A University of Iowa finance professor is optimistic the stock market might be ready for an uptick. Todd Houge say there are indications things could be swinging back up.
Houge says he’s reluctant to say the market hit bottom, but says since late November there’s been substantial negative economic news, but the market is higher than it was at that point.
Houge says the market may’ve factored in a lot of bad news already, so that news isn’t having the negative impact it otherwise might.
He says it makes him "a little bit optimistic that maybe the market has priced in the really bad news" and we may be near a market bottom. Houge says if we have hit a bottom, then that would be good news for getting the economy turned around.
Houge says there is evidence that the stock market tends to lead the economy by six months or so, and the turnaround in the stock market likely would start before an economic turnaround. He says many economists say the turnaround won’t come until late this year or into 2010. Houge says he sees good things happening if the stock market starts to show an upturn.
Houge says a lot of hedge funds and mutual funds managers are holding cash now, and as soon as we see what looks like an improvement in the market, he expects them to invest the cash into the market. Houge says that influx of cash could give things a good boost. He says there appears to be alot of money sitting on the sidelines waiting to get back into equities, and he wouldn’t be surprised to see a couple of days in the next couple of months where the market is up substantially.
Houge says that might be enough to get things going and to get investors back into the game. Houge is an assistant professor of finance in the U-I College of Business.