Last Thursday Was the Bottom - It's Time to Get Back in 109 comments
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Last Thursday, November 20, was the lowest finish for the market since the bear began last October. Since then we have had four consecutive double-digit gains, something that has happened only 45 times in the history of the market, dating back to 1896.
So was last Thursday the bottom? I think it was.
Much has been written over the last few months about how to tell when this market would hit bottom. Several well-done pieces noted the five (or six, or ten) signs that the market has bottomed out and noted that nearly all were in place a month or more ago. For instance, more than one essayist argued that when a "Perma-bear," such as Jeremy Grantham, begins talking bullishly about the market, that is a surefire sign of a bottom. Gratham has indeed argued the current market is more favorable for the equity investor than any he has seen since 1982. Other essayists focused on technical indicators, capitulation, mutual fund outflows, and other factors, most of which seem to have been present for some time.
However, the one historically consistent sign of a market bottom that has not been in place heretofore has been the market's discounting of bad news. That missing element finally appeared on Wednesday, November 26, when a stream of bad news came over the wire before the opening about weak durable goods orders and other negative factors.
But for the first time in months, negative news did not take the markets lower. Though stock futures pointed lower Wednesday morning, and though the market started down more than 100 points following the opening bell, the market quickly began a surge northward and finished more than 250 points above its Tuesday close. There was no positive news to account for this determined show of optimism, unless you want to count the official announcement of Paul Volcker's appointment to head a new committee of economists advising Barack Obama-- an appointment that has been hinted at for weeks, and it therefore appears that this bear market has finally gotten tired of dropping and intends to rise regardless of the news. Together with the various factors discussed above and elsewhere, that is the unmistakable sign of a market bottom. Another is the breadth of the bounce, which has affected nearly all sectors-- including, notably, the financials. Bank of America (BAC) is up more than 25% from its low, and even poor old Citigroup (C) has bounced back.
But doesn't the continued weakness in the economy mean that this cannot be a true bottom and is instead a dead-cat bounce? Not at all. The market always starts its upwards move months before a bad economy has even bottomed. In his book Stocks for the Long Run, Jeremy Siegel documents how the bottom of the market always precedes the trough in the economy as a whole, typically by 4 to 6 months, and on average by 5.1 months. Looking at the current downturn, it makes sense that we would be at or near the bottom at this point in the cycle. We have been in a recession for two quarters, and it is likely that we will continue to be for two more quarters. A one year recession would be one of the longest in the postwar period. But if the trough in the economy occurs late next spring or early next summer, as most economists believe, that would mean we should expect a market bottom around here.
In short, it's time to get back in. I am buying good companies that have been unfairly beaten down over the last few months and now sell at substantial discounts to book value-- companies like shallow-water driller Hercules Offshore (HERO), dry bulk shipper Dryships (DRYS), and solid financials like Bank of America (BAC) that look like they will not only survive but thrive after the shakeout.
One word of caution, however; I suspect the coming bull-- whether you consider it secular or cyclical-- will be short-lived. The feds have force-fed the economy with three-plus trillion dollars in the last few months, and as soon as the crisis is over and the economy seems stable, expect the Fed to begin tightening to keep inflation from running wild-- with correspondingly negative effects for the market as a whole. In short, buy aggressively here, but keep trailing stops on your big buys and be ready to move into gold and TIPS when the bill for the bailout begins to come due next year or in 2010.
Disclosure: Author holds long positions in BAC, C, HERO and DRYS
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This article has 109 comments:
"In short, it's time to get back in. I am buying good companies that have been unfairly beaten down ... companies like shallow-water driller Hercules Offshore (HERO), dry bulk shipper Dryships (DRYS), and solid financials like Bank of America (BAC)"
which sounds like you do not yet have them but will buy since you think market have bottomed.
But the disclosure says;
"Disclosure: Author holds long positions in BAC, C, HERO and DRYS"
Which tells me you already bought these shares. So you are here to pump shares you already own. Will you be here telling people to sell before you sell? Or are you just a stock pimp?
Something here has hit bottom, that's a fact, but it may not be the market!
If you've been long the stocks you're recommending (BAC, C, HERO and DRYS) for more than a week or so, then your post is most disingenuous. Either way, your investment strategy appears to revolve around HOPE and little else.
Market bottoms are processes more than they are singular events. This is a time for nibbles rather than big bites, and nimble, disciplined trading with a very watchful eye on risk management and capital preservation!
Jeremy Siegel's BUY & HOLD strategy and the research that supports it belong to the last bull market that came to an end with the 1998-2000 topping processes. You'll have a very tough time convincing many folks here that BUY & HOLD in a post 1999 investing world is much of an investing strategy. Even your friend Jeremy has begun to backtrack!
Not much more upside left. Stock pimpers bid it up to get out.
On Nov 28 08:41 AM Jim Hawthorne wrote:
> ^^Shakeout??? You call this past year a shakeout???^^
>
> Something here has hit bottom, that's a fact, but it may not be the
> market!
>
> If you've been long the stocks you're recommending (BAC, C, HERO
> and DRYS) for more than a week or so, then your post is most disingenuous.
> Either way, your investment strategy appears to revolve around HOPE
> and little else.
>
> Market bottoms are processes more than they are singular events.
> This is a time for nibbles rather than big bites, and nimble, disciplined
> trading with a very watchful eye on risk management and capital preservation!
>
>
> Jeremy Siegel's BUY & HOLD strategy and the research that supports
> it belong to the last bull market that came to an end with the 1998-2000
> topping processes. You'll have a very tough time convincing many
> folks here that BUY & HOLD in a post 1999 investing world is
> much of an investing strategy. Even your friend Jeremy has begun
> to backtrack!
What little I know about water transport stocks scares me, and that is volatile prices, spot markets, and ship inventories. Good dividends when times are good, though.
Oil? Well, anybody that doesn't believe oil will come back is crazy. The bottom we are seeing here has delayed people solving the problem of oil dependency, so we're no better off than we were before. Demand is down now, but will return when things perk up a bit, and any sign of shortage lures investors and hedgers into the market. I mean, a barrel could be $100 in March--it's just that volatile.
And you are saying that all these things are probably going to turn around in the next 6 mo?
Just because the world's governments are throwing money around and the market bounces up a little, doesn't mean anything except that there are a lot of impatient investors who really, really, really want to make some money right now. So what else is new?
This isn't a normal recession we're heading into, and it cannot be realistically compared to any of the recent recessions. This one is very different and the bottom is nowhere in sight.
I find it quite unbelievable that anyone could say (at this point during this mess) that we have seen the bottom and it's time to buy. Good luck!
Personally I think we will be in a trading market for some time to come. There has been too much damage done in this economy to think it's "up, up and away" for a few years from this point in time.
On Nov 28 09:48 AM You're Kidding wrote:
> I think you are dreaming. The worldwide macro economic situation
> is absolutely horrible and getting worse all the time. Have housing
> prices stabilized? Hardly. Has the derivatives market leverage unwound
> yet? Its hardly gotten started. Are the unemployment, bankruptcy,
> and bank failure rates going down now? They've just started going
> up. Do the people in charge of fixing things know what they are doing?
> Ya think?
>
> And you are saying that all these things are probably going to turn
> around in the next 6 mo?
>
> Just because the world's governments are throwing money around and
> the market bounces up a little, doesn't mean anything except that
> there are a lot of impatient investors who really, really, really
> want to make some money right now. So what else is new?
>
> This isn't a normal recession we're heading into, and it cannot be
> realistically compared to any of the recent recessions. This one
> is very different and the bottom is nowhere in sight.
The point about not reacting to bad news is well taken.
Only time will tell.
What about energy? The reason that oil is down from $120 is "demand destruction" caused by the recession. As soon as the economy starts to recover the price of oil is going to skyrocket. This built in inflation will cut the market off at the knees. I'm glad that you and your friends are jumping in. As soon as this market starts to rally I'm going to short the daylights out it.
"In seasons of tumult and discord bad men have the most power; mental and moral excellence require peace and quietness."
If the author's ultimate definition of a bottom sign were true -- i.e., the market's discounting of bad news -- the bottom would have come earlier this year, as the market consistently discounted all the bad numbers.
In the last market crash, the bottom didn't come until more than two years after the March 2000 crash.
This one is much worse, as it affects not just a market sector, but the whole financial system.
As others have said, the bottom will come when all are looking only for respite from the anguish.
On Nov 28 10:54 AM mc2406 wrote:
> Written by "an attorney and investor" under a pseudonym touting his
> best guess as to where the market is going?? Why is this even being
> included on this website?
In short, I think you are catching the falling knife.
Take a look at the Commercial Real Estate market...due to really tank within the next 3-6 months. You have a very "Shallow Thinking" thought process based on just stock prices and historical stock prices.
The current market <B>can not<B> be compared to the past to determine what is going to happen or to predict the bottom. We are currently in a totally different investing world than any before now... time to "Think" and roll with the punches!
On Nov 28 01:39 PM oldgoldbug wrote:
> It takes guts to call a bottom, especially when things look so grim.
>
> The point about not reacting to bad news is well taken.
> Only time will tell.
I commend the author for a researched and thoughtful article.
Stay in cash unless you are a successful day-trader. When I survey the corporate landscape, I see that that the dominoes have just started to fall.
BAC - First off, ignore the last 4 quarters (1 year) of figures. It's not really historically accurate. Ignoring the last year and looking at the 4 previous --- you have a company growing at at least 10% and last time I watched TV, it's making strategic acquisitions to spur growth in the next 5 years. It's priced to shrink earnings. This is not the case. Out of all banks, this is the only one that I've considered owning lately (Besides citigroup since it got saved).
C - Citigroup has been growing at at least 7% over the past 5 years under similar analysis and is priced to shrink faster than BAC.
That said, I've been staying away from banks for the last year since I saw and heard about this one coming... I think there are better deals out there, but the banks as you've seen are the first to rebound the hardest. Hopefully you were smart enough to buy C earlier this week (monday morning)
HERO - Priced to grow at 1.8%, it's been growing revenues significantly faster (80%) than that but the relationship between revenue growth and net income(-24%) has not been as strong lately... I like NOV and APA more.
DRYS - this one should recover from the fact that commidity prices are "bottoming" esp. if you are calling a market bottom. It's grown Net income at 82%. Can they keep this up? Well --- anyone who knows anything about the transpo business knows that there's no profitable way to transport people, but transporting goods is the way to go. My favorite transpo business distributes liquor (CEDC)
As for the bottom, you're 5 days late and everyone's screaming "bottom."
This could have been the bottom, look to global markets... there are strong indicators that it's the bottom. I think it's the bottom. But, I'm holding out a little bit, i've leveraged up 3 times at 9000, 8500, and 8000. I'm saving one more time to leverage up at 7000 in case the market is as unpredictable as I think it is. But I'm all in. I think that the DOW is worth about 10500, but would be surprised to see it reach that. If it does, it will overshoot to 11000+.
Hope this helps you guys!
Commercial Real Estate problems just beginning to surface........
You are right, some people shouldn't be in the stock market.
Behaving like little kids is shameful indeed.
Very good analysis.
Clear and logical.
1) 70% of GDP is consumer spending. -- where is this going? Oh and on the retail front --the customer count / traffic this weekend was Ok---but just remember that most stores had huge mark downs to attract them.
2) House prices- the largest source of wealth for Americans- continues to go down. People cant afford what they used to. Period. Banks don't want to lend to even close to the LTVs they did prior (ie. 100k down gets you a 300k house vs two years ago when 100k got you a 1mil house)
3) Earnings in the S&P havent been fully revised downward- because of the high levels of uncertainty-- YES -its unchartered territory people- GDII- and analysts still bad case of perma-bull-I-tis. This might be the most important factor.
Governments dont fix economies- consumers do. The bailout reminds me of trying to sandbag a rising tide. Its not going to stop years of unbridled liquidity being reined in. Things will recover, but seriously- buy now?? Buyer beware.
I am a new investor, starting putting money in my 401(k) and IRA earlier this year. I don't know where the bottom is and when the recovery will be in sight. But I do believe that good bussiness will come back even stronger after the meltdown. Reseason? A lot of weaker competitors got washed away after this meltdown. What I am doing now is buying good companyies paying good dividends every month with the money I don't need in the next 1-3 years. I am collecting dividends when I am waiting for the recovery. Although my portfolio is down 24%, but I believe they will come back. Remember, fortune is accumlated over time. A or two good trades will probably make you feel good, but in this market you lose money quicker that you maket. If you are a gambler, trade the market. If you are an investor, think LONG TERM.
There are still no jobs for Americans, so, housing crisis continues, Americans can't get loans, don't buy cars, 'consumables', etc ...
This isn't over for a long time ... this thing could bottom at 4500 ... or 3500 ... I saw one calculated prediction that put things back to the early 80's - market at 1000! It's gonna be ugly and painful ....
If everybody thinks like you, the whole stock market should just close up and forget it.
User 309389 is right, fortune is accumulated over time. You just can't
judge it on a day-by-day basis. You are just too nervous to be in this business. For your health, stay away.
Most economists are wrong.
I think if one looks at what's driving the economic decline, one has a hard time seeing it turn around anytime next year. Layoffs will continue throughout next year (with a possible seasonal uptick in temporary employment for next holiday season). The financial crisis will continue as banks, insurance cos., etc., continue to writedown bad derivatives based on residential and commercial mortgages, credit card debt, etc. And ultimately, the continuing increases in foreclosures linked to mortgages across the spectrum from prime to sub-prime will not subside next year.
About the only serious help to stem these economic forces must come from the USG. It is clear that Obama intends to try to use major fiscal stimulii to do so. The Fed has already tried to use monetary policy to ease the decline, but so far has generally failed (although things could have been a lot worse without their efforts to date, especially in preventing a complete financial sector meltdown).
NTL, I don't think anything the Obama administration can do will have significant effect until at least 2010. It just takes that long for even continuing fiscal injections (such as infrastructure development) to make their way through our economy.
The herd is throwing money in the market right now. Put your money into Treasuries or a guaranteed CD and wait a year for this thing to straighten out.
Tacitus, I applaud your willingness to make a prediction and accept the criticism that is sure to follow. An author with a real name, however, is more credible. By the way, I think you just may be right - that is, that the market going up on bad news is a signal of a bottom.
People who have been responsible yet gotten screwed-over tend to be hostile.
On Nov 29 12:05 PM Enough wrote:
> The hostile responses to the article are very disappointing and the
> caliber of people visiting this site has decreased significantly.
> I thought this was a place for healthy debate, not childish name
> calling.
>
> I commend the author for a researched and thoughtful article.
Normal rules do not apply, and optimism in the face of the barbarian hordes is foolish.
I don't want it, but it is very possible that Rome will burn.
Other than bail out money from the government and the lowering of interest rates, nothing has really occurred to unwind the Residential RE market to a point of stabilization represented by flat values and moderate sales. With Commercial RE, paper is more short term and will be called in to reset over the next 12-18 months, with much tighter requirements. Foreclosures and bankruptcies in this sector will cause a new round of heartaches. With store closings(HD), and retail bankruptcies (Circuit City), not only Mall, but Office Building occupancy and revenues will be under pressure.
I just can't see anyone calling a bottom after an 18% run, given all that is known and unknown about this historic economic event yet. I cannot trust the leadership that sat by watching all this develop, be the same experts that now will tell us that it is all OK now. I don't fault the author for being hopeful, but looking at the charts will show that we just came off a lower bottom and haven't even broke through the 13DMA yet to establish a higher top. My take is that we will not.
While many people a few years from now will be crying about missing their opportunity back in 2009, I may be driving by in a strange looking vehicle, throwing out sparks in all directions. Then, again, I might be busted, poor as a church mouse.
The author will be slaughtered along with his following.
If anyone reads this and wants to go long, give their money to me. I'll take 25% and kick you in the "bottom" and hand you your returns.
I agree w cos1000 in saying the government has been working on preventing "complete melt down in the world financial markets". SO FAR complete, utter, chaotic meltdown has been avoided. Hurray!!!
The ENTIRE SYSTEM IS IN QUESTION and the 'bad' is just starting to work its way through the economy. The 2002 tech bust was from one ancillary industry- not the entire bedrock of capitalism and the economy. Siimilar lows have only mometarilary been reached.
6 months of forward looking is not enough time to rebalance the excessess in leverage and unreasonable low costs of capital bourne from idiotic beliefs that the world is risk free.
Things are just STARTING TO GET BAD.
Notes for Tactius: Leverage : down ; Cost of Credit : up.
On Nov 30 02:42 PM cos1000 wrote:
> Market Bottom?? The Bottom, wherever that might be this time around,
> keeps being put off by artificial means. The government stimulus
> is just an attempt to stave off a complete melt down in the world
> financial markets. Government debt guarantees, the printing of money,
> all to support derivative financial instruments that have nothing
> to do with the underlying economy. All of these Credit Default Obligations
> that are off book, will need to be brought on to these companies'
> books in the upcoming year. That combined with the Commercial RE
> market, yet to be hit with defaults and foreclosures, bringing further
> job losses and bankruptcies still not yet reported, makes trying
> to predict a bottom in the stock market foolish at best. For traders
> temporary tops and bottoms are opportunities to make money, but for
> those trying to do business in this environment the waters are still
> treacherous. A buy and hold attitude in this environment will just
> was away any wealth a long term investor might have left. Moving
> to insured deposits and precious metals is more appealing here, preserving
> capital and taking advantage of fiat currency inflation over the
> next 12 -18 months.
>
> Other than bail out money from the government and the lowering of
> interest rates, nothing has really occurred to unwind the Residential
> RE market to a point of stabilization represented by flat values
> and moderate sales. With Commercial RE, paper is more short term
> and will be called in to reset over the next 12-18 months, with much
> tighter requirements. Foreclosures and bankruptcies in this sector
> will cause a new round of heartaches. With store closings(HD), and
> retail bankruptcies (Circuit City), not only Mall, but Office Building
> occupancy and revenues will be under pressure.
>
> I just can't see anyone calling a bottom after an 18% run, given
> all that is known and unknown about this historic economic event
> yet. I cannot trust the leadership that sat by watching all this
> develop, be the same experts that now will tell us that it is all
> OK now. I don't fault the author for being hopeful, but looking at
> the charts will show that we just came off a lower bottom and haven't
> even broke through the 13DMA yet to establish a higher top. My take
> is that we will not.
No, that doesn't make sense.
1,000 on the Dow? Nice. Go back to your shack in the mountains and make sure you have plenty of ammo in the guns.
None of them can account for the current society and economic conditions.
This downturn is different from the 2001 tech bubble or the1981 blip or the 1970's slogging or even the 1929 crash and subsequent depression.
Very little is the same, except the up and down lines on the chart and the conviction that societies and civilizations can be predicted.
We're still debating why all the great civilizations of East and West failed and crashed yet the market is predictable?
Just when you think sentiment is indicating a bottom and "capitulation" a new bottom in the market or established order will occur.
On Nov 30 05:51 PM sickofthehype wrote:
> One of the best contrarian indicators is sentiment, and after reading
> the comments it appears we're most likely at least 'near' a bottom.
>
>
> 1,000 on the Dow? Nice. Go back to your shack in the mountains and
> make sure you have plenty of ammo in the guns.
>
There is still alot of toxic waste yet to be dumped, financials need to recoup and retailers need to be shedded, stock will get cheaper than todays values.... IMO FTSE 100 will bottom between 3200 & 3500 however my worst fears in calculations could see a bottom at 2000 but I hope not as this is my extreme.
Lets wait till at least May and see what happens thereafter, watching for tech stocks (coms, semi-conductors, internet holders and infastructure), oil, gas & producers, silver & producers, various agri stocks & strong general blue chips.
Why wait until 2010 to move into gold? If you're hedging inflation, now is as good a time as any since gold rose past 800 again. It may not be that cheap for a long time if you're right about inflation returning soon.
Yet in a bull market, so few try to call the top?
One of life's mysteries, I guess.
I agree, it takes guts to call bottom, but my gut tells me we aren't there yet, as much as I wish I could agree with you.
The truth is that not a person on this board knows $hit from apple butter in this current environment and the mechanics of manipulation, oversight (regulation), bubble-innovation and even fundamentals are countless levels of smoke and vapor deep.
Folks, the curtain just got pulled off the wizard -- sit back and enjoy the fireworks.
We still have tens of TRILLIONS of dollars in value to vaporize.
On Nov 30 05:51 PM sickofthehype wrote:
> One of the best contrarian indicators is sentiment, and after reading
> the comments it appears we're most likely at least 'near' a bottom.
>
>
> 1,000 on the Dow? Nice. Go back to your shack in the mountains
> and make sure you have plenty of ammo in the guns.
>
Obviously the involved analysis is ultimately subjective without any sustainable, accurate guiding principles e.g., those that actual work over time. Lazlo Birini recently wrote an excellent Forbes piece on this very topic. Additionally, one is not required to be anything other than reasonably close in bottom fishing to create extreme envy at his or her club within e.g., one year!
My opinion as well as every poster’s thoughts in this thread mean little to nothing in confirming or rejecting the author’s bottom statement. To each his own but never forget that Columbus took a chance! Best of luck to all!
This thread is all over the place.. bottom in, no bottom in sight. to your wacked out. ..So we had a bear bounce. I think we can all agree at least a bounce. I say bear.
We have not been retested yet. We really never hit the bottom we needed to consider a floor. The shorters went away for awhile to set up the next sell off. I feel it could run another 800 and then collide with some giant Kodiac. Tight stops will be the call of the day. When it happens again, I am gonna grab a Guinness from DEO not CEDC collect my nice dividend all the while keeping cash at the ready on the sidelines. I can wait for that next 20% northbound. But I do like BAC down here along with AUY.
On Nov 28 01:24 PM sr9web wrote:
> DRYS has real debt problems and may in fact implode. There are only
> two shippers worth looking at right now: DSX (drybulk) and NAT (oil
> transport).
So I believe we won't see the real bottom unitl sometime in the third or fourth quarter of 2010. You might not like to hear what I have just written. I am not a prophet, nor a fortune teller. C'mon, it is just so obvious.
Do come back in the second quarter of 2011 to tell me that I am correct.
One thing for sure: this meltdown is a Bush/Cheney legacy. Regardless of those who try to blame Clinton or even Carter, B/C have had nearly 8 years in office.
(disclosure: I'm a traditional conservative Republican proud that I never voted for B/C. Sometimes you just got to sit things out)
On Nov 28 08:47 AM manohmanoh wrote:
> The S&P (to pick a broadly-based index) is up 18+% percent in
> FOUR DAYS, and NOW is the time to buy? Are you, by chance, long the
> rearview-mirror industry as well? I hope so, as you seem to be their
> best customer. How about providing the same advice (if that is your
> belief) after a 5% pullback? I'm long HERO as well (mixed company
> at best ... unfortunately for you ... ha ha ha) ... and I have been
> buying as well starting last Thursday (call it blind luck), but I
> actually lightened up a bit on that new money, taking 1/3 off the
> table on Wednesday. My crystal ball is a bit fuzzy, but a 50% move
> in GS and JEC seemed like pretty big moves to me in 5 days (even
> including the drop I took last Thursday) ... FYI, I'm still an idiot
> (in case there was any doubt), b/c I included a "lottery ticket"
> investment in Nortel (which is down in the past week of course).
Geesh, what's that saying about bottom pickers having smelly fingers?
On Nov 28 08:39 AM old guy wrote:
> I agree bought DRYS Wednsday....sooner or later coal,food,metals
> have to go across the pond! If the authors own it is wrong, if they
> don't own it is wrong! Get real!
On Nov 30 12:04 PM Chinese_Plastic wrote:
> Bottom? You're smoking crack my friend. This is exactly how people
> loose fortunes. Don't be fooled by Wall Street. The DOW could very
> easily hit 6000 over the next 12 months. There will be at least 1
> or 2 more bearish downturns over the next 6 months. Patience is the
> virtue in these troublesome times.
>
> The herd is throwing money in the market right now. Put your money
> into Treasuries or a guaranteed CD and wait a year for this thing
> to straighten out.
Ooops, was that a bad call, or what?
Oh, Tacitus, they have facial recognition software now...
Don't even try if you don't know where is the 700B was spend by Paulson and 2 trillions Bernanke distributed with your taxmoney :)
What is left to say but you are WRONG AGAIN so STFU with your GARBAGE BOTTOM CALLS!
i still think it is until it's been proven wrong, today's sell-off has not changed that prediction a bit.
Check out this site, very cool
www.freetradingquiz.co.../
"You can be a murdeous tyrant and the world will remember you fondly but f**k one horse and you will be known as a horse f**ker for all eternity."
Same can be said for bottom pickers that pimp stocks they have already bought. No cred and no class.
"Tacitus", or whomever, anyone wanting to make a small fortune in the market now better have a large one already in hand. Even Buffett is down over $325M on his GE buy, and we give him the credit(deserved or not) of being wiser than most. Maybe he still will be seen as such, but it will take decades and he will be dead.
Funny thing, I know, but I would like my investments to pay off while I'm still alive.
On Nov 28 09:50 AM xsuddensam wrote:
> Like a wise man said about profits,"You can have the first and last
> 20%. I'll take the middle 60%.
On Dec 02 01:34 PM bobbobwhite wrote:
> Buying stocks now is just like getting into the winemaking business.
> To make a small fortune, you have to start with a large one.
>
> "Tacitus", or whomever, anyone wanting to make a small fortune in
> the market now better have a large one already in hand. Even Buffett
> is down over $325M on his GE buy, and we give him the credit(deserved
> or not) of being wiser than most. Maybe he still will be seen as
> such, but it will take decades and he will be dead.
>
> Funny thing, I know, but I would like my investments to pay off while
> I'm still alive.
On Dec 01 05:36 PM squashnut wrote:
> Nice call. The internet is forever.
> Oh, Tacitus, they have facial recognition software now...
But, seriously, can I lease time on your crystal ball?
a) an economic recovery, and
b) a repetition of past trading patterns.
With both preconditions, the stock crashes and relatively prompt recoveries of 1987 and 2001 are being projected to occur again. Is that a valid assumption to make? Do drops and recoveries always work that way? Is it a law of economics that once all the retail investors have lost hope, things have to go up? Does past performance really predict future results?
Did that happen in Japan? Their market never again reached their 1980's high.
The thing that scares the hell out of me is currency instability. Massive amounts of money are being created and destroyed, and the chances of us having either Japanese deflation or out-of-control 1970's style inflation are higher than ever. Add in massive government debt and deficits and you have the possibility for the government to lose its credit rating as Noriel Roubini warns in the Financial Times today. If that's not gloomy enough, housing still needs to fall 20% to return to historic 100 year price to wages ratios, a million jobs connected to the big 3 will disappear bailiout or no bailout, unemployment is rising, and the consumer savings rate is still near zero.
That said, I cannot call the bottom, but I can ride right through it. Low prices are not a good reason to sell anything.
Just wondering.
TD CanadaTrust cashed in all my Canadian stock in Feb 2008 while Comerica sat on their hands while my US stocks sank. The dust hasn't settled for the financials, oils, and tech. Health and food stuff should be the first to rise. But i believe these will move premature.
On Nov 29 03:04 PM Glen Bradford wrote:
> It's unfortunate that a lot of the comments on this article just
> state random opinions and facts and don't back them up with any evidence.
> I figure it's the least I can do.
>
> BAC - First off, ignore the last 4 quarters (1 year) of figures.
> It's not really historically accurate. Ignoring the last year and
> looking at the 4 previous --- you have a company growing at at least
> 10% and last time I watched TV, it's making strategic acquisitions
> to spur growth in the next 5 years. It's priced to shrink earnings.
> This is not the case. Out of all banks, this is the only one that
> I've considered owning lately (Besides citigroup since it got saved).
>
>
> C - Citigroup has been growing at at least 7% over the past 5 years
> under similar analysis and is priced to shrink faster than BAC.
>
>
> That said, I've been staying away from banks for the last year since
> I saw and heard about this one coming... I think there are better
> deals out there, but the banks as you've seen are the first to rebound
> the hardest. Hopefully you were smart enough to buy C earlier this
> week (monday morning)
>
> HERO - Priced to grow at 1.8%, it's been growing revenues significantly
> faster (80%) than that but the relationship between revenue growth
> and net income(-24%) has not been as strong lately... I like NOV
> and APA more.
>
> DRYS - this one should recover from the fact that commidity prices
> are "bottoming" esp. if you are calling a market bottom. It's grown
> Net income at 82%. Can they keep this up? Well --- anyone who knows
> anything about the transpo business knows that there's no profitable
> way to transport people, but transporting goods is the way to go.
> My favorite transpo business distributes liquor (CEDC)
>
> As for the bottom, you're 5 days late and everyone's screaming "bottom."
>
> This could have been the bottom, look to global markets... there
> are strong indicators that it's the bottom. I think it's the bottom.
> But, I'm holding out a little bit, i've leveraged up 3 times at 9000,
> 8500, and 8000. I'm saving one more time to leverage up at 7000 in
> case the market is as unpredictable as I think it is. But I'm all
> in. I think that the DOW is worth about 10500, but would be surprised
> to see it reach that. If it does, it will overshoot to 11000+.<br/>
>
> Hope this helps you guys!
On 11.28.08, he said that we should go long BAC, C and DRYS (or that he was long)
BAC:
11.28.08 - $15.89
02.04.09 - $4.70
C:
11.28.08 - $8.27
02.04.09 - $3.49
DRYS:
11.28.08 - $5.44
02.04.09 - $7.16 (two days ago on 02.02 it was $4.89)
So it would seem that the author may have gotten in near a recent bottom with DRYS, but he's getting killed in BAC and C.