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The bear market is not over yet, warns Dr Doom
21 Apr 2009The FTSE 100 was stuck close to 4000 today, down 1.72 at 3989.14 as the so-called Doctor Doom of the credit crunch said the recent strength of stockmarkets was not a rally in shares but a “bear market rally”.
Nouriel Roubini, the business school don from New York University who earned his nickname for calling the credit crunch over the three years preceding last year's financial fallout, said yesterday that the worst in equity markets had yet to come.
“I'm still cautious and bearish,” he said. “I believe we are closer to a bottom in the stockmarket than a year ago but this is a bear market rally.” He added: “I see financial shocks in the months ahead. Some financial institutions are in so much trouble we may have to take them over.”
Roubini's comments on Forbes.com come as firms such as Goldman Sachs and commentators such as Fidelity's former stockpicker Anthony Bolton have called the bottom of the market. “While we are going to be technically out of a recession [next year], it is [still] going to feel like a recession,” he said.
Bear market rallies are said to occur when investors shorting the market have to buy stock to settle their bets, or because speculators call the bottom of the market then lose confidence.
Reader views (2)
"I believe we are closer to the bottom in the stock market than a year ago"
We are lower than a year ago and a year has passed, How can we not be closer to the bottom than a year ago?
- Peter, London thr, 21/04/2009 21:06
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He is right. This is a depression not a recession, so shares still have a long way to fall. The problem is that you dont know the difference until 5 years after the start of the down turn.
- Dave Davies, Basingstoke, 21/04/2009 09:59
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