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James Altucher is really really bullish on 2012. He notes the effects of QE normally take 6-18...

James Altucher is really really bullish on 2012. He notes the effects of QE normally take 6-18 months to be felt (the last dollar was printed six months ago), and reckons that if the S&P were to return to normalized PE ratios, indexes could more than double given today's non-existent yields.
Comments (28)
  • tunaman4u2
    , contributor
    Comments (2731) | Send Message
     
    Dow to 50K & utopia to follow! ha ha ha
    1 Jan 2012, 07:51 PM Reply Like
  • Buddy Canuspare
    , contributor
    Comments (398) | Send Message
     
    Dow to zero! Dow below zero! Go bears go!
    1 Jan 2012, 08:03 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    "Household debt obligations are the lowest since 1993. Mortgages, rents, car loans/leases and other debt services added together divided by income after taxes is the lowest since 1993."

     

    Hmm...
    1 Jan 2012, 08:11 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    http://1.usa.gov/ugeKgz

     

    B.100 Balance Sheet of Households and Nonprofit Organizations

     

    Total Liabilities
    2011 Q3: $13.766 trn
    2006 : $13.424 trn

     

    There's something wrong with his numbers. Liabilities, to include mortgages, consumer credit, etc., are still higher than 2006 levels, to say nothing about 1993 levels.
    1 Jan 2012, 08:16 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5208) | Send Message
     
    Ricard,

     

    Debt service costs go down as interest rates go down. Check out the Fed on DSR and FOR. While the debt load outstanding is still pretty heavy, the cost to service it is not.

     

    Tom
    1 Jan 2012, 08:27 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    Ahha...debt SERVICE. Thanks Tom.
    1 Jan 2012, 08:31 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    ..and employment levels are at 1983 levels….
    Participation rate…+10 yr decline.
    http://bit.ly/sBiT0v

     

    Employment to population ratio +10 yr decline..
    http://bit.ly/uosUSn

     

    Not In Labor Force.. rapidly increasing...
    http://bit.ly/vNEbLu

     

    Yup all is well.
    1 Jan 2012, 09:01 PM Reply Like
  • OilFinder
    , contributor
    Comments (2336) | Send Message
     
    "..and employment levels are at 1983 levels…."

     

    It's Morning in America Again:
    http://bit.ly/rTCTmX
    1 Jan 2012, 11:19 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5741) | Send Message
     
    Part of why retail sales have held up. Debt service cost have gone down all while people can't buy bigger houses b/c they don't qualify.

     

    In theory, house prices should be soaring as low interest rates would naturally push prices up b/c payments have come down.
    2 Jan 2012, 12:30 AM Reply Like
  • MonsieurMoneyBags
    , contributor
    Comments (102) | Send Message
     
    He should put his money where his mouth is & buy my $SPY 130 calls, cause I know no real fund manager would
    1 Jan 2012, 08:13 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5208) | Send Message
     
    What month?
    1 Jan 2012, 08:35 PM Reply Like
  • dancing diva
    , contributor
    Comments (2396) | Send Message
     
    Tom, while I'm not bullish - I see the potential 2012 range as anywhere from 900 - 1420 depending on a variety of factors, I've been keeping an eye out for potential "just in case" longer dated options trades. I haven't initiated any yet.

     

    Right now the most attractive to me is the Dec 2012 1x2 130/145 call spread for just under $3.00 as of Friday's close. Breakeven is 133, the max profit is at 145, and only if spy trades above 157, or an all time high, would you lose money. My guess is you're probably loaded up on stocks already and losing money on the trade if the market rallies to new highs is a problem you'd like to have :)

     

    The Dec 125/140 1x2 call spread can be initiated for less (about $2.50 with breakeven at $127.50) but on the off chance the market really soars the relative delta's are less favorable and more losses are possible.
    1 Jan 2012, 10:40 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5208) | Send Message
     
    dd,

     

    You're correct about my position, in a general sort of way, actually I have in the money LEAPS instead of stocks, lots of them. I sold a lot of covered calls expiring in January, and will need to sell a new batch or else I'll be in a position where time is working against me.

     

    So something along the lines you're suggesting might be helpful, I could sell calls a little closer to the money and use the SPY call spread as insurance against seller's remorse.
    1 Jan 2012, 11:24 PM Reply Like
  • dancing diva
    , contributor
    Comments (2396) | Send Message
     
    Sounds like a good plan to me. Best of luck!
    2 Jan 2012, 01:02 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    James is an interesting read when he doesn't comment on the markets that is.

     

    It is tough to take him seriously even though he could be proven right. I have never heard a bearish word from him so it's hard to know when he is being honest or just talking a book.

     

    He is either a contrarian indicator, useless, or right - take your pick.

     

    http://yhoo.it/ryOrTY

     

    'You Can't Go Wrong': Stocks Still Cheap, James Altucher Says

     

    Posted Aug 28, 2008 06:45pm EDT by Aaron Task
    "But James Altucher, managing director of Formula Capital, is looking beyond such short-term technical indicators and seeing a stock market that, to him, is a screaming buy."

     

    This was the really funny part:

     

    "Altucher also believes the housing crisis and subprime news is "baked in" to the market."

     

    DOW was at 11715 and S&P was 1300.
    1 Jan 2012, 08:49 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    I remember what I was thinking Aug 2008...I also thought that the subprime debacle was baked into the stock market, as we had just crossed bear market territory. I didn't expect Wall Street to go nuclear.

     

    Point well taken regardless.
    1 Jan 2012, 10:19 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Good comment. This guy is a perma bull always. A typical asset gather who only cares about whatever fees he can collect regardless of losses to clients. Too bad such market shrills can't only be paid on actual performance with fee clawbacks for negative performance.
    1 Jan 2012, 11:26 PM Reply Like
  • James Altucher
    , contributor
    Comments (364) | Send Message
     
    Well, I'm not an asset gatherer.
    7 Jan 2012, 08:27 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    James,

     

    On a positive note, I really enjoy reading your thoughts on all things non-financial.

     

    There was an article you wrote about eliminating the poisonous people from your life that I thought was particularly inspiring to me. I have had very similar experiences and your advice on how to deal with them was spot on. Also your series on College was also amazingly thought-provoking - so tempting to give my kids the money instead and help them build a business.

     

    Thanks for the ideas. It takes guts to post when you are faced with such slings and arrows as thrown by the likes of me and others.
    7 Jan 2012, 01:20 PM Reply Like
  • James Altucher
    , contributor
    Comments (364) | Send Message
     
    @Conventional Wisdumb, thanks very much. I really appreciate you taking the time to post that. There are a lot of arrows out there and I'm probably too defensive (i.e. I should follow my own advice)
    7 Jan 2012, 02:15 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2350) | Send Message
     
    The fact that the media gives any time to James Altucher is proof enough how desperate the whole system is for new suckers.

     

    Sure a clock is right twice a day. The only difference is Mr. Altucher can probably afford to be wrong unlike the majority of Americans.

     

    Where is the client's money from the collapse of MF Global? My God it has been reported enough that JP Morgan got it to keep them from losing anything in the collapse. It was stolen.
    Yet our gov't does not care. Our regulators do no care.

     

    Just keep all that in mind when Mr. Altucher is pumping away. Worse: The best he can do other than Apple is pump the dead money stocks from a bull market that ended 12 years ago. Mr. Altucher needs to read some of the research by William O'Neill that proves the majority of former bull market winners never regain their favored status in the future. They remain dead money save for the traders who can trade them in the ranges.

     

    Remember: Mr. Altucher I am sure has more money than he knows what to do with already. Do average Americans? Not a chance.
    1 Jan 2012, 11:46 PM Reply Like
  • dancing diva
    , contributor
    Comments (2396) | Send Message
     
    I had a long comment almost completed why he's too optimistic and played games with the statistics - and wasn't correctly analyzing them - but unfortunately lost the comment when accessing a reference but forgetting to open a new tab. Ah, the joys of writing on the computer.

     

    Suffice it to say I think there is an outside chance he is correct to be very bullish, but it depends on far too many "ifs". These include no further global slowdown, business investment improves, the public reverses its opinion of revulsion toward the market and starts to invest again, Washington starts to cooperate - or at a minimum both Obama and the Rep. candidate state emphatically in an early debate there won't be an elimination of the Bush tax cuts in 2013, Europe and/or China and/or Japan doesn't implode.

     

    I'm not happy with my what-ifs since they don't give me a concrete basis for a of plan of action - but my crystal ball is broken again this year and it's the best I can do (my husband has been promising to fix it for years :). So right now I'm playing it safe, net long but heavily in income plays and cash.
    2 Jan 2012, 12:53 AM Reply Like
  • Husky Financial
    , contributor
    Comments (212) | Send Message
     
    I think its a sign of an unhealthy market when the "Bull" case involves any sort of QE in addition to any number of unknown and unpredictable variables. I think that without any intervention, (ie- Keynes takes a HIKE) we are on the verge of serious bear territory. It worries me that most of the "good news" that has come in the last 2-3 months has been extremely "well timed", ie- Fed and Global CB's all agreeing on liquidity swaps on the same night S&P downgraded 37 global financial institutions. This is only one example. Then there was the whole downgrade of Goldman and France, only to be taken back after they were publicly posted. Anyone who has been closely tracking the market, and the subsequent negative and positive catalysts, will agree that things have been awfully suspicious in the last couple of months. My guess is that behind the scenes it is a lot worse than many think. This is not to say that we can have a legitimate, sustainable recovery and transition into another bull market. Yet I do believe that there will be another wave of hurt to come first. Its like ripping off a bandaid...The question is wether or not the Fed& political cronies will allow it to happen quickly, or slowly.

     

    My guess is we stay in range 1100-1300 on the S&P until the bandaid is ripped...When this happens and how long it takes is unknown. S&P could see 800-900 again easy. Then we should begin yet another rally, probably one that will rival if not trump that of 2009/10 as this tme around it should be organic, and not through trillions of $'s of stimulus/easing.
    2 Jan 2012, 05:11 AM Reply Like
  • Canary Cash
    , contributor
    Comments (471) | Send Message
     
    Well said Husky!
    2 Jan 2012, 05:40 AM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    There are so many unhealthy signs in the market that I've almost lost track of them:

     

    1) High unemployment
    2) Consumer confidence at severely depressed levels
    3) Govt deficits = 1/3 total budget
    4) Debt has surpassed annual GDP
    4) ZIRP for foreseeable future
    5) (sovereign) Ratings decline
    6) Zero consensus on Washington
    7) Occupy, and the 2% argument
    8) Bernanke hiding in a hole until 2013
    2 Jan 2012, 10:18 AM Reply Like
  • optionmike
    , contributor
    Comments (82) | Send Message
     
    i believe the old adage still stands true "the market climbs the wall of worry"
    2 Jan 2012, 11:31 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Or is it really 'the market climbs a continual and massive wall of repeated and ongoing central bank interventions"? Watch what happens when central bank interventions start to dry up even a little bit. The crying so-called free market crony capitalists will be begging for even more yet again.

     

    Free markets, capitalism, real price discovery ..... where is that? Maybe on Mars or Pluto but certainly nowhere to be seen on the planet called Earth.
    7 Apr 2012, 12:05 AM Reply Like
  • nlemberg
    , contributor
    Comments (27) | Send Message
     
    Maybe the biggest factor for the equity markets in 2012 is an election and possible change in governments in 4 of the largest economies
    in the world : USA ,CHINA ,RUSSIA, FRANCE .
    I am selling jan 2013 Puts 30% below the market on Large Cap co's and will sell 30% out of the money calls on rally this spring
    2 Jan 2012, 12:38 PM Reply Like
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