Cheerleading for an 0-9 Team To Go 1-9

By Jim Wiandt

Matt Hougan is hopeful, which is either a good thing, or the latest sign of the apocalypse.

So we'll hit 10,000 before we hit 6,000? That might seem like a slam dunk prediction from Mr. Hougan. But is it really? I wouldn't be so sure. All it would take would be one more shoe to drop (say a couple more giant banks and an auto manufacturer going out of business) and we'd be there in a hurry.

Matt is framing this a bit oddly, seeming to say that the mainstream media is saying the sky is falling, while the smart guys are all saying we've turned the corner. The reality is that generally speaking, the mainstream media is a bunch of cheerleaders and largely have been all the way down. That said, I do agree that there's a potential whiff of real capitulation in the air.

Until you feel real scared, it's not capitulation, is my rule. So do you?

Generally I agree - I mean it's screamingly obvious - that this is the buying opportunity of a lifetime. The big issue for me is how much do you lay your bets on the U.S. economy, vs. tilting toward particularly Emerging and Asian (read: Chinese) markets?

Honestly, though, it does feel a bit like shooting fish in a barrel right now (except the way the market has been whipsawing around, near-term you can end up shooting yourself in the feet). So much looks so good. Even commodities - oil particularly - seems like a great potential buy. Do you think Oil is going to $25 a barrel or $100 a barrel first? And EM, for those of you who missed that last train, is primed for entry. The U.S. Financial sector is not going out of business. Valuations on many companies across the board seem absurdly low, and despite a worrying demographic cash-in by baby boomers, I do absolutely like the market around here.

My overwhelming thought is that you ought to be in with both feet, because this is going to look like it was a great buying area in a few years. So there, now I'm cheerleading myself.

BTW, did anyone see the study that says that 65% of U.S. high schoolers have cheated and 30%+ have stolen something within the last year? I find that to be extremely distressing. It makes me feel like I am living in an alternate reality. I don't know where the easiest, most obvious lesson of life - that shortcuts are not very satisfying, and integrity and decency, in the end, is all you have - got lost.

Matt mentions Treasuries have again dipped to practically zero yields, and I'm sure he'll come in with another devastating report on real estate soon. But hey, things are looking up!

Comments

[Sean M:]

If it looks good at 8500, it will look better at 6500, then 4500, then 2500. The buy the dip mentality will be beat into the ground over the next few years! You are using a bull market mentality in a bear market.

2008 Dec 03 04:29 PM

[Hacksaw:]

I believe everything said here is directionally true. Just dont thing we've hit the lows yet. Reason being the action today and yesterday was very corrective looking making me believe we need one more plunge to really bottom this thing.

2008 Dec 03 04:42 PM

[Smarty_Pants:]

Yep. Ask those who bought the 'investment of a lifetime' Nikki at 20,000 back in 1992. It was down almost 50% at that point.

They got back to break even twice since then but never much above that. They are currently sitting at 8000 after 26 years of waiting.

If you absolutely feel you MUST buy the dips, then be sure to sell some into the rallies and reduce your average cost of ownership over time (or sell call options to gather premium while you wait for the bull market to resume).

2008 Dec 03 04:48 PM

[icandoitdon:]

that's 16 years of waiting on the nikki...not 26.

i'll say this....the risk/reward ratio of stocks today is a hell of a lot better than it was one year ago and with short t bill rates pushing zero there isn't much of an alternative to stocks. as for picking the bottom, you don't need to do it to make a hell of a lot of money when the turn comes. for those who argue that it won't turn....history is against you. i've been bearish a long time but 've started to buy selectively with relatively small positions in stocks that have good finances that i think have a long term future. and i plan to keep doing so...particularly on those severe downdrafts that will likely be recurring in coming months.

2008 Dec 03 09:10 PM

[carey_jim:]

Maybe those teenagers are living in the social reality of many of our leaders who define justice as "the advantage of the stronger" and who are only virtuous in the rhetoric of their campaign speeches.

2008 Dec 04 12:27 PM