The market is only about halfway through what is historically typical of a bear-market recovery—and this time around, the rebound is likely to be even bigger, said Barton Biggs of Traxis Partners.
Traxis analyzed 14 past bear markets—ranging from gold to US stocks—and found that when markets dipped more than 40 percent, the average rally off the lows was about 72 percent, he said.
Since the Dow is up only about 45 percent and the S&P about 52 percent, the market still has a lot of room to the upside, Biggs said.
"We've had a tremendous, an unbelievable decline in both the economy and the stock market, and so I just think we're going to have a bigger than normal bounce," Biggs said. "I just think we've got further to go."
Counterpoint:
To take advantage of the runup, Biggs recommended investing in the following areas:
Large-Cap Technology
Pharmaceuticals, Oil Services — These two areas were very depressed and are due for a powerful recovery, he said.
Emerging Markets, particularly Asia — Asia stopped outperforming in the middle of June, allowing room for European countries to grow, Biggs said. Led by China, Asia will make its comeback in the fourth quarter.
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Disclosures:
Disclosure information was not available for Biggs or his company.