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Random Quote: Hard work pays off in the long run. Laziness pays off now.
I think you need to distinguish between an acute, but hopefully short term banking problem and a longer term recession issue. I would not be surprised to see things drop another 10%-15% in the current lending environment, but get it all back and more in a day or two (or maybe even an hour or two!) once that problem is solved. Look at the TED spread as a leading indicator that that problem is finally being addressed.
What that tells me is that Friday was not a bottom, but just short covering in front of a weekend where a lot could happen but so far nothing has.
Once we get that pop, the real problems kick in. We will have much weaker employment, lower corporate profits, negative GDP growth and a host of problems to contend with for at least the next year, probably the next two years. We could easily see the S&P jump back over 1,000, but then stagnate in the 650-850 range most of the next few years.
Short answer- sell on the bounce if you are still in the market, because happy days are not here again. And by all means make sure your accounts are all under the FDIC insurance level.
Where I do see value right now is in bond funds, especially closed end funds selling at 30% discounts to current NAV. I would be curious if anyone else see things that way.
Tom O
I been having this fear for the past 10 months and most of my moneys have been in bonds.Yes,I did not make a killing as in the past 5 years,but I am one happy camper compared to most people I work with.Day trading was alot slower this year,but still very productive.Did I loose moneys,yes on some company stock that was a given.Hell,just another tax write off.
Now,for the bottom.Last monday,I was thinking around 8200/8300.By tuesday,I was thinking 5800 within the next two weeks.
And to those of you who claim to be able to "call? the bottom, keep this in mind: the bottom of any bad market is not a point as you so foolishly claim, it's a period.
CMP
If you zoom out enough.
7400-ish. Not 5000-ish. sir.
Big Al
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"I hate Illinois Nazi's" - Joliet Jake Blues
I have to agree with Sal. That was very eloquently stated.
AFA our vaunted service based economy goes.....this meltdown is what it has brought us to IMHO. It was a house of cards waiting for a strong wind. An economy that doesn't produce tangible goods that are used by the majority of the people is doomed. To put it very simply, we have just observed what happens when the supposed creation of wealth amounts to nothing more than trading worthless pieces of paper. Each seller along the way promising that the paper is worth $xx.xx to the next buyer in line. Hmmmmmmmm, seems to me that ponzi schemes are illegal. But what do I know.
Sal's right on another point and that is the need for a moral society. Typically morality is based on a belief system of accountability to a Higher power and our courts and schools have done just about all they could to eliminate that thought. The lack of moral standards is what separates this generation from the "greatest generation" that went through the depression and the proceeded to kick butt and take names during WWII.
Frankly, I don't see us coming out of this at all. The fundamental difference is that the USA is now a debtor nation, beholden to other sovereign governments who have purchased our debt and allowed our economy to be artifiically propped up for a time. This was not the case back in the 20's-30's. I think the whole buyout was precipitated by the "behind the scenes" fact that some of the countries that own us started to call in their poker chips and we (the banks) didn't have anything but paper profits to show them. Just a gut feeling and hopefully I'm way off base but there's something different about this whole deal.
Did I loose moneys,yes on some company stock that was a given.Hell, just another tax write off.
Just another tax write off for you, for every company, for ever investment firm, and for every person that lost money in this. What do you think that is going to do to the tax base and the federal gov'ts programs that distribute tax dollars to the states, counties, and cities that depend that distribution?
Hint: not a single person giving advice here has looked at the big picture or thought this thing all the way through to an end.
The market ain't gonna see bottom until ALL global currencies are stabilized and an international agreeable re-valuing of every country has been decided. Until then you will see some moments of a bull market, and some moments of a bear market. But what you won't see, and no one can predict when you will, is when there will be any market stability, anywhere in the world.
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IGNORE LIST CONTENTS: Hydro, nautiduck, Greaser, sdkid
Wish you good luck. I'm 52, and cutting back to do more "giving back" to the community. Teaching high school!
I've taken a 35% or more loss since mid october of 2007, but I'm still right where I was in mid 2005. I am somewhere around 2.5 times where I was in 2001.....part of that is continued healthy additions...which will reap huge growth from this downturn...
For the first time since I started keeping good records (2002) I am slightly BELOW my target line. In 2002 I drew up a target based on roughly 8% growth, that would get me from where I was then, to where I needed to be in time for retirement; as long as I stay at or above that line, I'm fine. (I was as much as 4 years ahead of the line, but not right now!!)
However, in the meantime I've paid off the mortgage and I also have far more in my emergency fund than I had then....so I'm actually still well above that target line....but then I set it rather conservatively)...
Stick to a strategy. I was doing this same strategy in 2001 and 2002, buying the S&P500 right down to 750 (it is 900 now);; this feels different because I have lost SO MUCH so quickly, but I think this is overblown. I agree with other posters who have wisely pointed out that much of our economy is worthless production of paper or useless services....those hopefully will go away..... But the sky will not fall to those who follow biblical investing principles. God has been very good to me, and we're able to shelter a tanzanian student for a year and teach high school when not at the hospital -- very rewarding. The most important treasures to store up are in the eternal life, not here. gives one a differnt perspective. Every day now I take care of dying patients who are younger than I am....makes one think!
OK Gordon. Wow, another great American! I like your perspective as well as many others' here. I suppose the doomsayers are allowed their opinions too, maybe they are the realists, but everyone seems to be of the mind; no one knows where this is all going. It's ANYONE's guess. If that's true, then I'm going for the good vibe, the good Karma and focus as you say; on the kids, our good health and the way roses smell. On a Sunday I's usually go boatin'. Today I left the wallet at home and went surfing. It was 3-5 out of Ponce today. Great for surfin', lousy for fishin'. Lemonade man. Lemonade.
Lord, some of the guys I come in contact with and we talk about the future. Realistic or not, not so sure I'd wanna go fishing with them.
"Damn Doug, we 'aint never gonna catch a fish................"
"Stop it, you gotta think positive."
"OK, I'm POSITIVE we 'aint never gonna catch a fish..........."
Well, back from lunch and the Dow is holding a good bounce (+570) with not much volitility. In past days I would feel comfortable that at least 60% of the day's highs would carry to a close. Now? Not gonna say. Shoot, we could tumble all the gains and then some into the red at the two minute warning. Nuts!
I suppose good news on the Morgan/Stanley/Mitsubishi deal and for the fact, out of the G7 meeting, the bigger members of the EUs' banks are going to insure intra-banking loans and deposits. The US has to follow suit or the investment community would run over seas?
So, I would imagine a lot of investors will continue to sell into the highs and buy into the lows. If Friday was the bottom, there is good reason to believe we will visit it again. Meh, at least there is some sort of method to the madness now, 'panic' is lending to 'plan'. Good.
A lot of earnings reports due this week. Sigh. At least the sh***y jobs and GDP numbers are baked in and no more "Lehman" 's going over the edge (man, in hind sight, what was the Fed thinking letting them fall? In terms of recent events, that just seemed stoooooooopid). If Osama keeps it in his pants and the nominees don't clang the firebell about the economy to hard on the campaign trail and in the last debate; I'd take this port in this storm. Not so naive as to say we're even close to the edge of the woods, but I sure feel a lot better now than I did Friday at this time. I made a concertive effort to get out of the house and away from the 'media' this week-end. It was work not thinking about it.
Odd though, Capital One sent me a series of counter checks with no finance fees and a letter upping my credit limit by 20%? I don't ever carry more than a 10% balance against the old limit. I find that odd. I were afraid they would CUT my limit and the 10% would look more like 40? Puzzled. Maybe the drop took 'marketing' by surprise and soon CC offers and raised limits will halt? Hmmmmm. Santa is going to have a light load this year. Bummer.
I dunno Tom. I read your post, clubbed my neighbor's cat, and bounced it about a dozen times. All I got was about a 3% return. To be honest though, I think it just ate. I guess I'll never understand economics.
I think you need to distinguish between an acute, but hopefully short term banking problem and a longer term recession issue. I would not be surprised to see things drop another 10%-15% in the current lending environment, but get it all back and more in a day or two (or maybe even an hour or two!) once that problem is solved. Look at the TED spread as a leading indicator that that problem is finally being addressed.
What that tells me is that Friday was not a bottom, but just short covering in front of a weekend where a lot could happen but so far nothing has.
Once we get that pop, the real problems kick in. We will have much weaker employment, lower corporate profits, negative GDP growth and a host of problems to contend with for at least the next year, probably the next two years. We could easily see the S&P jump back over 1,000, but then stagnate in the 650-850 range most of the next few years.
Short answer- sell on the bounce if you are still in the market, because happy days are not here again. And by all means make sure your accounts are all under the FDIC insurance level.
Where I do see value right now is in bond funds, especially closed end funds selling at 30% discounts to current NAV. I would be curious if anyone else see things that way.
Tom O
Well, the bond thing worked out just fine, the quick jump to S&P 1,000 happened even quicker than I thought, but after I posted "a weekend where a lot could happen but so far nothing has" something definitely did happen. The question is where do we go from here?
So far, the TED spread is still hanging in there, so to my limited understanding we are rallying more on hope than evidence. That so much money was so quick to come back in the market on the strength of a bunch of politician's promises makes me think it could go out just as quickly if we don't begin to see results real soon.
Beyond that, the bottom line is that the world and national economy sucks, and if we have fixed the credit problems all we have done is stave off catastrophe. To me, it seems that at best we are getting closer to the long drag down, and this uptick should be looked at as a selling opportunity rather than as the beginning of something good.
On the other hand, I usually miss the first month or so of a rally out of an excess of caution, so take this all for what it's worth.
Themis- I'll bet this was a happy day for you. Are you seeing it as a real, or false bottom?
Trading range 9500 - 10500 until it is clear that all the bailout
efforts will not prevent serious recession.
Rising unemployment to 12% will be the death knell to new range of
6000-7000.
I bought a hard to find new Sebring convertible two weeks ago for
31% off of MSLP. Car dealers are going to be dropping like flies... or boat dealers.
They are desperate for cash to keep the lights on.
I see it as a short term, several month bottom. I played it, had some fun, but am tired and weary. I am back in 50% cash. When I strike like that it is big and quick. Today will be up is my guess, but I am thinking 2 or 3% by the end. Eearnings are starting to come out, and I don't think those will be good anywhere, so I don't see a move above DOW 10k soon.
I do see unemloyment hitting 10% soon, and my neighbor and good friend, a GM dealer, is going to close his dealership and sell his house for cash. The past several years had him mortgaging his two homes to put back into the dealership to keep it afloat. He hired consultants and pais staff. He did it becuse his kids are in it and he didnt have the heart to just close it. Now he is being carried out. There will be more like him, and it is sad. And his pain will trickle down.
Re: I'm Calling The Bottom
