So were 16 years into this deep, dark 21st century bear market. Share prices just seem to keep falling. Its beenages since any of my investments made a profit. Surely nows the time that stocks start to recover steadily, as the next bull market gets under way? Surely, the years of famine will turn into years of feast?
Maybe not, because it seems that global stock markets have missed their cue.
Momentum is the strongest force in investing
To understand whats going on, you need to understand the strongest force in investing. Momentum.
Momentum is a funny thing. Its as if global equity marketsare a huge supertanker stacked full of money,trillions of dollars worth of cash. Turning this ship around takes a huge amount of time and energy.
Theres a lot of talk about greed and fear in investing. But I viewit more as optimism and pessimism. I thinkinvestors are more pessimisticthan at any time since the early 1980s.
This negativity has been reinforced by one disaster after another. Buying shares? You must be off your rocker. People talk about gold, about bonds, and about staying in cash. You know what happens when you try stock investing: just think of the tech crunch, then the Credit Crunch, and then the Eurozone crisis. Even China, which people have beenbeginning to think of as the new engine of world growth, is slowing.
We will just have to be patient
However, looked at from a neutral perspective, there area lot of positives to draw from the world economy. Emerging markets such as China, India and Malaysia are still pushing ahead. Europe is recovering well, buoyed by QE and a weak euro. And the UKhasits highest ever numbers inemployment. The Great Recession that followed the Credit Crunch is finally over.
Its just that it takes ages for hope to build a momentum of its own. Anyone with money from Manchester to Mumbai has woken up after the Christmas break to see their investments down on the year, yet again. OK, thats enough, they think. Lets get out of shares completely.Thats whywere seeing crash after crash in the markets.
Positive thoughts from financial commentators and investment bankers wont make any difference. I think even Goldman Sachs has yet to discover a bull market-generating machine. We just have to wait patiently for confidence to build.
So just how do you turn a bear market into a bull market? Well,my answer to this question is a little prosaic, but very true. You build itslowly.
I’m a firm believer that income investing is the patient way to investing success. If you’re interested in dividend share opportunities, then our experts at the Fool have unearthed a little known firm that’s worth a much closer look. It’s good value, high-yielding, and a growing business.
Prabhat has no holding in any of the companies mentioned in this article.The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.