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Leading the Bull Run

Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars. — Bernard Baruch, American Financier

Mr. Baruch was right.

Wall Street in Crisis
CNBC.com
Wall Street in Crisis

In thinking back to last year at this time as the market was just starting to turn, hardly anybody was confident enough to call a bottom.

Many observers thought we had hit bottom the previous autumn when storied financial institutions such as Lehman Brothers were collapsing, but another sharp downturn to start 2009 inflicted more pain on investors.

On Monday, March 9, the Dow dropped 80 points. Little did any of us know that we had just seen the bottom of one of the worst bear markets in history.

The next day, the Dow soared 379 points to close at 6926. By the end of the month just three weeks later, the index had tacked on 1061 points from the low. It’s still surprising how sudden and sharp the reversal was, but anyone who has lived through or studied previous market bottoms knows that’s often the way they happen.

Do you remember what set the market off on March 10?

I would guess many people do not.

Looking back at the news of that day, it was a leaked internal memo from Citigroup CEO Vikram Pandit to his employees that got the most attention. Pandit said the company was having a good first quarter and would report positive earnings, and that sent financial stocks soaring as investors began to hope that the worst of the financial crisis might be nearing an end.

How ironic that one year later Citigroup again made a positive announcement — this time about “sustained profitability” — and ignited a rally in financial stocks.

Follow the Leaders

There are still many uncertainties one year after the bottom, and we’ve talked about some of the biggest in Investor Brief, including financial reform and sovereign debt. We don’t yet know what the full impact of those will be.

So what do we know now that we didn’t know then?

We have a much clearer picture of where investors believe the growth will be, and that is in both technology and global investing.

The tech-heavy Nasdaq significantly outperformed the S&P 500 over the past year. A similar picture emerges when you look at the global markets. Let’s compare the U.S. stock market with the rest of the world using iShares funds that track each.

From March 9, 2009 through March 9, 2010,

· iShares S&P 500 Index fund (IVV): +72.2%
· iShares MSCI All Countries World Index (ACWI): +80.3%
· iShares MSCI All Countries World Index ex US Index (ACWX): +87.8%

Many of the investing pros I talk with continue to see opportunity in both technology and global investing, and we will talk about opportunities in those areas in the coming months.

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Questions? Comments? Write toinvestoragenda@cnbc.com