Tacitus

It's Not a Great Time to Get Into Stocks

I believe the bottom is in, but even if you prove correct and the real bottom is at 6800, that's only 700 below the bottom set on November 21 (Dow) or 50 below the bottom on the S&P. Meanwhile, there are excellent companies with hard assets (i.e., not solely financial assets subject to writedowns) selling for one-fifth or less of book value. The downside risk on these companies is negligible, even if the market drops to 6800 Dow or 700 S&P. At least as to companies like these, it's hard to make a very persuasive argument not to buy now.

Moreover, if the government is pumping in 3 trillion and you believe (as I do) that the stimulus is working, why do you feel the real bottom is at 6800? As the stimulus is seen to be working, where is the justification for the market turning substantially south? So far, the market has been discounting bad news and moving determinedly upwards. The only down days have come in response to multiple up days and thus look like corrections in an overall upswing. In addition, many important indices are at unsustainably low levels and simply have no more downside room. The BDI is down to 660 from highs in the 14,000 range. Shipping will simply come to a halt if that doesn't spring back some soon, and that's not in anyone's interest. Credit, which caused the BDI to crash, is already showing signs of loosening up. Mortgage brokers and bankers are already working around the clock on new loans and refinances. We are certainly not out of the woods yet, but the ice floes that have stalled credit are started to break up.

I agree that 15,000 was overpriced and we are not likely to see that number again any time soon, but it wouldn't surprise me if we get back as far as 10-11,000, and maybe even 12,000, some time next year, before things start heading south or at least sideways again.

Uncle Ben Signals the End Game

I've read some astonishing things on this site lately, but the idea that a recession that started in December, 2007, is somehow "Obama's fault" really takes the cake. In December, 2007, Obama was not only not the president, and not only not the Democratic nominee, he was in third place in the race for the Democratic nomination. So how exactly is he responsible for the current recession? Statements like this one do not exactly redound to the benefit of your credibility.