Don't get your rally hats on yet, Mark Hulbert says: Markets still have to work off the extra...


Don't get your rally hats on yet, Mark Hulbert says: Markets still have to work off the extra optimism they built up in October's rally. Only then will the wall of worry be strong enough to climb up; in fact, he figures we may be closer to excessive optimism than excessive pessimism.
Comments (35)
  • 7footMoose
    , contributor
    Comments (2229) | Send Message
     
    Everyone has their own opinion and Mark has never been shy about expressing his.
    10 Dec 2011, 08:49 AM Reply Like
  • spald_fr
    , contributor
    Comments (2814) | Send Message
     
    Rocky: Bullwinkle, it says here that for you to inherit the fortune, you have to spend the weekend in the ancestral home; Abominable Manor.

     

    Bullwinkle: That's no problem. I've been living in an abominable manner all my life.
    10 Dec 2011, 12:26 PM Reply Like
  • Mister Ed
    , contributor
    Comments (591) | Send Message
     
    As I recall, prior to last week, we still had net outflows from mutual funds. I wouldn't call that excessive optimism. And the 30-yr T-Bill went from 2.8% to 3.1%, not exactly explosive. Pessimism still reigns supreme amongst the hordes.
    10 Dec 2011, 01:45 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    "The wall of worries" should be replaced by valuation. Otherwise one is actually always worried. When you do value based investing you don't have to worry that much about short-term noise and non sense.
    10 Dec 2011, 01:51 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    what optimism?

     

    the data is good - profits are strong - balance sheets are amazing and yet stocks are despised - hated even.

     

    this is no time to sell. it is time to buy with each Eurotrash or Republicrat induced panic

     

    it is a good time to be an investor - keep your eye on the horizon

     

    E
    10 Dec 2011, 01:57 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    -High Frequency Trading
    -Front Running
    -Black Pools

     

    The game is rigged folks and it is not rigged in your favor, Until the three practices mentioned above are banned buyer beware...

     

    The" market" is not your friend, The market is not set up for you to make money, it is set up for businesses to raise capitol and separate you from your money, You making money in the market is a non essential byproduct of your investment.
    10 Dec 2011, 04:47 PM Reply Like
  • 0ZJ
    , contributor
    Comments (69) | Send Message
     
    JohnLocke:

     

    Quite correct. I'm surprised at how little attention is paid to each of those issues. I expect that at some point in the not too distant future people will wonder how they ever could have ignored these things in the first place.
    10 Dec 2011, 06:13 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
     
    Please doc refute Q3 $447Bil debt growth vs $167Bil GDp growth. It can't get much more faux than that. Employment has been on a +decade long decline.
    http://bit.ly/pSpjQo

     

    Seriously sir…+$2.50 debt to generate $1 GDP is NOT healthy..it is NOT growth…it is pure fakery. Please prove it different. This is not new…and the debt to GDP ratio continues to grow.

     

    When do markets rally big…when govts say they will increase debt…that is pure economic madness. If debt doesn't matter then why bother with money?…just make everything free.
    10 Dec 2011, 08:56 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    could not disagree more

     

    the market - let's you buy a piece of the future - you can buy a piece of emerging market growth or US recovery and you can do it very cheaply if you buy index funds

     

    forrget the fear and nonsense - index and you are riding the wave of growth

     

    E
    10 Dec 2011, 09:23 PM Reply Like
  • sean.parmelee
    , contributor
    Comments (791) | Send Message
     
    Papaswamp,

     

    Comparing the growth of government debt to the growth of GDP is entirely meaningless. Going $25k into debt to permanently increase your income by $10k might be a great idea, depending on how your finances look next year. Or it might not: one can't say based solely on these two numbers, because they are not connected in any way.
    10 Dec 2011, 09:34 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    Disagree with facts Sir...

     

    Did I say something that was not true?

     

    I provided my facts with my premiss what proof do you provide to support yours?
    10 Dec 2011, 10:31 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    Sean, It is all connected. The scenario you describe still fails no matter what if the 25K debt continues to grow and accrues interest to the point that the increase in income no longer covers interest payments on the Debt...

     

    Sound like a familiar scenario?
    10 Dec 2011, 10:35 PM Reply Like
  • John_DeVita
    , contributor
    Comments (180) | Send Message
     
    Whenever sitting down to a poker table, one must first look to the right and then to the left. One must identify the sucker. If after looking around the table, and one still find the sucker, then you must leave immediately.
    10 Dec 2011, 10:58 PM Reply Like
  • ItsAllGreek
    , contributor
    Comments (541) | Send Message
     
    Agreed. Zero trust for any of these pundits including Hulbert.
    11 Dec 2011, 12:22 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
     
    sean,
    GDP = private consumption + gross investment + GOVERNMENT SPENDING + (exports − imports).

     

    How is government spending not related to GDP when it is a key component?

     

    Going into debt may improve one's income, but only if the debt doesn't continue to grow (and thus the cost to service it) and one doesn't take on more obligations. The future obligations are staggering.
    11 Dec 2011, 06:55 AM Reply Like
  • sean.parmelee
    , contributor
    Comments (791) | Send Message
     
    JohnLocke and Papaswamp,

     

    Please read my post more carefully. To reiterate, the scenario you describe COULD be a bad thing, or it might not be bad at all. What I am saying is that simply quoting GDP growth and debt growth does not provide the answer to this question. As you yourself say, Papaswamp, you would be better of speaking in terms of the future trajectory of debt. I'm just making a technical point.
    11 Dec 2011, 01:24 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    Sean, I can't speak for Pappa but the reason I responded to you was simply based on the last line of your post...

     

    "Or it might not: one can't say based solely on these two numbers, because they are not connected in any way. "

     

    We both challenged your absolute premise that the numbers are not connected in any way...

     

    In the case of the US Government and the FED the situation you describe has always been a bad thing based on past performance. The numbers speak for themselves...
    11 Dec 2011, 01:34 PM Reply Like
  • sean.parmelee
    , contributor
    Comments (791) | Send Message
     
    John,

     

    You're right. I misspoke. The proper statement would have been, "those two numbers are connected, but do not provide enough information to say whether the government's finances are getting better or getting worse." And for the record, I agree that any time the government proposes "investing," we should clutch our wallets tightly.
    11 Dec 2011, 01:39 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    Sounds like we all agree in principle:-)
    11 Dec 2011, 03:57 PM Reply Like
  • Spencer Knight
    , contributor
    Comments (389) | Send Message
     
    It should not be surprising we see optimism slightly higher during the holidays because spending is at its highest levels and people are generally in a good mood. But not sure I agree we can determine when to buy and sell based upon confidence and pessimisim/optimism...
    10 Dec 2011, 02:01 PM Reply Like
  • Bruce Whitaker
    , contributor
    Comments (406) | Send Message
     
    Every other week they fix Europe, so what's to worry about?
    10 Dec 2011, 03:35 PM Reply Like
  • ItsAllGreek
    , contributor
    Comments (541) | Send Message
     
    LOL. Europe is the gift that keeps giving for those who benefit from a volatile market. Expect some bad news next week.
    11 Dec 2011, 12:22 AM Reply Like
  • buyitcheap
    , contributor
    Comments (1902) | Send Message
     
    Bruce W above is absolutely right, if it's not the right fix, they'll fix it again later and besides....what's a light volume rally among friends during the holidays..., well it's a big monster hangover, head in the toilet down move in January.
    10 Dec 2011, 04:02 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    Quite the opposite - after the window dressing it is UP in January because of bargains due to window dressing. Get beaten down stuff. BTU is still WAY down there among some other pretty decent stocks.
    10 Dec 2011, 05:17 PM Reply Like
  • Julius Ferraro
    , contributor
    Comments (493) | Send Message
     
    btu is one of the only cheap stocks there are. Markets were cheap thursday only to become expensive once again friday
    11 Dec 2011, 12:20 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    When you look at the one year charts I would say most energy stocks are still cheap compared to their Febr. highs. Lots of tech stocks too.
    11 Dec 2011, 06:35 AM Reply Like
  • lowemoran
    , contributor
    Comments (130) | Send Message
     
    YTD stocks are flat.....stocks aren't going anywhere. Just buy when the S&P drops below 1,200 sell above after a week's rally. The only suckers here are the investors who buy companies thinking profits matter...ROFL....

     

    The S&P was at this level in 2010, 2008, 2007, 2006, 2000.....s

     

    This year the YTD return of S&P 500 is anemic, this despite record profits and the US consumer spending like a drunk sailor. Taking the inflation rate into consideration the returns are a huge failure.....

     

    What is going to change in 2012 that is going to propel stocks? Nothing......just buy the big dips....and sell the dreams of the suckers who believe stocks are going to make them rich....
    10 Dec 2011, 05:44 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    sounds about right and the way it has played out. would not be a LT buyer unless and until equities substantially decline in price.
    10 Dec 2011, 06:29 PM Reply Like
  • dividend_growth
    , contributor
    Comments (2895) | Send Message
     
    What extreme optimism? You call AAPL at 13 times trailing earnings extreme optimism?
    10 Dec 2011, 08:35 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    Agree. And what is the forward P/E and PEG? It is like 10 and 0.54! Man, 0.54! Even if it comes not quite as good that would mean stock should double in one year!
    10 Dec 2011, 08:38 PM Reply Like
  • sean.parmelee
    , contributor
    Comments (791) | Send Message
     
    TP, I love your eternal optimism, but AAPL has never been valued like a high-growth tech stock and it never will be. There is no reason why, with Steve gone and iPhone fever dissipating, things will suddenly look BETTER for the stock.
    10 Dec 2011, 09:38 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4206) | Send Message
     
    I know Sean. I see it going to 550 though. BYW, ty for the eternal opimism thing. I will print that out and hang it on my wall so people can read it.
    11 Dec 2011, 06:37 AM Reply Like
  • tiger8896
    , contributor
    Comments (721) | Send Message
     
    There are only a few weeks remaining until year end. The Euro crisis has been kicked down the road again, portfolio managers will be chasing alpha performance for their year end bonuses, stocks are attractively valued, economic numbers are sanguine, we have been probing a breakout of that 200 day ma and the upper end of the trading range for a few weeks now. It's not a stretch to see the market rallying into year end.

     

    The new year is another story but to me the contrary play may be a breakout to S&P 1400 since so many prognosticators are predicting the rally will be capped at 1320-1340.

     

    10 Dec 2011, 09:33 PM Reply Like
  • John_DeVita
    , contributor
    Comments (180) | Send Message
     
    I cant see the S&P staying past 1280, I see rallies into early next week followed by a massive sell off

     

    All accross Europe companies are moving euros out of PIIGS and the periphery and into German as they fear, all balances will be reset in local currency.
    10 Dec 2011, 11:23 PM Reply Like
  • AAABBBCCC
    , contributor
    Comments (25) | Send Message
     
    Mark, I have news for you: Markets are run by computers and they don't have any emotions. Concepts such as optimism or pesimism don't apply. But carry on, anyways.
    11 Dec 2011, 12:20 AM Reply Like
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