Capitulation...Maybe Not

Jason Zweig had a great piece in the WSJ that I missed making the point that quite a few of bear markets do not end in giant capitulation sell offs. That is one thing I have been arguing that this time around stocks will be done going down when enough people are just sick of stocks. When CNBC viewership has tanked and no one really cares. Many investos makes a big deal of the 1982 Business Week magazine death to equities cover pointing to various similar covers. One I think that is way overplayed. Two and more importantly it was more of cursing to equities. Death to you equities. American's were finally fed up with it. It is amazing to me how many people I talk who don't follow markets, who really don't know much about markets, still talking to me about equities and what a great time it is to buy. I think we will reach a bottom when no cares anymore (unfortunatly that means no one will be reading my blog anymore :).

http://online.wsj.com/article/SB122488709542968173.html

In truth, bear markets often end not in a crescendo of selling but a cloud of indifference. For example, take Dec. 6, 1974, a day that will long live in market infamy. The Dow closed at 577.60, down 45% from its levels in January 1973. Total trading volume was a tepid 15.5 million shares; a few days earlier, it had totaled only 7.4 million, tying the lowest level in more than three years. Lucien Hooper, one of the nation's leading security analysts, told The Wall Street Journal that day that the market was "just waiting the bad times out." Far from throwing in the towel, most investors weren't even at ringside.

"The most interesting thing about [the 1974 market bottom] was its dullness," veteran fund manager Ralph Wanger recalled to me. "It wasn't a crash, it was a mudslide. You came in, watched the market go down a few points and went home. The next day you went through the same thing all over again." And then, without a moment's warning, the bull woke up and took off.

and

In short, bear markets sometimes end with a bang, sometimes with a whimper. You're more likely to see a unicorn in your backyard or a chimera in your kitchen than you are to spot an indisputable sign of market capitulation. The obsessive attention so many investors are paying to the huge swings in the Dow suggests that we may not have hit bottom yet; stupefaction seems not to have set in yet.