LeoTheDog

3 Market Scenarios for the Coming Years

This is an excellent point that seems to be lost on every bull. If you believe that valuations drive returns, the market is and has been (but for a short period of time earlier this year) terribly overvalued. To be a bull, it seems that you either have to believe that valuations don't matter, or that corporate profits will (at a time of tight credit) explode to the upside in the near future to bring these valuations down. I'm doubtful....


On Sep 03 11:07 AM Mad Hedge Fund Trader wrote:

> tyui. US stocks are now the most expensive they have been in seven
> years, and never really got cheap during the March low, just fairly
> valued.

Will the Market 'Melt Up'?

This is a ridiculous article. The answer to the title of the article is that "IT HAS MELTED UP". That's how we got a 50% move on the basis of "it is getting worse more slowly".

The author appears to think that 1200 on the S&P and 12,000 on the Dow are within reach. At what P/E would the market be trading at if he is right, and is that a reasonable valuation...?

Due for a Correction? Market Is Already Priced for Grim Future

"the rally has been driven by a lessening of the horror of big government, and that in turn has been largely a function of Obama's policy prescriptions being rejected by the electorate and bogged down in Congress."

Really, is THAT what has driven the rally?

Morgan Stanley Sees V-Shaped Recovery: I See W-Shaped Recession

Or, for that matter, a recovery. Numbers that show that things are getting worse, but worse more slowly than before, are not particularly strong evidence of a recovery. It isn't even clear that things are getting better, only that they aren't getting worse as fast as before.

Moreover, even when we can see improvement it should be remembered that "improvement" does not equate to "recovery".


On Aug 06 02:25 PM JCC wrote:


> Suffice it to say that It is way early to predict a W shaped recession.

Why the Dow Is Headed to 6000

Radical pessimism is now anti-American?


On Jun 30 12:49 PM MWilliams1188 wrote:

If you're really this radically pessimistic of the market, you have no business being investors, or Americans for that matter.

In March, Another Bouncing Cat

"Monster gains"? Are you serious? What would the driver of monster gains be? The robust earnings growth that is (not) going to occur?

Earnings drive stock prices (at least in the long run). Unless and until there is a "monster" uptick in earnings you will not see any corresponding gain in stocks. S&P is currently at about a 20 p/e. That's "overvalued" in my book....

Any wall of worry will likely crash on the heads of the bulls.

Jeremy Grantham: Reinvesting When Terrified

This is hardly the case for entering or even staying in the market. The author cites a 50/50 chance of falling below 600 on the S&P. From today's close that represents a 50% chance of a decline of more than 23%.

Notwithstanding the claims of "saturation" of bad news, I would suggest that the following have not been fully priced in or appreciated by most investors and commentators (not because they are stupid, but because it is impossible to price these things in until we see how bad they are):

1. 1st and 2nd quarter earnings.
2. High risk of an Eastern European default.
3. Switzerland (Switzerland!) is devaluing its own currency. What does this portend for Japan or China, and by contrast how does a stronger dollar affect US growth estimates?
4. Alt A mortgages.
5. Credit card defaults.
6. The economic effects of 10% (or higher) unemployment.
7. Possibility of a commercial real estate crash.
8. Rising foreclosure and bankruptcies caused by continued job losses, weak job market and loss of healthcare.

I fear that additional shoes have yet to drop....

The Rally, When It Comes, Will Be a Doozy

This argument would be more persuasive if the cause of all this sidelined money was the irrational hording of cash at a time of deep value.

Looking at current (and forward) P/E ratios for the main indexes, I don't see the deep value, which suggests the cash-hording is quite rational.

Doesn't mean folks won't get irrational again (my bet is you're right, and they will), but the magnitude of this downturn might temper some of the irrationality going forward....

Options Trader: Thursday Outlook

Interesting that the Reagan fans here don't seem to take issue with any of the substance in the cartoon.

10 Predictions for the Global Economy

The tenor of the comments to this article are all the reason I need to be short. Many writers seem to attack this article as being "too late", as if "it" already happened. Could it be that the author is suggesting that as bad as it has been, it is going to be a lot worse? Just because stock prices are cheaper doesn't make them cheap.

These comments, plus the ridiculous 2009 S&P projections from the major market strategists (see article on home page for details) strongly suggest that there are too many people who think that worst is behind us. Those folks seem to ignore (or be ignorant of) the enormous crisis in Alt-A mortgages that has not yet hit, irrationally high S&P earnings projections and an absolutely devastated state of emerging economies (or maybe you believe the Chinese government's reported 8% economic growth statistics...). See you at the bottom.

The Sun Is Shining on Wall Street

PrudentMan, you are a fool. We've had two former CEO's running the show for the last 8 years. How'd that work for you? You continue to denigrate intelligence and favor the stupidity of "real" people like an unlicensed plumber who makes $40k a year but who thinks he makes more than $250k. Wake up. It is long past time that we have an intelligent and thoughtful president who is confident and competent enough to surround himself with incredibly talented people.

Context is Everything: 7 Ways to Assess the Bigger Picture

Stocks are cheap if you believe current 2009 earnings estimates. If you believe current 2009 earnings estimates you are going to lose your shirt.

Fourth quarter numbers will be bad, 2009 guidance will be worse, and 2009 actuals will be terrible. How do you justify 12% projected earnings growth for the S&P for 2009 when we are heading to the worst recession in decades?

Asset Class Performance during the Bush Years

Wow, we elected an incurious oilman and the S&P drops 30%, with 7 of 10 S&P sectors go down for the next 8 years? Only the oil industry outpaces inflation during his term? Yeah, that's a real surprise. What a disgrace. Anyone having trouble figuring out who to vote for today?