find a racewalker than someone bragging about his stock picks.

This has been the biggest problem of the whole 2000s market.  Investors have experienced plenty of loss this decade and their tolerance is low.  The least wind of trouble, and they run.

We’re right where the tie-dye investors were now, heading into the eighth year of the decade with the S&P still showing a loss.

I expect this is the year that every investor sentiment tool index ever created is going to go to maximum despair and disinterest.  And this time, you can take that contrarian message to heart.  If there was ever a time when the advice to be brave when others are fearful is likely to be golden, this is it.

Flash back to the 1970s for inspiration.  The breakout came fast - a disjointed seven-percent gain in 1978 held the final bear market bottom in its embrace.  And from there, the market made a fast 54-percent gain in the next two years.

Those who came back to investing after the bull market was obvious in mid 1980 did OK, but they missed the best gains.  What’s more, there was a mini-bear the next year and the latecomers lost money, unlike those who began investing earlier.  After that, you probably know what came next - the longest bull market in history.

But it took almost all the 1970s to set it up.  Follow that pattern now to set up for the next bull market.

You can ride it as history repeats itself.  Do the tie-dye market recovery dance.  Just don’t forget the tie-dye clothing rule: if you wore it the first time around, you can’t wear it the next time.  But who needs tie dye with all those scared investors selling you their maximally cheap stocks right before the next bull market, anyway?

All you need now are some good stocks.  And I have a couple here in this free report.

Sincerely,

Lynn Carpenter

P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.