By Ray Turchansky
Edmonton Journal &
Saskatoon StarPhoenix
Wednesday, June 11, 2003

EDMONTON -- Nobody wants to mention the words "bull market" these days for fear of jinxing its potential and incurring the wrath of investors.

It's an understandable nervousness. No sooner had the Dow Jones Industrial Average hit 9,000 and the Standard & Poor's/Toronto Stock Exchange composite index reached 7,000 last week, than they each dropped roughly 100 points. The slip was quickly attributed to profit-taking.

But that's the new paradigm. Having been lulled into a false sense of security by double-digit returns in the late 1990s, only to lose most of what they had gained or more, investors are now quick to lock in even minor gains.

"In the short term, being the next year or two, can I tell you that this is the beginning of the bull market? No I can't," said Adrian Mastracci, registered financial planner with KCM Wealth Management Inc. in Vancouver.

It's a feeling understood by Phillip Roth, chief technical analyst with U.S.-based Miller Tabak.

"Some people have been reluctant to call this a bull market, because it's nothing like the 1990s," said Roth, in a CNN/MoneySense interview. "But it is a bull market, it's just nothing like the 1990s."

Unlike the 1990s bull market, a rocket launch to dizzying heights, this one will be an elongated upward climb that could take years to revisit its previous heights, with plenty of stumbles along the way.

Think of the upstroke on a Nike swoosh after a precipitous drop.

From their highs in 2000 to their lows last October, the Nasdaq led the decline, falling 78 per cent, while the S&P/TSX dropped 50.2 per cent and the Dow Jones Industrial Average shrunk 39.6 per cent.

Now, while small-cap companies traditionally lead shares out of a bear market, another forerunner is technology stocks.

"One of the ways you can tell when a trend is healthy is when tech stocks are leading," said Raymond James market analyst Ralph Bloch. "And when within tech, the semiconductor stocks are leading, you can basically dive into the pool without checking to see if there's water."

Since the lows of October, the Nasdaq has jumped 46 per cent, the Dow Jones and the S&P/TSX each 24 per cent.

But a bull market usually requires heavy trading volumes as well as rising stock prices. While S&P/TSX volume is up 9.5 per cent year-to-date through May, value is down 16.2 per cent.

Mastracci says you have to establish your investment profile. If you feel comfortable with 50 per cent in equities and 50 per cent in bonds and fixed income, then stay close to those parameters.

"If you really have to have that aggressive streak, take five or 10 per cent into the aggressive stuff, but run the other 90 per cent the normal way," said Mastracci.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.