Marcus Aurelius

The Rally, When It Comes, Will Be a Doozy

Michael D.

The stock market is a ponzi scheme like insurance is gambling.

LilBob,

We'll just disagree on that then. I agree the fundamentals of our economy look bad at the moment, for some reason they always seem horrible even in good times. Admittedly, my views are based more on technical/contrary sentiments. As I said I heard a lot of people calling $5.00/gallon gas last summer and the scoffing at the $30 CL call was legion and wrong.

The Rally, When It Comes, Will Be a Doozy

Fahrender,

Most common explanation for Autozone and the like is people are repairing their current cars rather than running out and buying a new one. In addition, probably a number of more people are doing the repairs on their own. Last fall I did some brake jobs on my own requiring me to visit similar stores a number of times.

The Rally, When It Comes, Will Be a Doozy

LilBob,

I disagree strenuously with your sentiment. I think the coiled spring analogy is perfectly fine. Also, you leave out the rest of 320's comment which is bullish and meshes with my outlook.

I put it all out again. If last August I would have called for $40/barrel oil, what would you have said? I have seen these oscillations before and I fully expect to seem them again. I am quite willing to entertain the notion the tension was built into the system at 14,000 rather than it being wound up now, which is something I am starting to become convinced is the case.

Price & value discovery is not an exact science nor are the parties in the deals on the same timelines.

@Jeez, nor is there any law saying it must stay out. I have seen money flow in and out of equities from a fairly close perspective a number of times in my life. I see no reason why this time should be any different unless someone ;-( takes a wrecking ball to our nation's economy, which I admit is starting to seem a reasonable fear.

So much of this seems a redux of Jason Scharz's $30 CL call last summer/fall.

The Rally, When It Comes, Will Be a Doozy

Raisin4daughters,

Your thought just occurred to me the moment before seeing your post. It is quite possible the initial tension could have been upside tension in the American economy as a whole and not just a sector. Still, it is always a temptation to believe the top of the last bull run is the proper place for the market. In any event I think the market has overshot and overshot by quite a bit its proper value.

The Rally, When It Comes, Will Be a Doozy

@Domino412,

The prevailing sentiment is bearish and not for a snapback. As the rejoinder to my note on that states is to keep it quiet so the masses don't catch on. Last summer I paid close attention to commodities especially CL and other energy commodities and the sentiment on that. Even as the prices started retreating from the top, very few expected it would whiplash as severely as it did, economic downturn or not.

Maybe a few of us here are looking for such a thing but out in the general population there is very grim outlook. I have been through this before with my 401K watching it do down-down-down and then finally getting sick of seeing that... So I stop watching closely, I come back sometime later and what do I say? Holy $#!+ where did all of that $ come from?

Back in August if I told you oil would be trading for $45/barrel in the sprintime, what would you have said to me? I bet it would be something along the lines of "give some of your smoke!".

LordDarley,

Yours is about the only cogent reason put out there to explain for a slow return to 14,000istan or a longer time to 15,000istan than what many think. Even if the death tax is not repealed that wealth will eventually return into play, when those people pass on. The money will not suddenly disappear into the ether, will it? I guess that last conjecture depends on how bad the imminent inflation is.

The Rally, When It Comes, Will Be a Doozy

@3201JQ,

Hehehehehe,

Lordy, I got PO'ed at first at your comment but I kept reading.

I went into the market about one month ago (well, again I am in but I am hoping for a miracle on that one, it registers a 33.3% gain and still reads: $0.00 on my board) and currently am down 1/3 on that purchase. I am thinking about scooping up another block of that stock despite somewhat dire personal circumstances.

Watching the reaction to Jason Schwarz's $30 CL call was an interesting lesson in contrariarnism.

@BeninEden,

So correct! Too many people view money like Thurston Howell III the old caricature capitalist. Hydrocarbons & energy are the limitation and remember, nations used to war over islands of bird dung until the petro-economy came spurting out of the earth.

I always picture that island dude taking the wad of cash, pulling the rubber band, tossing the cash and going nuts over finding the rubber band.

The Rally, When It Comes, Will Be a Doozy

I like to think of markets as a spring. Right now the spring is getting wound up tight on the downside, sooner or later whatever force is holding the spring in place will have to let go and watch that energy go the other way.

Think oil. Last summer the CL spring got wound real tight on the plus side, it let loose and look where is it at now? One guy last fall was calling for $30 oil and the prevailing comment theme was "what are you smoking". $30 was too low, but it wasn't that far off.

One thing I do agree with though is demographics may put a lid on any equity recovery. Even when the public is back in the mood for equities most likely a fair amount of that public will not return because they need income and not growth. Interestingly enough, that same demographic trend will relieve the pressure on rising medical costs.

US Economy Still Has a Ways to Go

I wonder what the thought is about the state of long term rates 10 years out from now is? 30 year mortgages in my locale are currently varying from about 6.25% to 6.75%. A local bank is offering a 10 year arm for about 5.7%.

This will give us the chance to gobble up a lot of principal and keep an eye for long term rates in the same neighborhood (about the start of this year late last year 30 year mortgages were going for 6% +/- .125%).

However, if we don't figure out our energy situation I fear interest rates on mortgages may be going back to the way they were in the late 1970s.