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March Lows a "Textbook Bottom," Buy the Dips, Says Schwab Funds CIO

Posted May 07, 2009 08:45am EDT by Aaron Task in Investing
March 9 was a "textbook bottom" and investors waiting for the retest may never get back in, says Jeff Mortimer, CIO of Charles Schwab Investment Management, which has about $235 billion of assets.

The outperformance of riskier sectors - smaller-cap, growth and economically cyclical names - has all the hallmarks of prior major bottoms, including 1974 and 1982, Mortimer says in
the accompanying video, which was taped prior to Wednesday, the latest installment in the post-March rally.

Although valuations never got as low in the current cycle vs. 1974 or 1982, the low inflation environment makes every dollar of earnings worth more, supporting higher P/Es, he argues.

For investors who've been skeptical of the rally's staying power (like yours truly), Mortimer's advice is simple: dollar-cost average into stocks and use pullbacks to increase equity exposure to levels appropriate to your age and risk tolerance.

136 Comments

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:00AM EDT

Nice to hear that we may have seen the bottom. Good to look to buy American made stuff maybe from some of these small cap domestic compaines... www.myamericangoods.com

PATRICK
PATRICK - Thursday May 07, 2009 09:09AM EDT

Schwab Equity Ratings is bogus.

CpG
CpG - Thursday May 07, 2009 09:21AM EDT

I wonder if they will find this pumper when it crashes. This farce will continue to DOW 9000-ish , then crash to new lows. Where are the jobs coming from? 2 trillion deficit today, 70 trillion owed over 30 years. REAL unemployment 14%. China slowing buying our paper. Dollar heading down.. on and on,

ardvarkk
ardvarkk - Thursday May 07, 2009 09:23AM EDT

Put all your money in cash in BBV cd's Thanks for reading.

hunterta
hunterta - Thursday May 07, 2009 09:25AM EDT

Aaron - you and Henry still just don't get it do you. I'm actually surprised that neither you or Henry don't understand how the market really works.

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:27AM EDT

That guy looks like a classic dip... go figure....

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:34AM EDT

The man is hardly impartial.

alan
alan - Thursday May 07, 2009 09:34AM EDT

He has perfect hindsight, now go chew on a bone.

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:35AM EDT

Just follow Jack Bogle's advice. DCA and "age in bonds/cash". Works like a charm over the long run.

- Thursday May 07, 2009 09:37AM EDT

Laughable. Why not wait for the market to go up 2100 before your call. You're recommending at the top kid.

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:37AM EDT

We may not retest the lows, but I don't see how the economy can recover with a Marxist in charge. Cap and trade, government healthcare, punishing the job producers, we're headed for a decade of poverty and stagnation like England in the 70's.

Mike
Mike - Thursday May 07, 2009 09:38AM EDT

You p&%%#ies!!!! Stand up to your government!!!! How do you think this country was founded?? it's happening again and you better be willing to fight!! Your all blind sheep!!!!!! wake the F$^# UP!!!!!! If your ok with your money being stolen then send that to me because it's so easy to take it from stupid people!!! F*%$ our government!! They lie, steal and DON'T CARE ABOUT YOU!!!!!!!!! JEEZZ WAKE UP!!! OH I think it's going to get better?? SHUT UP!!!! YOU KNOW NOTHING AND YOUR GOVERNMENT LIES!!!! 9/11, Stealing your money, Freedom IRAQ.....STAND UP NOW BEFORE IT'S TO LATE!!!!

Dan C
Dan C - Thursday May 07, 2009 09:40AM EDT

Dont think we'll see the lows again, but we could have a 10% pull back or so down to 800. Fair value of this market is around S&P 850. I wouldn't be mroe than 60% long equities IMO. For people with a long term 10+ year time horizon, these levels look attractive. Yes, they are at 1997 levels. in 1997 we didn't have all this greed and leverage, yet the market was around where it is now. In my mind this is a screaming buy. Or you could wait till everything is great and buy at S&P 1300. There is downside risk, but only in the short term 1 year or so. Ride it out and you will be rewarded within 5 years.

Dan C
Dan C - Thursday May 07, 2009 09:40AM EDT

Dont think we'll see the lows again, but we could have a 10% pull back or so down to 800. Fair value of this market is around S&P 850. I wouldn't be mroe than 60% long equities IMO. For people with a long term 10+ year time horizon, these levels look attractive. Yes, they are at 1997 levels. in 1997 we didn't have all this greed and leverage, yet the market was around where it is now. In my mind this is a screaming buy. Or you could wait till everything is great and buy at S&P 1300. There is downside risk, but only in the short term 1 year or so. Ride it out and you will be rewarded within 5 years.

danny
danny - Thursday May 07, 2009 09:42AM EDT

napp96- I have been thinking about doing the same with my 401k as far as cashing out and taking the hit on the taxes. My logic is the Government will eventually raise the tax rate on withdrawn 401k money and I would rather pay the 10% than 15 or 20 later on.

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:44AM EDT

Take responsibility for your investments. Get involved. Buy the dips! Sell the highs! Whoopee! Ride the roller-coaster until you hit the jackpot and can retire, or you lose everything, and end up having to work until you fall over dead. THIS is how building one’s nest egg was meant to be: Full of heart-stopping, nail-biting EXCITEMENT!

Ron
Ron - Thursday May 07, 2009 09:45AM EDT

Thanks Tech Ticker! I sold everything in March because you scared me out of the market. Where do I send the bill? I can't believe I listened to these clowns on how to invest. http://en.wikipedia.org/wiki/Henry_Blodget "Blodget personally invested $700,000 in tech stocks, only to lose most of it in the years that followed."

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:47AM EDT

Where do I find that crystal ball you all have? I am still tossing a coin.

- Thursday May 07, 2009 09:47AM EDT

This guy oversees the Schwab Core Equity Fund, down 32.77%? And you're going to take his advice? Sold to you.

Yahoo! Finance User
Yahoo! Finance User - Thursday May 07, 2009 09:50AM EDT

The second Great Depression won’t end until Obama’s weak foreign policy leads to the third world war.

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