Big K

Where Are the Bears?

The market has returned to normal. Neither high nor low. In March, 666 on the S&P was a flyer. Many bears on this bearish forum think we are headed back there and below. Wake up and smell the coffee. That was a once-in-a-lifetime buying opportunity. I'm sorry you all missed it!

Current Rally: Are We in May 2003 or May 2008?

Another aim to fit the current situation into a past pattern. Sorry, each time is different. The market does not remember or care what happened last time. Attempts to fit the current market with some historical trend have no merit. One thing is for sure; this is not May 2007. The market fell down 50-60% after summer of 2007. It won't happen again, for quite some time. Too many bears are praying for this to happen again, writing articles like this one. They missed it in 2008, and have now sold short, after the market is down 50%. It's too late.

While the economy is still sputtering, it is far from dead. The recovery of the averages recently is not yet a bull market, but a correction of an oversold condition. For stocks to fall again another 50 or 60% from here(because this is where the author might like to "revalue" them), the country's economy would have to regress back to a point where there is 30% unemployment, and we all should grow our own vegetables and hunt buffalo. It ain't gonna happen.

Short-Selling Hedge Funds Started the Fire

Naked short selling is helping to make many people very wealthy. In March, there was such a fire sale going on that the smart money was picking up bargains in quality stocks at prices not seen in generations. Imagine getting some REITS for pennies on the dollar. I hope for much more selling. I look forward to buying companies like O, KO and PG for a dollar a share. These will pay a 200% dividend. Bring it on.....

Modest Dividends Point to Delayed Recovery

Since the Dow is an arbitrary selection of stocks, the yield on the Dow now is of no relevance when comparing with the 1930's. I could choose a Dow now that has a higher yield, if that were the criterion. Currently the Dow contains badly mismanaged companies like GM, or scam companies who steal their shareholders equity, like AIG. When you choose companies run by creeps and incompetents to represent your average, you don't do so well. Hence, this article has no reason to exist. Instead, the author of this article should watch and learn from the professionals in this field who follow the S&P 500, and mostly ignore the Dow.

The author missed an important point when he says "CEOs ploughed cash back into buybacks at the expense of dividend hikes for the most part.". Actually, CEOs plowed the money back into their own pockets with unethical pay raises, undeserved bonuses, and sham backdated stock options. That's the reason to avoid most companies on the market today. I stick with companies that have a fair dividend (3% or greater) with a long history of increasing dividends. Afterall, many of the wealthy in this country did so by holding high quality dividend aristrocrats for decades and are now receiving dividends equal to 100% or more annually based on their original investments. Such companies that could have brought you wealth had you bought them decades ago, especially if you re-invested dividends, include KO, PG, CL, CLX, KMP and ABT. These managements, and others, reward their shareholders rather than steal from them.

Martin Weiss: A Depression Is Unavoidable

Another permabear waxing romantically about Depression. Get over it. It ain't gonna happen. People are in no mood for such an event, and mood is what does it. Unemployment is slowing down, consumers are gaining confidence and real estate is stabilizing. Permabears are still trying to make money shorting the markets and spreading ill winds, hoping to make the rest of us feel nervous (and make a profit). That worked last year, but created historic opportunities in many sectors, such as REITS. Some are up 300% since the bottom in just a matter of weeks because they sold off due to irrational fears and expectations that the American economy would convert us into Indians subsisting off the land hunting buffalo. Many of these people were reading the dooomsayers on this website predicting the end of the world. Fortunately, they are now being proven wrong. As the shorters' profits evaporate, the rest of us can now go on with life, profitably.

Equities Are Likely Heading Lower: Resist the Temptation to Short Them

Stop living in the past, this is not 1929. There is much more wealth in the world today. The flames of the coming inflation will shrink the massive debts allowing people and the government to keep borrowing. The way to keep up with inflation is to buy equities such as KO and JNJ. Despite the author's suggestions that companies will slash their dividends, these two companies and many others have actually raised theirs. The ones slashing their dividends are those who criminally gambled their shareholders money on games called CDS or CDO, or securitized junk mortgages marked with a AAA rating.

The author is also clueless about Pfizer (PFE). The reason they cut their dividend was to stockpile cash for the Wyeth buyout. Had nothing to do with the economy or going back in time to 1929. Bears romanticize about 1929 in this forum and wax fawningly over their overly pessimistic leaders. In this case, comparing the PFE dividend with the depression of the 1930s is not only inappropriate, but dead wrong.

Sentiment Overview: Optimism Decreases for First Time in This Rally

People won't stay home and wait for the grim reaper for the rest of their lives. Americans are not cut out that way. Why go back to an18th century style economy when you can live a sweet life now. Hungry? Go out and have a nice meal out. Thirsty, go to Starbucks for a treat. I don't think people will give that up so they cook some home grown potatoes and rhubarbs. The pessimism is overblown. Americans seemed to have lost their minds. First, overly bubbly, buying real estate in California and Florida at 5 times the value, even getting into lotteries to do so. Now we've swung 180 degrees in the opposite direction, saying we are going to starve to death because the economy is dead. Fortunately, we are safely in the middle of these pathological extremes. If the market dips down again, largely expected by this bearish forum, load up on equities. The future is bright, and inflation will drive those equities through the roof.

Leaving the Dow Jones Alone Would've Been the Best Thing

We like to fiddle here in the US of A. Perhaps life is too easy, and we need to screw things up so we have something to do. The banks fiddled, nearly fiddling themselves out of business (if not saved by their government enablers). The government fiddled around the world, and now the world is plotting our destruction. Congress fiddled with the tax code to suit their grafters, now we have a broken tax system on nearly 100,000 pages of indecipherable, and often nonsensical gobbledygook. Madoff fiddled his clients money away while government regulators looked the other way (congress instead fiddling with baseball steroids). Fiddling is the American way, and leads things to be worthless. So, fiddling with the Dow average is simply what we do, and it renders that average worthless. That's why professionals don't fret over the Dow. They use the S&P 500 index, because that is less prone to fiddling. Fiddle on my friends!

Is Buy and Hold Dead?

Blame the media for "the sky is falling" style reporting. Markets always over correct. Now that Obama is in office, the media has been turning around and sounding a litte more positive. Buy and hold is not dead. In fact, most of the rich people never sold. Busted hedge funds, short-term traders and easily panicked investors have been jumping out. The above dividend strategy will be proven to be successful, with patience. Maybe we won't see another bubble for awhile, but markets will stabilize and we will get out of this. Confidence is re-emerging.

The Major Indices Need a Makeover

I'm not in favor of frequent changes in index makeup. Every time a new flavor of the month stock pops up or one already in the index falls on hard times, there is an outcry for changing the index. Like in a third grade class, the annoying boy who thinks he knows all the answers, "oh oh oh, use my picks...". Willy nilly manipulation in and out stocks from the DOW would make the index meaningless, especially for comparison and trending purposes. Because the DOW is made up arbitrarily, based on popularity, most professionals use the S&P500 index. Here, replacement can be made based on objective principles, on a specified frequency. If you watch the DOW, all it needs to do is be representative of a good cross section, which is does. Yes, the banks and autos are down, but all of them are, and that is the correct measure of today's economy. Replacing BAC with the next popular stock like Google would be render the index useless.

The Dow: An Historical Perspective

I don't understand your rationale for predicting a nice up rally before the crash back to the trendline, which appears to be around 1800, back to the '80s. This is predicting wiggles in a stock chart, which is nonsense. Especially, since "experts" can't even predict the trend most of the time, you proport to predict even minor wiggles. Also, the 80 year history of your lower chart is on linear scale, but your upper chart is logarithmic scale (the correct scale, especially for long periods like 80 years). I think you are trying to compare apples to oranges, or is this done to "prove" your point better? I agree things are bad, but lets not use BS to make our points.

Some Bank Behemoths Now Sub-Single Digit Midgets

I don't know why the folks in government don't ask to see AIG's books to see what the liability is. Perhaps they are afraid. I keep hearing about the 500 trillion dollar shadow banking system. Could AIG be sitting on the top of this heap with hundreds of trillions of dollars in future losses for the taxpayer? What is the depth of their corruption?

Are We Headed Back to 1980?

The above analysis is correct in that we should see about a 0-200 on the S&P. The shorts would love to push into negative territory, but that would be crazy. Maybe the geniuses that run the banks will think of a derivative method to make this happen. Back to the point, most likely, 600 is way too optimistic. I can see 200 on the S&P, and this would still be consistent with the double top theory, since it is only approximate. The shorts and institutional sellers (heretofore inactive, i.e. pension and endowment funds) will drive it down. Don't despair, however, once we bottom out at 200, I believe there will be an hysterical bounce back to 250, which will be a solid 25% gain!

Market Outlook: What Will the Fog of March Bring?

This just shows the fruitlessness of technical analysis. All this data, and it's 50/50 about which direction the market will go. Technical analysis seems to work best when you already know what the market did, and then you can interpret each twist and turn knowingly, sagely explaining exactly what happened. As a predictor, it is useless.

Reading the posts on this website, I'd say equities are dead. This reflects the general sentiment of the population. We are entering a brave new world of sub 1000 Dow and sub 100 SP500. Put your money in cash and gold. Forget about stocks, they are doomed.

Another Tough Month

February will seem like a gentle month compared to what is in store for this overpriced market. The economy is shutting down. The new administration is using this as an excuse to seize communistic power and raise taxes on anything that is still profitable. Economy to shrink 15% this year, 15% next year and 15% the following year. Then the bottom is really going to fall out. The US government will be bankrupt, democracy will end, and we will be under a communistic dictatorship. Goodbye to the American experiment. Hello Amerika! The stock market has no bottom and no place in the future of this country. The population will be reduced to foraging in the woods and wilderness for edible mushrooms and insects. Convert all your money to gold. It must be physical gold in your possession. Paper gold stocks/assets will not be worth anything. The government will try to get your gold, so hide it and don't tell anyone you have it.