Riding the Bull

I want to make a few comments tonight on bull markets. Has anyone else noticed how hard it is to stay on board in a bull market? As we all know bull markets climb a wall of worry. We constantly wonder if the bull is over and the bear is ready to wake up. This constant anxiety is why bull markets go up different than bear markets go down. Bulls tend to have quick severe pullbacks which when added to the anxeity already present tend to produce many bear calls on the way up. Bear markets on the other hand tend to have sudden violent rallies as markets get too oversold. I'm fully aware of all the reasons for why the market should be going down, housing collapse, sub prime woes, economy slowing, earnings slowing, high energy prices, etc., etc. However let me point out that every bull market in history has had similar worries. We are just never going to get the perfect investing environment. So how do we know when the fundamentals are finally going to matter. The answer of course is that no one knows. There is a way to know what the big money in the market thinks though. By watching the COT we have an idea when the large commercial players are nervous and aggressively hedging their positions. If they are hedging heavily then it makes sense to me that they are not going to be big buyers. Without their buying I believe its going to be very hard for the markets to continue to rally. On the other hand if they are not hedging then it makes sense to me that they are probably buying stocks. When we get one of these pullbacks I've got to think these players will be using it as an opportunity to buy stocks at cheaper prices. Right now the commercials have the largest net long position in history, the obvious longer term trend is up and Dow theory confirms the trend is up. Robert L posted that bull markets don't top until a period of extreme optimism has been reached. I believe that is correct and I don't feel like we've reached that level yet. I've not heard anybody talking about the stock market except on financial blogs. I remember in 87 there was enough public interest in the stock market for me to put some money in a mutual fund even though I really had no idea what a stock was. Of course this was a top right before the crash. I'm not really seeing that kind of behavior yet. I think no matter how hard it is to do, that one should probably try and stay on the bull. Of course that's just my opinion. This is my blog though so I'm allowed to state my opinion. LOL