The following chart is from Thomson Reuters. It shows the very high correlation between the market bottom and bankruptcy M&A. The indicator would appear to make perfect sense as fears of bankruptcy would certainly send stock prices lower and a reduction of BK’s or peaking out would imply better times ahead.
When we consider the fact that corporate defaults are set to skyrocket in the coming 6 months it would make sense then that the market fears over corporate defaults will likely peak in the 3rd or 4th quarter of 2009. Market bottom? I’m still not relying on it.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.