Fred Voetsch

Are We at the Beginning of a Bull Market?

"Now, what I know for sure is that the long term is great for investors (I'm talking about a 5 year outlook) and that even if people buy very solid fundamental stocks now, they will be greatly reward 5 years from now."


The data (from almost every perspective I take) suggests otherwise and history suggests that you are likely to be wrong.

The mistake you make is that you are basing your prediction on your lifetime of knowledge, which is now failing you. At worst we are in year 2 of what will likely be a 15-20 year underperforming stretch for the stock market. At best we are in year 9.

I don't just base this on past history as that would be foolish. I base it on the macro economy and the fact that we still have yet to unwind most of the leverage we built up over past decades.

To top it off, every way that I can objectively value the stock market using historic norms (book value, P/E, price to earnings, trend average) tells me that the stock market has been overvalued and is only at fair value, at best. The history of bubbles (of all kinds) makes it clear that we should expect to see a similar period where the market is undervalued to balance out the period (1980's, 1990's & 2000's) of overvaluation.

...unless things are different this time. :-)

Q1 Earnings Season Preview - Why 2009 Is Not 2008

On Apr 07 04:42 AM Cetin Hakimoglu wrote:

> Google and AAPL are great buys. GOOG 700 within a year so so. AAPL
> 200 soon. These companies are immune to the supposed financial crisis
> and hype recession.


"the supposed financial crisis", I love an objective thinker.

Q1 Earnings Season Preview - Why 2009 Is Not 2008

"The rate of economic contraction is getting better and the stock market will price in the improvements before human nature catches on. The question of the day is whether or not you should buy the index (SPX, QQQQ) ahead of earnings. The 2009 market is telling you that the environment is different than it was in 2008, and yes, the indexes should be bought."

And Dow Theory tells you not to get ahead of the market. Once a major trend is in place you don't go against it. Oh, that and the fact that the housing market has yet to hit bottom; the stock market is still above its historic "fair value"; consumers are tapped out and have made getting their balance sheets in order their top priority; demographics suggest a long term shift away from putting money into the stock market and towards taking it out; deleveraging is not even close to being completed; earnings have shown no signs of growing and in fact, continue to decline.

Now let's see...do I listen to the author's gut feeling or go with the only investing theory proven to outperform the market over the long term and a bunch of hard data...that's a tough one...hmmm....

seekingalpha.com/artic...
On November 16, 2008 the author wrote:
"Here are some reasons why hope will trump despair in intermediate market performance..."

The market has dropped 300 points, from 8273 to 7975 since then, even after a near 30% rally.


seekingalpha.com/artic...
On September 16, 2008 the author quoted Jim Cramer, which is bad enough, and then wrote:
"The capitulation to come this week is required to form a bottom in the financial sector. I count ten times this year that analysts have prematurely called for a bottom in the financials and each time buyers have been bitten. We at Lone Peak Asset Management have refrained from making any such calls but it must be noted that this action is different."

Uh...I think we all know what happened in October and November and January and February.


seekingalpha.com/artic...
On May 30, 2008 the author wrote this:
"I can make the case that we are now at an unprecedented point of time to get long financials"


So did I mention that the current P/E of the S&P 500 is 60; the DJIA is 26 and the DJTA is 24? Ah, but why bother with details like earnings?