J Clinton Hill

What's the Fair Value for the Dow Jones Industrial Average?

i normally don't comment on comments for other bloggers, but as a proponent of free market capitalism, i philosophically disagree with your proposed solutions...

such measures would highly restrict the freedom of choice and flow of capital to both competitive or even more consumer/friendly business models...

in essence, it would be akin to shooting ourselves in the stomach just to get to the predators who stalk us from behind...

if you are searching for a utopia or sugar tit in the sky, you might be better off relocating to venezuela or someplace similar if you're really serious about this..


On Nov 01 07:01 AM apppro wrote:

> What happened this week is just another and perhaps best/final case
> into why we must stop this short-term option trader/traitor mentality
> & trading. I’ll be the first to admit that maybe the DOW and
> S&P have as some have complained, “Gone too far in too short
> a period of time!” Without going back to my original argument that
> they’re basing that moronic statement on a level we should have NEVER
> been at in the 1st place, let’s just say that maybe the markets have
> gone a little higher then maybe their actual worth is based on. As
> to whether the DOW or other indices are fairly valued, I give your
> opinion above worth noting.
>
> For me I take a far longer view. We’ve taken out all the added fluff
> that they say was added with all that leverage since 2004, and actually
> we’re even back to 1999 levels. Fair? Doesn’t sound fair to me, but
> that’s what we allowed to be done.
>
> Just look at this past week’s chart of JPM Chase.
>
> finance.yahoo.com/echa...;range=5d;indicator=vo...
>
>
> Monday and Tuesday were ok and non-events on no news. On Wednesday
> the entire market sold off at the open and never recovered. The news
> again was really a non-event, but some media pundits & traders/traitors
> brought back that ‘double deep’ crappola and fear spread throughout.
> Thursday reality set back in when GREAT GDP and just ok employment
> #’s came out.. the markets recovered, but those traders/traitors
> couldn’t let it go. CNBS had a parade of naysayer pundits on the
> show Friday morning and when basically so-so spending and income
> numbers came out at 8:30 am (These numbers were exactly as expected
> and should have been a non-event.) the short-term option traders/traitors
> had worked everybody up into a sell-off mode and things never looked
> back. 250 points down on the DOW and major levels breached. It was
> a pure disgrace. They tried to blame it on the dollar, on the consumer,
> on anything they could grab a hold of; but when it comes down to
> it, the sell-off was a well orchestrated, end-of-the-month options
> traders/traitors manipulated disaster.
>
> You may ask, “Why should I care? I’m not in the market or I own mutual
> funds, why should this matter to me?” It matters because you may
> be one of those lucky people who still has a job, or one of those
> still trying to find one... all these swings and angst are not healthy.
> They make everyone so full of fear and uncertainty that no one can
> muster up the desire to spend, invest, invent, inspire, etc. And
> don’t make the mistake of thinking that CEO’s of big companies are
> any different. I told you before, you keep bashing someone over the
> head over and over; sooner or later they will break! This is especially
> true of small businesses, the major driver of employment in the U.S.
> Would YOU spend thousands or go into debt to start a new business
> if every 5-minutes someone else is telling you that everything will
> crash in the next 10-minutes? I don’t think so!
>
> Whether you’re a Republican or Democratic, whether you’re a capitalist
> or socialist, whether you’re a ying or a yang; we MUST ALL start
> to agree upon ONE THING and that is this short-term mentality and
> trading MUST END!
>
> STOP THE INSANITY NOW!
>
> Revised Tax Rules:
>
> 1. Capital gains under <6 months - 55% tax on capital gains
> 2. Capital gains 6 > 12 months - 45% tax on capital gains
> 3. Capital gains 1 > 2 years - 35% tax on capital gains
> 4. Capital gains 2 > 5 years - 18% tax on capital gains
> 5. Capital gains 5+ years - 5% tax on capital gains
> 6. Most critical of all — Institute a capital gains tax of 55% on
> ALL short sales not directly tied to a long buy by a licensed hedge
> fund. I'm tired of paying for the pure shorts 3rd vacation home.

What's the Fair Value for the Dow Jones Industrial Average?

thanks for taking the time to share this "valuation compass" for the Dow... it serves will serve as a convenient reference point, especially in the midst of any stormy corrections that might follow...

although some argue that the forward EPS estimates are a bit optimistic, it is more important to consider that the TTM earnings give us a floor and the likelihood of growth from this point is highly probable, so there is upside for the DJ-30...

my investment bias leans towards the "W" recovery camp, but part of my thesis is contingent upon how effectively dollar weakness is managed by the Fed and supported by other central banks...

any pullback should be welcomed as a buying opportunity and that is most likely what we will see from bulls if sellers get too aggressive...

thanks again... really enjoyed your concise report...

More on Greed, Regulation, Lehman, The Financial Industry

amen...

25 Companies That Lost America Nearly $1 Trillion

SR9WEB,

I find it extremely challenging to argue with such an intellectually solid based rebuttal and therefore will not debate you, but I will bitch slap you:

It is often said that God takes care of all fools and all Americans. As I apparently represent both, it probably explains why I managed to sidestep this entire downside move since the fit hit the shan in October 2007 and have absolutely zero debt.

Then again, what do I know? You are the expert who spends his time "seeking alpha" and investment advice from surfing the web. Me? I can only rely upon my own resources, experience, and wits.

Sincerely your buddy and village idiot at Seeking Alpha,

Hillbent.com on the Market Direction!!!

p.s. by the way... if these companies did not have the assistance of taxpayer money, do you honestly believe precious capital would be allocated towards "special retention bonuses" in this type of economic environment? the only thing i'd give these guys is a swift kick in the ass and for anyone who wants to stay after being on the receiving end of such, i'd tell them i only want to see assholes and elbows!


On Mar 27 02:12 AM sr9web wrote:

> "As far as accuracy of numbers, this is irrelevant"
>
> Buddy, you are an idiot...

25 Companies That Lost America Nearly $1 Trillion

Teutonic,

I very much agree with your inference of an over-saturated market. With the exception of the mega banks, which pose global systemic risks, I think there is enough financial infrastructure in place to survive the current purging of the financial industry.

As a former and ongoing student of modern economic history and business cycles, I am not surprised to see the influx of snake-oil in the banking industry. The abnormally long cycle of cheap credit was akin to a Faustian proposal too tempting to resist for even the purest of "financial puritans". Now we must wear the scarlet letter of "A" (for asinine) before the entire world to acknowledge and pay for the sins of our lusts.

Once we get thru this and if we learn our lesson, our financial system should be much stronger until future generations will have forgotten the lessons of posterity.

I wish I could give you a more intelligent answer, but I think your question answers your own question.

Best regards,


On Mar 26 11:50 PM Teutonic Knight wrote:

> Mr. Hill,
>
> I wish you could spare a moment to answer one dumb question. I came
> from Canada over 3 decades ago. Over there they "used to" have far
> fewer banks than the U.S. has., and still much fewer now.
>
> Why do we have so many banks in the U.S.? 10,000 or so including
> the credit unions?
>
> From your list, isn't it time to vastly consolidate most if not all
> of them as soon as possible and retrain the folks to other, in my
> opinion, more "productive" industries and services?
>
> Thanks in advance.
>
> teutonic

25 Companies That Lost America Nearly $1 Trillion

Gentle Readers,

The purpose of this post is not to single out any specific companies. The original title at my website reads: Incentivized Management for Success or Failure: Only in America. SA's editors changed the title and as a result probably redirected the focus and intent of my article. I would strongly encourage you to check the primary source (hillbent.com) regardless of your impressions from reading.

The post was from an email that a CEO friend sent to me and is not my own work. As far as accuracy of numbers, this is irrelevant. The fact remains is that we know many of the companies on this list have lost a LOT OF $$$ thru general incompetence. Period.

Now, let's pretend or hypothetically consider that none of these companies were publicly traded on the exchanges and therefore were private entities. Let's also pretend that you, i.e. individually as the reader, owned these private companies in your portfolio. Given that many of these incurred massive writedowns and losses, would you as the owner of these businesses be awarding your managers of these companies bonuses like this in economic times like this? I'm not going to answer this question, but look forward to your responses.

In the event that any of you would still consider paying out such hefty bonuses, please let me know if you have any positions available. I would love to have a job whereby my success or failure is decoupled from my incentive compensation.

Sworn to fun and accountable to none... Only in America... God bless us all....