Private investors may feel nervous about investing in the stock market.
After all, thereâs been a drip feed of often-negative economic and geopolitical news for months.
But at least one multi-millionaire veteran stock trader is making positive noises and preparing for an imminent bull market â read on for more.
Bull markets tend to endure
And thatâs exciting because a bull market is a period when a big percentage of stocks and shares rise for an extended period.
Bull markets tend to last for months and years, rather than mere days and weeks.
However, thereâs plenty of negative general economic news around. For example, interest rates are still rising on both sides of the Atlantic, driven by efforts to curb price inflation.
Speculation is in the air that the US economy may plunge into recession. And if that happens, itâs hard to imagine the UK economy doing the opposite and growing.
But one key point to remember is the stock market is not the economy. And the two things tend to move independently.
Meanwhile — love him or loathe him — thereâs no denying the uncanny accuracy of many of American trader Mark Minerviniâs big market calls over the past 40 years, or so.
And last week he described the current market conditions as a âbottoming processâ.
But he added that during a bear market, we often see a “shakeout” in some form when stocks and shares temporarily retreat.
And the “reason” is usually some âscaryâ news items that fuel negative investor sentiment.
From weak hands to strong hands
In the US right now, thereâs talk of debt ceiling issues, inflation worries, recession speculation and negative Fed language, he said. And that all heaps onto the shoulders of investors who are already beaten up and worn out emotionally and financially.
Such conditions often lead to the final selling and mark the shift from weak hands to strong hands. And that tends to create the necessary impetus for a new uptrend, he asserted.
In summary, Minervini drew on his experience of nine bear markets and said: âIt was always during these âscaryâ times that bottoms formed and a great opportunity was about to be born.â
Meanwhile, billionaire investor Warren Buffett times his entry into stocks and businesses. And he does so by considering valuations.
He tends to buy when stocks and valuations are down and hold for years as sentiment and business prospects improve.
However, positive outcomes are never certain when attempting to invest in stocks, shares and businesses for the long term.
But when I consider Buffettâs style and marry it to Minerviniâs observations, I canât help being excited about the potential of UK shares. And thatâs because weakness in stock prices and valuations now may provide the opportunity to shop for Buffett-style bargains.
Meanwhile, if Minervini’s correct about an approaching bull market, my purchases will have been well timed.
The post Get ready for a bullish stock market appeared first on The Motley Fool UK.
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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.