2009: Expecting a Massive Rally 101 comments
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As the world says goodbye to one of the worst years ever (for the markets), 2009 will be starting out with plenty of unknowns and fear.
I recently wrote a post in which I said the probability of a huge decline is a lot less right after a huge decline. That is where the world is now. The world is wading through the aftermath of a huge decline, trying to sort it all out. The way markets work, by the time it is all sorted out the market will be much higher.
The S&P 500 went below its 200 day moving average (DMA) which is an important indicator for me, over a year ago (click to enlarge):
When this happened, very few people heeded that warning. In fact, most were explaining to us why there would be no bear market or recession and selling stock was difficult for most folks. Now, buying stock has become difficult. More often than not, the difficult thing turns out to be the best thing to do.
In the last couple of months I have added a Chinese telecom stock, one of the publicly traded U.S. exchanges, a consumer discretionary ETF and some short-term corporate debt (highly rated from the healthcare sector). It is not too late for any of those market segments.
Over the next few weeks, I expect to add an industrial stock, a tech stock, longer dated corporate debt (from the consumer sector) and some foreign sovereign debt.
I think we are setting up for a massive rally - much more than the 20% rallies we have had. The quicker a massive rally were to occur, the more likely I would expect it to turn out to be a bear market rally and I would look to add an inverse ETF as a hedge if the rally was very fast. 30% in a couple of months would be a scenario that I would fade. If the market rallied 30% over 12-15 months, I’d be less likely to fade that one - but that is a long time off.
While 30-40% might seem laughable, the biggest up years for U.S. markets that I know of occurred during the 1930s.
I’d like to wish everyone a happy and healthy new year.
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This article has 101 comments:
Just to be a devil's advocate, however, if a huge upswing really does come around, which is not unrealistic, it will come only as a rebound to the downs that every market in the world has experienced this year.
But, when you look at what is driving ECONOMIES, not MARKETS, everything is still in a mess. Despite bailouts and rate cuts from all the world's Justice League (pardon the reference), the fundamental state the world is functioning in is not sustainable. US is faaaarrr too consumer-oriented and its causing the national deficit to increase and increase, not to mention the effect of the bailouts on the deficit. Wall street is going to change completely.
Without getting past the real problems first, the markets are just going to keep going down.
In conclusion, I agree with you...until more bad news comes out.
S & P 500 should be around 750, to be "at trend".
Look, I am not saying that charting or fundamental analysis is the "end all" to investing, however, I do believe in reversion to the mean.
Allowing for a 50 point, over/under at that trendline, means the the farther away from the trendline the S & P goes, the harder it has to fall in the future to revert.
If the Fed/ Treasury and its "partner" trading desks would stay out of the market, and let the market act on its own, we wouldn't get these phony 30% plus spikes in the averages.
I would prefer the S & P at 750 and return 10% / year (with dividends) for the next 20 years, rather than 35% spikes, 10% drops, 20% spikes, then 40% drops.
I am not a trader, as a matter of fact, I am the worlds worst trader. So while traders would enjoy wild spikes in the market, investors probably would not.
Massive rally: be careful what you wish for, for everything always reverts to the mean.
keepamericaatwork.com/...
Virgil
www.KeepAmericaAtWork....
On Dec 29 11:16 AM Malkiel wrote:
> It would seem that a lot of the wealth required to make a solid and
> permanent rally was paper wealth that's been evaporated and will
> not come back until new players and products show up on the scene
> which can create new paper wealth (or you can work the rest of the
> century to build up real wealth through manufacturing or other gritty
> hobbies). In the meantime, I would expect any parties contributing
> to a 2009 rally to wake up a few weeks later and realize that they've
> just bought a lot of stuff with no fundamental reasons for doing
> so and should quickly dump them, giving us the final bottom which
> most certainly hasn't come yet...
On Dec 29 11:30 AM Roger Nusbaum wrote:
> In case it is not clear a massive rally is just that, a bear market
> rally which I think is more probable than a new bull. In 1935 and
> 1936 the Dow had a two year 72% rally.
Will the next bear market rally be explained as the consequence of another divergence, perhaps of the 50 day MA, that was so obvious in technical analysis hindsight?
These 5 sucker rallies were:
11/13/1929 - 04/17/1930, 198.69 -> 294.07, 48%
12/29/1930 - 02/24/1931, 160.16 -> 194.36, 21%
06/02/1931 - 07/03/1931, 121.17 -> 155.26, 28%
10/05/1931 - 11/09/1931, 86.48 -> 116.79, 35%
01/05/1932 - 03/08/1932, 71.24 -> 88.78, 25%
and Obama has promised us that things will get WORSE before they get better.
I'm inclined to believe him, so I'm not looking for a bang up now.
I am a little disappointed in Roger's analysis here. I think Roger was one of the few people to really call "the end of the world" in late 2007, while others were seeing "a correction" at best. (We won't talk about the Steins of the world, they got what they deserved) But, Roger, going after fundamentals in this market.... is it the way to go? Question: What goes up in sucker rallies?
I'll just propose something else too. Back in September, October and November there was A LOT OF PEOPLE calling the bottom in the comments here on SA. Now, almost no one is. Everybody is talking about more downside and sucker rallies. Is this a good sign?
Here is one link from summer 2007;
randomroger.blogspot.c...
and another post from Dec 2007 where I say I think a bear has started;
randomroger.blogspot.c...
Nikola, I would not say I am going after fundamentals, quite the opposite, bear market rallies happen for no reason at all when few expect it. Fundamentals, which I don't think I touch on at all, have no short term predictive value, I am not building a fundamental case at all.
I say in the post that if leadership of a rally comes from what lead before then we should probably take it as a bear market rally, ie a sucker;s rally which I think is the higher probability. if leadership comes from new areas then I would say new bull market.
Jimmy46, things getting worse can be correct and have nothing to do with where stocks go. Regardless of when, you can expect stocks to turn up before things look better.
To the comments that say we are going back to the lows, or lower, yeah, I think the same thing but that a rally comes first, IMO.
Lending loosens
The population gains confidence in themselves and the new admin.
Housing stabilizes
Corp earnings favorably compare
Also keep in mind the Feds now have ownership in numerous companies in the US. I got into bonds last Oct and plan to stay in bonds. New money went in at 7500 and will go in again at 6500-7500. Don't buy into a sucker rally!
These guys have been calling bottoms all throughout 2009. They have been wrong all along. But we're supposed to buy it this time?
Maybe we'll have some one week wonder rallies, but the general trend is still down. What is going to be the catalyst for the real recovery? Gov't spending? Ask Japan how that worked for them in the 1990s.
Don't expect any major rallies. L shaped recession...'growth' to be anemic afterwards. The market will eventually come to realize this and follow suit- sideways that is.
Charts and tech analysis are meaningless when you are forced to consider REAL future needs such as shelter and food. People don't gamble(aka invest) with that money.
Not to worry though, as we see with GMAC/GM/Cerberus, if Joe six pack won't continue to overleverage himself to support the unsustainable fiscal model, Uncle Sam will print it, spend it, and tax him for it later.
What is your target stance heading into this rally? I.e., what is your recommended equity-bonds-cash allocation?
It's one thing to move from a 100% cash position to a 20% equity, 80% cash position, and something quite different to move from a 10% stock, 40% bonds, 50% cash position to a 60% stocks, 40% bonds position.
What kind of allocation changes are you proposing here?
Personally, I don't believe that the markets move randomly, the tides in the markets are a reflection of the monetary tides at work in the economy. I see zero possibility of any significant improvement in the economy, as unemployment continues to crank up in pace with a continually shrinking global economy. The dollar is about at the end of its ability to support the deficit borrowing by the state, and we are seeing not just corporations and a corrupt finance sector imploding, but now whole states are on the brink of fiscal collapse.
If there were a ray of hope somewhere, something to indicate that we had at least reached (or even approached) rock bottom, then yes, I could see a "tradeable rally" before the markets took their next step down.
But the fact is, the economy of the 1930s got its big half-time rally when the debt overhang fueling the boom collapsed, a LOT of companies and banks imploded, and people thought the worst was over. It was only after they saw that the economy was continuing to shrink (deflation at work!) that the steam ran out of that rally.
In our current situation, the debt bubble has not yet begun to deflate -- not even a little, despite all the mortgage failures and (non-bank) corporate bankruptcies. The Fed and Treasury have simply been too adroit at preventing any of the hot air inflating our debt balloon from escaping, creating new debt even faster than bad debt has imploded. We now stand at a total debt-to-GDP ratio of about 3.6, as compared to 2.6 at the peak of the debt bubble at the start of the Great Depression. BTW -- their "tradeable rally" did not occur until after their debt bubble popped, perhaps in part due to assets fleeing crashing debt instruments.
Our deflation continues, and the global and national economies continue to shrink. The pressure is mounting on our own debt bubble.
Somehow, I can't see a lengthy period of relative stability wherein stocks could rally. Maybe an inauguration honeymoon Obama rally, up until the unemployment continues to soar, past 10% (U3), and many companies begin to go bankrupt, with the economy no longer large enough to support them all. The Fed is down to being able to only print money, driving rates lower is not an option. That will undoubtedly lead to inflation, and countering the deflation as designed. But with a beaten and broken consumer demographic, we are not going to see jobless millions thronging to the malls to celebrate, buying up the few rapidly-increasing-in-... goods that remain. Combating inflation by raising rates will carry a (too-steep) price in terms of additional unemployment, so the Fed is going to be helpless and we will finally see our debt overhang begin to erode away, with bonds failing along with the companies, municipalities, and states that have issued them and are unable to service their debt.
Stagflation will be the only item on our economic menu for a couple of decades (maybe more) to come. And while we will certainly get small rallies along the way, I seriously doubt that any of them will last more than a quarter.
Happy New Year.
On Dec 29 10:51 PM Mr G wrote:
> Here's what I think. Strong possibility the Dow will go to 7000
> or 6500 in 2009. I dont believe we will start back up again until:
>
> Lending loosens
> The population gains confidence in themselves and the new admin.
>
> Housing stabilizes
> Corp earnings favorably compare
> Also keep in mind the Feds now have ownership in numerous companies
> in the US. I got into bonds last Oct and plan to stay in bonds.
> New money went in at 7500 and will go in again at 6500-7500. Don't
> buy into a sucker rally!
"I have added a Chinese telecom stock, one of the publicly traded U.S. exchanges, a consumer discretionary ETF and some short-term corporate debt (highly rated from the healthcare sector)."
Sounds to me like CHL, FXI, XLY, and some GE short term corporate debt. Maybe MRK.
Also, it's my belief that if you want to call for a bottom, using only technical analysis isn't the way to go, you have to talk about the current price level of the market and the expected future growth as well as consumer and investor sentiment.
This is absolutely a trader's market right now, and you can get burned if you jump in with both feet.
Markets take a long time to recover, so don't feel like you need to buy up stocks when the market shoots up 5% in a day, it will fall. Take your time and find some solid investments for the next 5 years.
Glen S, two things one my primary obligation is to clients. Second, the saying about teaching to fish would better describe what I am trying to accomplish with the writing.
Big bear market rallies, which is what I think is going to happen are very normal events, look at how bear markets have worked before, this is far from a bold prediction. I will repeat that bear market rallies come and when they do they are not fundamental events. Do you think things were better in 1935?
Slooooow and painful -- Expect absolute hell as the masses wake up and realize that Wall Street is vapor and they have nothing, and unable to retire.
Sitting 80% in cash gazing at macroeconomic trends until there is universal agreement that the coast is clear may not be the best long term investment strategy and, more damningly, how boring!
On Dec 30 03:15 PM Paulo wrote:
> When all is said and done, the fact remains, as Gemonk points out
> above, that for those who are prepared to put their investor hat
> on and have a time perspective of five or more years, there is good
> stuff to buy out there that has a good yield and will most probably
> still be in business for at least a decade or two.
> Sitting 80% in cash gazing at macroeconomic trends until there is
> universal agreement that the coast is clear may not be the best long
> term investment strategy and, more damningly, how boring!
I think you have apoint here. Would appreciate if you mention some of the stocks where you think there is value 4 the buck so we could discuss these here.
Regards - G.Beer
On Dec 30 08:57 AM gemonk wrote:
> The time to buy is when blood is running in the streets. There are
> some incredible bargains out there right now, some under a buck a
> share. Pick wisely, and you will become wealthy. Now.
On Dec 30 04:26 PM GermanBeer wrote:
> Hi Paulo,
>
> I think you have apoint here. Would appreciate if you mention some
> of the stocks where you think there is value 4 the buck so we could
> discuss these here.
>
> Regards - G.Beer
But when you look at the weekly, monthly, quarterly and yearly charts; you will see much much more bearish indications.
At the present stage; the momentum to the downside has already been "neutralized" on the daily chart.
Weekly charts of the major indeces ($INDU, $SPX, and $COMPQ) still has the 20ema resistance as a major upside roadblock with their momentum or ADX still in the high 50's and rising (meaning more than 90% chance of lower low on the weekly chart.
Likewise, monthly charts ADX momentum are still rising and are above well above the minimum 30 in order to maintain the momentum to the downside.
It got worse on the quarterly and yearly charts just by looking at the extened runs on the bar by bar basis. Such extended bar by bar runs seldom got reversed.
At any rate; in order for the momentum on the weekly and monthly charts to be "neutralized" -- $SPX will have to break above 1095 in order to provide the necessary momentum for the daily chart and will give enough "courage" for both traders and investors to wait and buy the next pullback to the downside.
A break above 1173 for SnP500 is more than enough to tell everybody that the bottom has already been "set" and any minor pullback will be bought by both traders and investors alike.
Without those levels being broken by the Q1 2009; the direction is clearly downward.
On normalized basis; 676 is the "ideal" target for SnP500 to the downside assuming the next run down by Feb-Mar 2009 do not extend far beyond 721; and the next run down by late H2 2009 do not result into a global panic sell-off well beyond the normalized 676-588 levels. A global panic sell-off can easily push SnP500 into the 478-356 levels.
There is a bull market in corporate bonds now. LQD has blasted past 10, 50 and 200 DMA after putting in a double bottom in October.
Junk bonds (HYG) are doing the same now and have blasted past 10 & 50.
Preferred (PFF) are just a little further behind.
I notice that S&P 500 has just crossed the 10 DMA (first time since the September cliff) Next resistance is at 50 DMA. That may be a signal to buy defensive equities.
The other statements, regarding the way a rally unfolds and how to judge it, are also spot-on.
The author is simply positioning himself for an upswing but is ready to pull the short trigger if the rally is manic enough to cause suspicion.
Completely reasonable. Good advice (unlike some of the mish-mash I find on this site).
Thank you Mr. Nusbaum.
It'll be a bad recession, but not a depression and nothing like the 30s. The unemployment rate in the 30s was 20%+, and GDP decrease by double digits. You can rule out that scenario just based on the fact that the FED has bailed everyone out. I think the economy has been good for so long people have lost perspective on what a recession is like.
On Dec 30 08:57 AM gemonk wrote:
> The time to buy is when blood is running in the streets. There are
> some incredible bargains out there right now, some under a buck a
> share. Pick wisely, and you will become wealthy. Now.
Meanwhile, watch for new lows coming in 2009 - earnings need to get revised downwards big time! Additionally, using leverage to buy stocks is no longer in vogue and will become even less popular (if that's even possible at this point) as the market moves lower!
On Dec 29 11:36 AM Emerald wrote:
> Malkiel makes a very valid point. Current S&P earnings estimates
> are still too high and therefore stocks are not cheap. Assuming $55-60
> per share and a average multiple of 12, you have an S&P at 680
> ($57 x 12). We may get a brief rally at the end of January, but expect
> a selloff by traders in mid February. Paper wealth is still being
> destroyed as companies and consumers deleverage and is not available
> for long term stock investing. A more meaningful bet would be in
> investment grade corpoate debt as spreads tighten over 2009.
>
>
> On Dec 29 11:16 AM Malkiel wrote:
The "suckers" by definition are supposed to be the majority, not the minority.
Bears are way over-confident in themselves. I would love nothing more than to have a "non-sucker" rally, just to remind the bears that nobody is omnipotent and humility in the markets is always a virtue.
The market is entirely too self-conscious for a real display of strength in either direction, I think. Trading with a wide brush - index funds, for instance - will get you nowhere. Broad-based shorting is a losing play in a flat environment. Find companies, sectors, individuals that will do well and invest in them. Or better yet, become such an individual, start such a company.
One caveat... Having disproved Santa, the bearishness is especially poignant right now. I see a good likelihood of a green January. But who knows! It's all mind games at this point.
No doubt I agree. Several times in the past two weeks we've rallied in the face of the bad news. Again today in the face of consumer confidence report. The liquidity waiting on the sidelines is ready to come rushing back in. And as you suggest, historical patterns indicate when equity markets goes down, once they find the bottom, they eventually come back up stronger.
Happy New Year to you too Roger.
GNE
Once again, we have the majority of the public and hedgies on one side of the market... long.... the BAM.... just when you thought it was safe to go back into the water.... The carpet pulled out from everyone once again! Expect large downward corrections in the market in the coming months... and "bear market rally"?........ really? You mean ANOTHER bear market rally, no? You just had your Nov-Dec Bear Market Rally from 7500- 8800..... hope you enjoyed it while you could......
On Dec 29 09:35 PM Roger Nusbaum wrote:
> Chris B you could go to my blog and find literally hundreds of posts
> about my using the 200 DMA as a catalyst for defensive action, the
> earliest being 2004 when I first started writing.
>
> Here is one link from summer 2007;
> randomroger.blogspot.c...
>
> and another post from Dec 2007 where I say I think a bear has started;
>
> randomroger.blogspot.c...
>
I bought this stock well under a buck (many shares), and I will sell half of them when and if the price doubles. Thus I will have many shares at a cost of $0. I have already done this with Wachovia, AIG, Citi and Ford (carrying C and F at a small per share cost, but way under a buck).
HTM - US Geothermal: research it - I think you might agree that this one is a potential flyer. Same for BCON. COT is a debt service play, and now a bit over a buck, but a potential winner. LEA is around a buck today - will do as well as the overall auto industry.
If you include stocks under $3/share, the pickings become even more interesting.
My general point is that there are some real bargains out there right now. Unless you truly expect the system to collapse, start poking under the rocks for bargains. I am looking at SIRI - 12 cents/share - can only rise if mgmt can scale the debt hurdle - great product.
For the record, I am long FNM, HTM, LEA, AIG, COT. Also long GLD, SLV, PAL, and many others. Roughly 50% of my holdings are long American equities.
1. Only one lasted as long as 5 months. Most were 1 or 2 months long. So they were not "massive" in any sense of being sustained.
2. The fact that they were bear-market, or sucker, rallies is evident from the overall movement from the beginning of the first to the end of the last: 198.69 --> 88.78, which is negative 56%.
On Dec 29 02:43 PM mkreisel wrote:
> The Fed didn't do anything between 1929 and 1933, and the market
> managed to pull together 5 sucker rallies 20% or more before finally
> hitting the bottom.
>
> These 5 sucker rallies were:
> 11/13/1929 - 04/17/1930, 198.69 -> 294.07, 48%
> 12/29/1930 - 02/24/1931, 160.16 -> 194.36, 21%
> 06/02/1931 - 07/03/1931, 121.17 -> 155.26, 28%
> 10/05/1931 - 11/09/1931, 86.48 -> 116.79, 35%
> 01/05/1932 - 03/08/1932, 71.24 -> 88.78, 25%
On Dec 31 10:41 AM jiltedpatriot wrote:
> In response to the previous posts about "blood in the streets buy
> now", if you had done that in December of 1930 after a 45% drop in
> the DJIA by March 8 of 1932 you would of lost more than half of your
> investment. Bear market rallies are death traps to "buy and hold"
> If you notice every one of those rallies of the late 20s and early
> 30s were followed by larger percentage sell-offs. Up 21%; Down 37%;
> Up 28%; Down 44%; Up 35%; Down 39%. Do the math. The return of your
> principle was horrible in the 30s and looks the same now. Timing
> is everthing. Just remember even though there was 5 large rallies
> of the early 30s the DJIA lost 81%. Sept 3 1929 381 points March
> 8 1932 71 points.
We need to have major inflation to double or triple the property values based on inflation to rejuvenate the consumer spending.
All of the above is only possible to have single hard currency “GOLD” to start with and rebuild from there…..
This optimistic nature without a solid basis, this Disneyland, Pollyanna, constant upbeat attitude that all things will right themselves in our best interests naturally shows itself in "sense of entitlement" younger people far more than in older ones who are more likely to have witnessed at least some of the severe deprivation and life-threatening hardships of the Great Depression that did not end until WWII ended...16 hard years long.
None of these younger writers has ever experienced the tragedies of those killer days, so is writing as if an authority from an incomplete life experience lacking the full cycle witnessing of boom and total bust. Not ever seeing a total bust as was the Great Depression makes their falsely persuaded opinions as empty and valueless as market gains this year.
in the scheme of things, both of us have been here but an instant, we have seen very little, and we know next to nothing.
negativity without basis is equally unsound as optimism without basis.
the sun is shining warmly today. get some fresh air...
On Dec 31 11:58 AM bobbobwhite wrote:
> This article shows a great example of what I have been writing about
> for nearly 6 months......that our trumped-up economy based almost
> entirely on perpetual consumer spending and ever increasing GDP has
> thoroughly inculcated younger financial writers with a "growth at
> all costs" market enthusiasm that is not justified by what is happening
> in economic reality. They seem to think all things financial will
> always revert to the high point of the cycle, and not to the mean,
> let alone the low point.
>
> This optimistic nature without a solid basis, this Disneyland, Pollyanna,
> constant upbeat attitude that all things will right themselves in
> our best interests naturally shows itself in "sense of entitlement"
> younger people far more than in older ones who are more likely to
> have witnessed at least some of the severe deprivation and life-threatening
> hardships of the Great Depression that did not end until WWII ended...16
> hard years long.
>
> None of these younger writers has ever experienced the tragedies
> of those killer days, so is writing as if an authority from an incomplete
> life experience lacking the full cycle witnessing of boom and total
> bust. Not ever seeing a total bust as was the Great Depression makes
> their falsely persuaded opinions as empty and valueless as market
> gains this year.
On Dec 29 10:22 AM market ace wrote:
> Dream on! There will obvioulsy be tradable bounces in any market,
> but this one has no chance of a solid long term rally. The only bounces
> have come on bailout news and Gov't intervention. The basic problems
> are not going away - ie housing/mortgage problems, excess personal
> and corporate debt, consumer withdrawal and unemployment, excess
> Gov't debt and ultimately lower corporate profits. All of these work
> against and will not sustain any economic recovery for many years.
> Throw in a very unstable world and wars popping up all over in 2009
> and safe haven investments will remain king.
S & P 500 should be around 750, to be "at trend".
Look, I am not saying that charting or fundamental analysis is the "end all" to investing, however, I do believe in reversion to the mean"
To truly revert to the mean you should be using all data as far back as possible and that would suggest a reversion back to the 500-600 level with a likely discount of at least 50% for the overcorrection that takes place in the typical secular bear market.
I suggest the Dow is going to under 4,000 and as low as 1,500 over the next several years, and possibly over the course of a decade or two, as we work out the deep, systemic debt problems we have built into the system over the past several decades.
--Fred Voetsch
you ask yourself do we just go back to pre-bubble and maybe add some
normal inflation to establish a new market value. Author is dead on with
large trader rallys in a bear market scenario, 40-60% moves? 10k-11k?
If one backs out the grossly leveraged financing schemes, we might just need to turn the clock back 10 years. It can get there quickly or as it trend in a
downward slope for a few more years.
That's why I lean towards stagflation also..low or no growth with ever rising
cost of living, plus a desperate government looking to find sources of
revenue. These stimulus packages help a little but they are no substitute
for real growth...our trade with China needs re-shaping..wiped out our
"important" middle class base..
I do like commodities..even with slow growth..I think natural resources are
taken for granted in this country. Hard to bet gold..beats to it's own drum.
If one looks at a long term chart in the Dow from say circa 1987, an argument
could easily call for retrace to say 5000. Not a prediction although it seems
we have "earned" ourselves some serious humbling this time around.
On Dec 31 08:20 PM dividendmachine wrote:
> What isnt being talked about is the LARGE amount of cash on the sidelines.Mutual
> funds can be in cash only so long.They will need to get the money
> out there and high div payers large caps like PM MO RAI KO XOM JNJ
> KFT etc will be bought
LOL
what a rocket scientist.
you should be writing for Rocket Science Daily
www.leap2020.eu/index....;=
This suggests three months of drift up, followed by another major nose dive.
If this prognostication is as inaccurate as your TBT guesses, then I'll pass.
Thanks anyway.
By the way, did you ever publicly fess up to that major FU?
On Dec 29 09:49 PM stox2buy wrote:
> There was no Christmas rally this year. I believe the rally will
> come in February, 2009 as we see that the earnings are not as bad
> as feared.
Not many companies can grow revenue 10-20% this year and turn profitable for the 1st time in this kind of economy.
No debt, plenty of cash
A leader in cell/stem cell processing and preservation with no competition.
Do your dd before investing as always.
On Dec 30 08:57 AM gemonk wrote:
> The time to buy is when blood is running in the streets. There are
> some incredible bargains out there right now, some under a buck a
> share. Pick wisely, and you will become wealthy. Now.
String, are you the same guy who emailed me at TSCM about this article about TBT for TSCM? www.thestreet.com/_yah...;cm_cat=FREE&c...
Um I didn't recommend the fund. If your knickers are in a twist over a theoretical post about pairing TBT and TLT then you would be up on TLT. Other than that I don't think I've written about TBT so not sure what your problem is.
I did not predict 2% for ten years and the like and I expected higher rates but I have no idea what you are so worked up about.
PTR44 I wish more aspects of the market could broken down that simply, it would make the task much easier.
Bobbowhite, "younger writer?" too young...I will take that in a heartbeat but I'm not sure why your having endured the Great Depression means there cannot be a bear market rally.
As far as evidence, most bear market rallies are groundless--based on nothing, they just happen. What evidence would point to a rally based on nothing? If it happens people will try to find something that explains why, explaining why is less important than catching it if it happens, paraphrased from Talleb.
For how much longer will analysts in the finance community continue to base their views about market direction on past performance. To say that a bear market rally always follows an initial downward spiral because that's the way it's happened before is just wrong. How can *ANY* period in history be compared to today? The reversal of excessive leverage, HF redemptions, US burgeoning debt combined with negative trade surplus in a fiat currency environment, the onset of retirement for the first phase of baby boomers, etc etc. The exact mix of problems we see each time is different.
How can the conclusion that "markets recover before the actual economy does" be relied on. Sorry, but statistically speaking, the sample size for this having occurred is just too small to be considered for investment decisions. If markets are a forward looking mechanism, then shouldn't the looming mediclaim and social security liabilities due to the retirement of baby boomer generation also be taken into account? The other thing that is very different this time around is the presence of the internet and how easily financial research is available. Not just to institutions. So I think due diligence is much better now than it would've been during say the era of the Great Depression. And also, why can't this crisis be worse than the Great Depression. I've read about theories where things got worse during the Depression of the 30's when eventually the Fed did intervene. Economists argue that the Smoot-Hawley act exacerbated the downturn. Also to draw a parallel in this context, I believe that the new administration isn't likely to take China's foreign exchange policies too lightly and could well respond with tarriff based measures. Wonder where this might lead us!
Wish everyone a happy and hopeful 2009.
Ride the wave, eh?
There is a lot of money presently on the sidelines. How long can it stay there? Either stocks or commodities or both are going to have significant appreciation.
There will be some massive % moves in individual stocks as money starts coming back into the market such as those moves seen in EMKR, TQNT, CY, etc.
There is a huge stimulus which will likely create a stock market bubble. The Government needs to create a bubble to get profit on the money loaned. Spending habits of Americans can change for a little while but in the long run the folks will return back to their previous habits. We need these folks to start spending again and quelch the "fear" that has put us in this massive spiral downward. Government will do what it takes to achieve this and hence another bubble coming but this time in the stock market or commodity market or both.
Oil, Indium, Tellurium all are good commodity buys right now.
Anything with renewable energies and with a strong balance sheet will go way up.
also really like the author coming back into the comment thread (more than once) and responding
very nice thread - thanks!
On Jan 01 11:56 AM dividendmachine wrote:
> Consumer on strike is RIGHT on. I had an IRA 15 years ago that I
> invested entirely in Mo at 5.5% div yield and I hve reinvested dividends
> ad recently sold my"spinoff Kraft" to buy Moand lock in a 8% dividend.
>
>
> Desite the depressed prices o Pm and Mo I have a 62% dividend yield
> from the original amount invested which i think is significant. Theappreciation
> of 1200% in that time frame is not bad either.
I called a bottom the morning of Nov 20 and am still about 95% optimistic that it will hold. With any luck, we see a continuation of the fall in volatility and selling interest despite the weak economy.
The recent relentless pounding of new bad news is disconcerting though. Though improbable, if we have a routing of confidence here and scare off all the money edging back in to the market in hopes of catching a rally, the effect on the market could be quick and catastrophic. If DOW 7500 doesn't hold, I can't see a floor.
The problem this time is that in the 80'smost real estate was privately held in partnerships which didn't affect the averages. This time a pretty good % of the S&P is in REIT's which I really think are going to get utterly unhinged from any mooring.
As the baby boomers retire, we may go decades before we see the same level of inflows that have been happening since the 1980's. They may also begin to wake up to the fact that the stock market is not risk free and permanently move some of their needed retirement funds out of equities.
We'll probably build from here, but there are still some substantial potential pitfalls and a lot of bad earnings to work through. Any sharp rally will probably fail and though cautiously bullish in the longer term, I'll be selling into any exaggerated spikes.
If this market is similar, you could ride the current rally up and sell in say March. But, it is not clear if the road ahead is deflationary as it was in 1929-1932 or the Fed will succeed in a relatively rapid reflation of the money supply. The Fed, the banks, and the money supply appear to be the key just as in 1929-1932, but no one knows for sure how their actions will play out.
The Fed Monetary Base has spiked dramatically but the credit freeze has not thawed yet. Look for evidence that the credit freeze is thawing before bettting on any sustained rally. We are more likely to get a sucker's rally until it does. It might be tradeable if timed right and with trailing stops, but this is not a buy and hold market or unless volatility continues to drop, it is not even a good trader's market.
FWIW, my gut feeling is we will see a rally in Jan-Feb, maybe longer, but my gut also says to sell in March-April or whenever the rally falters, and the market will topple again another 20% below its recent lows.
On Dec 29 02:43 PM mkreisel wrote:
> The Fed didn't do anything between 1929 and 1933, and the market
> managed to pull together 5 sucker rallies 20% or more before finally
> hitting the bottom.
>
> These 5 sucker rallies were:
> 11/13/1929 - 04/17/1930, 198.69 -> 294.07, 48%
> 12/29/1930 - 02/24/1931, 160.16 -> 194.36, 21%
> 06/02/1931 - 07/03/1931, 121.17 -> 155.26, 28%
> 10/05/1931 - 11/09/1931, 86.48 -> 116.79, 35%
> 01/05/1932 - 03/08/1932, 71.24 -> 88.78, 25%
On Dec 29 10:22 AM sg hammer wrote:
> The Delineator is now showing significant negative divergence from
> the November lows. This suggests that a move back to test the SPY
> 75 level is in the offing representing an 11% decline from current
> levels.
Now the way we got out of the great depression was world war II, Israel is in bed with the U.S. could they have a bigger picture in mind with the latest military advances? It's all smoke and mirrors. Russia, and Iran are wild cards in this scenero.World war III? It's not out of the question!
Now comes the war on drugs and the billions of dollars spent fighting the war on drugs. So lets legalize pot,the goverment would love to offer society an alternitive to reality,everybody must get stoned, so they are even further from reality,less aggressive,and a way to sedate the population so the goverment will have less resistance to their manipulation of the people. Oh lets not forget the money the taxpayers would save by not fighting the drug war and the taxable income generated by regulating the growth and sale of the drug (marijuana)
Maybe I am in the minority with these concepts,feed back welcome.
On Jan 03 11:54 AM dividendmachine wrote:
> Consumer on strike is dead on.Geting into the right stocks at the
> right prices with the right dividends insures that you will have
> prepared what retirement is supposed to prepare:A consistent stream
> of dividends that MORe than replace your income
So many people are going to be unprepared, I just can't imagine what the chaos will be like when the coming 12-24 months of reconciling takes place.
I agree. It's nice that the media (and government) woke up to the fact that we were in a recession--if a year late. What continues to be very troubling is the naive acceptance of the misappropriation of funds in TARP. We have acknowledged some of the crises, but still fail to provide more than a bandage solution to them.
Just yesterday I heard another pundit prattling (I believe on Fox News) about how "nine times out of ten the market takes off after a bad year" and that the "worst thing you could do is try to time the market and miss it". What they failed to mention was that the one time was during the great depression, and that going long after the first year, you would have lost something like 43% of your remaining money.
Another interesting point that everyone seems to be missing is that he great depression didn't happen overnight. While they label this just another measly recession and not a depression, the markets are down more in the first year of this than they were in the first year of the great depression.
Yes, maybe down years following immediately after down years are a 1 in 10 rarity, but so far we are positioned more that way than even we were during the beginning of the great depression!
It would be fantastic if what I'm saying turns out to be a false alarm. I just find it very reckless to ignore the danger.
I'm afraid that until there is more caution and some real solutions--hard choices made, that there is still room for the markets to fall.
On Jan 02 11:32 PM asleeper wrote:
> This is good data, and I've seen it before. I've also seen an overlay
> of the current recent DJIA market drop over the 1929 market crash.
> That first 48% sucker rally after the crash was a great opportunity
> I suppose if you disbelieved the pundits at the time and believed
> instead the market was headed for an even greater fall.
>
> If this market is similar, you could ride the current rally up and
> sell in say March. But, it is not clear if the road ahead is deflationary
> as it was in 1929-1932 or the Fed will succeed in a relatively rapid
> reflation of the money supply. The Fed, the banks, and the money
> supply appear to be the key just as in 1929-1932, but no one knows
> for sure how their actions will play out.
>
> The Fed Monetary Base has spiked dramatically but the credit freeze
> has not thawed yet. Look for evidence that the credit freeze is
> thawing before bettting on any sustained rally. We are more likely
> to get a sucker's rally until it does. It might be tradeable if
> timed right and with trailing stops, but this is not a buy and hold
> market or unless volatility continues to drop, it is not even a good
> trader's market.
>
> FWIW, my gut feeling is we will see a rally in Jan-Feb, maybe longer,
> but my gut also says to sell in March-April or whenever the rally
> falters, and the market will topple again another 20% below its recent
> lows.
>
> On Dec 29 02:43 PM mkreisel wrote:
Not sure what you mean. The broad media seems to make reference to the Great Depression only to dismiss the idea that we could ever face something similar.
I make reference because although the statistical sampling is too small to be of much use, the consequences of ignoring the similarities could be very dire. I think that the current problems of our economy have probably less than a 5% chance of causing a depression, but given the huge impact of one, I feel compelled to take precautions.
On Jan 04 01:52 AM SugarDaddy wrote:
> We have had only one depression to try and compare stat's and notes!
> This time is a lot different than the 30's in so many ways, I'm not
> sure why everyone keeps making reference to it.
>
> So many people are going to be unprepared, I just can't imagine what
> the chaos will be like when the coming 12-24 months of reconciling
> takes place.
On Jan 04 10:35 AM dividendmachine wrote:
> Consumer on strike realizes that this casino mentality needs to stop
> and has wisely explained this
Dividendgrowthinvestor wrote a good article about it. Think the title was
"Dividend Income During Market Downturns'"
BTW Dividendmachine I visited your website for the 1st time. I really like what you're doing. For those of you that haven't been there you really should check it out.
On Jan 04 06:53 PM consumeronstrike wrote:
> Many strong companies continued to pay dividends and some even increased
> them even during the great depression. MO, PEP, RAI, etc will cut
> the check regardless of what the market's doing...
> Dividendgrowthinvestor wrote a good article about it. Think the title
> was
> "Dividend Income During Market Downturns'"
> BTW Dividendmachine I visited your website for the 1st time. I really
> like what you're doing. For those of you that haven't been there
> you really should check it out.