Ugliest Charts of This Bear

The last several weeks have given us a truly epic, slow-motion crash in equity prices. Friday's lows had the S&P 500 down by more than 45% from its intraday high of October 2007. That's a mauling for the ages. Market participants aren't just upset about all of this; they aren't just scared by it. They're also in awe, looking on slack-jawed as each week brings more nuttiness than the last.

So, in the spirit of great art, we think it's time to present a few eye-popping charts, the constituent elements of the broad market's historic selloff. With recent intraday prices, and in no particular order:

Joy Global (JOYG) , down more than 76% from its 52-week high of $90.00:

click to enlarge

Potash Corp. of Saskatchewan (POT), down more than 72% from its 52-week high of $241.62:

John Deere (DE), down more than 68% from its 52-week high of $94.89:

Continental Resources (CLR), down more than 74% from its 52-week high of 83.81:

CB Richard Ellis Group (CBG), down more than 82% from its 52-week high of 27.11:

U.S. Steel (X), down more than 82% from its 52-week high of $196.00:

Merrill Lynch (MER), down more than 76% from its 52-week high of $68.18:

American Capital Strategies (ACAS), down more than 75% from its 52-week high of $43.94:

We could go on, but you get the point.

One of the remarkable features of this wicked bear has been the near-total absence of places to hide, though a few prominent consumer staples names have held up better than the overall market. Here are some: Coca-Cola (KO) - down more than 36% from its 52-week high; Procter & Gamble (PG) - down more than 21%; Clorox (CLX) - down more than 17%. Not pretty, but not quite as ugly as the material/energy/financial/industrial darlings-turned-villains.

Some great values have been created amid all this carnage. The challenge, as ever, is to identify where and when--and to do so before everyone else does.

Comments

[Jimmy Lathrop:]

I see three things.

charts of optimistic price to earnings ratios evolve into more realistic expectations of actual return on investment during a period of upcoming recession.

a graph of share prices buoyed by leverage then brought down as leverage was withdrawn and

forced selling due to margin calls

2008 Oct 26 11:31 AM

[dingy31:]

My opinion; the charts reflect the negativity of short positions being filled at a time when no new capital is being invested. The downward force is unstoppable.

2008 Oct 26 02:22 PM

[captainccs:]

Not only were some prices driven too high by the housing/financial bubble now they are being driven too low. It is always a good idea to have an "inventory" of investable companies but there is no rush to get in ahead of everyone else. Haste makes waste is very applicable now. I was too hasty in buying ACAS and it was already 30% below its 52 week high. Had I been patient I could have bought three times the shares for the same money!

Take Textron [TXT], it has a P/E ratio of 3.24. Margin expansion to 15 would make it a five bagger. But if it first drops another 50%, you would be able to buy a ten bagger. No rush here. Once the bottom forms, you can expect a bull to run a couple of years at least.

No position in TXT but seriously considering it.

2008 Oct 26 03:01 PM

[investor88:]

Las Vegas Sands down from usd140+ end 2007 to usd6+ now. Stock down 95%. As ugly as the charts above.

2008 Oct 26 08:36 PM

[Steven Hansen:]

do you understand in the last five recessions the mean drop of earnings was 33% (and 1990 earnings fell 60%). this market still is not cheap for what probably is going to happen.

2008 Oct 26 08:51 PM

[realeebop:]

to the Hand... this market will see earnings drop WAY MORE than 33%, maybe more than the 60% in '90... I remember it took years to recover post RTC and this sh_tshow is 100x worse... your reactions Hand ?

2008 Oct 26 09:31 PM

[sr9web:]

Good post. I bailed on ACAS a number of months ago. At the time, I was griping about the haircut. Now as I look back, I'm shocked at how much farther it's fallen. Maybe it will go to $5 and we can all buy a boatload then.

Right now, I'm watching to see if GE will drop below $10

2008 Oct 26 11:41 PM

[dave mckay:]

to "the hand"..I can't find any evidence that earnings dropped that much (60%) in 1990 recession as you say. Anyways, many small cap growth mutual funds had 80-100% returns in just one year, a year or two after that recession.

2008 Oct 27 02:55 PM