1) Massive drop in gas prices = hundreds of billions more available to spend (or invest)
2) Big drop in price for nearly all commodities and consumer goods
3) Massive and historic stimulus by the Fed
4) $1 trillion money bomb on the way from Obama
5) Bad if not horrific news now priced in
6) Massive layoffs = companies getting lean
7) Nearly everyone is a bear and thinks a Great Depression or worse is on the way
8) Mortgage rates at historic lows - refis lowering monthly payments with some likely taking cash out
9) Stocks going back up = new self-perpetuating wealth effect
10) Huge Obama approval rating, world peace breaking out, Iraq war ending
11) Hedge fund liquidations almost over
12) Bush, Paulson and Cox nearly gone
13) Huge piles of depreciating dollars sitting on the sidelines with no other place to go
OK, that's doing my best with my sunshine hat on.
So, have we hit bottom?
Posts
65 comments:
Companies like Heinz which refinanced at 6% in 2000 are refinancing at over 11% today.
Government is crowding out the private side. Companies are going to fall like swatted flies.
And wait until Alt-A comes out of the closet.
And wait until the feds have to start bailing out states and munies also! Right now taxes galore are being instituted at the lower levels of government.
Stocks might go up for a few more months because of an asset-mix rebalancing but that's it.
By that time inflation will be kicking in and that will kill earnings even more. Contrary to popular belief, stocks do very badly while inflation is rising. Stocks start to refelct inflation when investors get a handle on infation expectations. And since eveyone right now is focusing on deflation... there is no freaking way inflation is priced in!
Did I forget to mention all those 1million unemployed who'll soon start selling their funds to make ends meet. And all those Boomers who'll be forced into early retirement and start selling some investments to keep their lifestyle.
Since rates are 0%, many people are going to decide that the best investment they could make right now is to pay off their 6% mortgage.
After the rebalancing is done, there will be more money coming out of equities than going in.
ATE-UP SAID:
I want my Mommy.
HI TOOLS!!!!
I CAN SHOOT THIS DOWN IN ONE NOTE!!!!
JUST REVIEW YOUR 60 MINUTES POST!!!!
WE ARE IN THE EYE OF THE STORM!!!!
HERE COMES ROUND 2!!!!
TOOLS!!!!
DOLTS!!!!
DOPES!!!!
you left out the one reason these won't happen.
the us consumer is BROKE
Not yet bottom
1. Alt-A, Ninja's yet to surface.
2. Strong US Dollar coupled with diminishing export markets.
3. Still more Madoff's are in hiding which should surface sooner.
4. House prices still in falling mode.
5. Japanese Yen still strong indicating that Hedge Fund Redemptions still not finished.
What about earnings?
People are scared.The stock market will only go back up when greed comes back.People are greedy by nature.Remeber a stock is just a piece of paper.I look at stocks as a measure of greed out there.I really think that we are starting to shift from fear to greed.You make some really great points about stocks.
This snowball still has some rolling to do. Automakers shutting down, laying off, the effects are still spreading out. After Christmas what little money is left in consumers' wallets will go to pay down debt that is huge and scary. Stores and restaurants will be empty, more layoffs, more gloom.
People either will not, or cannot, spend.
Expect to see maybe a temporary uptick, but the DOW, IMHO, is going to fall to 4,000 - 6,000 in the next 12 to 18 months.
Refi's are up, but are limited to areas and buyers not effected by the home price crash. More people will walk from their home when they are told they cannot refinance due to being upside down on their home 3 fold after the appraisal comes in (still alot of people have no clue until they try to refi). Until the sheeple start buying houses again at a much higher rate than they are currently, this dog will continue to fall from the sky in a ball flames. It's all about houses and trust me, sales are NOT good at all and are will not be anytime time soon.
This market is like shooting fish in a barrel...and hopefully, you're not a fish.
Just Keyser Soze, trying to brighten your day.
I say buy slowly all during 2009 and 2010, yet keep a lot of cashola, or pms, if that's your bag.
DANM - re: Heinz, perhaps you should buy an investment grade bond ETF?
Not even close to "bottom".
1) Massive drop in gas prices = hundreds of billions more available to spend (or invest)
Billions spent on mortgage resets and paying down debt.
2) Big drop in price for nearly all commodities and consumer goods
People have no money = businesses demand no comodites
3) Massive and historic stimulus by the Fed
Previous steps have not helped. this will only postpone the recovery and bottom.
4) $1 trillion money bomb on the way from Obama
Will not create enough jobs to replace those that will be lost.
5) Bad if not horrific news now priced in
New continuous stream of horrific news not priced in
6) Massive layoffs = companies getting lean
Reduces pricing power and demand. layoffs are just getting started.
7) Nearly everyone is a bear and thinks a Great Depression or worse is on the way
Not everyone. the general public is still pretty optimistic about avoiding a depression.
8) Mortgage rates at historic lows - refis lowering monthly payments with some likely taking cash out
Foreclosures still rising and equity falling. right now homedebtors have the lowest percent of equity in history.
9) Stocks going back up = new self-perpetuating wealth effect
A select few sectory will rise. most will continue grinding down with unemployment rising.
10) Huge Obama approval rating, world peace breaking out, Iraq war ending
World peace? hahaha. just look to Pakistan, the new Iraq.
11) Hedge fund liquidations almost over
Derivatives are not nearly finished.
12) Bush, Paulson and Cox nearly gone
A huge positive in the long run but the controlled train wreck is loosing its engineers.
13) Huge piles of depreciating dollars sitting on the sidelines with no other place to go
You can't force banks to lend and people to consume.
My gut says we're going lower. But then again, my gut has shit for brains.
You're a GENIUS.
I worship you.
I am not worthy.
Why aren't YOU Rich?
DIE PIGS
I will add to Keith's 13 points but with the disclaimer that we've reached a short term bottom..the market will probably go up into the 9400 pt range of the Dow. From Yahoo: Many of the signs of a bottom have been evident in recent weeks, noting:
* Cash levels in 401(k) accounts reached an all-time high in October, a sign investor sentiment hit extremely bearish levels, a contrarian indicator.
* As of November 2008, the 10-year return for the S&P 500 matched its worst performance in history. Because of mean reversion, bad (or, in this case, awful) 10-year returns typically lead to positive 10-year returns going forward.
* Treasury yields falling to zero — and negative for short periods — is a sign of panic among investors who would rather lock in a quantifiable loss vs. risk putting money to work in "riskier" assets.
The small family-owned medical equipment firm where I work was sold to a corporation two years ago. Yesterday at work they called everybody (about 75 of us) to the front office for an ‘announcement.’
We were all told that due to the current economic climate and the projected drop in revenue for next year, there will be no annual pay raise.
This is one result of all the speculation and greed that manifested itself in the real estate bubble.
So, with inflation having taken a bite out of my earnings (sorry, but insurance, medical care, and food prices are NOT deflating), plus the possibility of layoffs next year, I am not in the mood to gamble in the stock market at this point in time, nor am I in the mood for spending money on anything but the essentials needed to get by.
Now, multiply these sentiments by 100,000,000 and you will understand why the stock market is not going to roar ahead and also why we have not hit bottom.
So, to sum it up, now is not a good time to buy.
-Mammoth
1. Falling US Dollar
2. Prices falling, but so are profits, leading to more layoffs.
3. Unemployment rising
4. Alt-A, Prime ARM, Option ARM resets coming; 8 Million more foreclosures
5. States are bleeding
(see CA; e.g. The state's top three financial officials voted unanimously today to freeze $3.8 billion in financing on road, levee, school and housing construction projects throughout California in the most drastic fallout yet from the state's cash crisis.); leading to more unemployment, less tax revenue,...
6. Commercial real estate problems are starting to hit
7. Automakers and US manufacturing sector are bleeding; automakers having a special 'holiday'
8. House prices falling, and must still fall 50% in some areas
9. Bond yields falling
10. US Debt is massive
11. US Budget in shambles
12. Fed Policy is potentially disastrous
13. Capitalism is dead, they are looting the treasury
14. Billions 'spent' every day on wars
15. Consumer is credit is tightening (recall zero credit card bond sales in Oct; I'm sure the Fed picked up the tab on that slop)
16. Baby boomers seeking social security and other old fart payouts
17. ...
Keith,
You are missing your csll as a CNBC "analyst", the ones that have been wrong over and over and over.
The dollar has plummeted back to its September exchange rate with respect to the Euro.
"I see naked people"
-Warren Buffet, 2008
1) Massive drop in gas prices = hundreds of billions more available to spend (or invest)
- for who ? companies may be better off, but consumers are too far under water to think about spending again. And are certainly not gonna get a loan for it.
2) Big drop in price for nearly all commodities and consumer goods
- same argument as 1) consumer doesn't have the money, and wont get the credit for it.
3) Massive and historic stimulus by the Fed
- to banks only, and those are refusing to lend the money further
4) $1 trillion money bomb on the way from Obama
- whats a trillion these days ? chump change.
5) Bad if not horrific news now priced in
- not nearly enough horrific bad news priced in, the big 3 still need to take the plunge, then maybe.
6) Massive layoffs = companies getting lean
- thats loads of people not consuming
7) Nearly everyone is a bear and thinks a Great Depression or worse is on the way
- and they are right :-)
8) Mortgage rates at historic lows - refis lowering monthly payments with some likely taking cash out
- too bad nobody is qualifying for new loans.
9) Stocks going back up = new self-perpetuating wealth effect
- stocks need to go up first before that can be used as an argument.
10) Huge Obama approval rating, world peace breaking out, Iraq war ending
- hahahahahaha
11) Hedge fund liquidations almost over
- hahahahahaha
12) Bush, Paulson and Cox nearly gone
- true, you got a point there
13) Huge piles of depreciating dollars sitting on the sidelines with no other place to go
- hmmm good point, hyper-inflation could mean the stock market goes up in dollars, wont do any good though.
IMO, when we get our checks in the mail from the gubment and credit card companies are bailed out, the game really begins.
The strong left standing will be in a mad scramble to gobble up every red cent that they can and keep our savings and checking accounts with as close to a zero balance as possible.
OK, here's my best 13 bear arguments:
1) Earnings are going to plummet like never before - stocks still overvalued in terms of future p/e
2) Unemployment is going to soar to 10%+
3) GM and or Chrysler will fail and the GOP will block any bailout
4) Alt-a bomb is about to go off
5) Black Swan event could hit - assassination, terrorist event, foreign flare-up, Iran goes nuts
6) Hedge fund liquidations nowhere near over
7) Dollar stays strong against Bernanke's will, killing any US company with exports or foreign earnings
8) Derivative bomb goes off to the tune of trillions
9) China announces they're going to sell off their US debt and not buy anymore
10) Banks continue to not lend, credit card companies keep taking back credit lines, consumer refuses to spend
11) massive commercial real estate crash
12) States and cities start going bankrupt - fed bailout dollars diverted to basic services
13) Oil skyrockets again
I see bare-foot people!
Why sit around and guess about what is to come? Why not read about the other places who have already been through what is coming. At least it will be an educated guess.
http://tinyurl.com/ytvt8q
------------------------------
From financialarmageddon.com/
Despair in Once-Proud Argentina
After Economic Collapse, Deep Poverty Makes Dignity a Casualty
By Anthony Faiola
Washington Post Foreign
ROSARIO, Argentina
Word spread fast through the vast urban slums ringing Rosario. There was food on the freeway -- and it was still alive....
"And yet there I was, with my own bloody knife and piece of meat," Banrel said. "I felt like we had become a pack of wild animals . . . like piranhas on the Discovery Channel. Our situation has turned us into this.".........
I'm waiting for Obama's Trillion Dollar Stimulus to call bottom.
That will make everything HUNKY DOREY again!!!
Wooooot!!
Isn't it funny and ridiculously hypocritical how we lambast the Little Shrub for his economic "stimulus" checks but when Obama writes checks over three times bigger we think it's great?
And don't get me wrong - I absolutely loath Boosh and every scum-sucking Neocon behind him.
Gerald Celente the well known trends forecaster (like Peter Schiff) is saying the collapse of 2009 is coming and will be followed by the Greatest Depression after 2009.
2009 will bring the collapse of retail and commercial real estate. I agree because we're already seeing the beginning of this.
Gerald Celente is on the Alex Jones Show today. You can listen to the free streaming radio show at:
Infowars.com
Of course, you could be right Keith. Maybe Obama will bring "world peace" and prosperity for all and a booming stock market the moment he is inaugurated.
Bwahahahahahahahahahahahahahahahaha!
Commercial real estate is going to fall off a cliff. I am a commercial appraiser. My boss was at a seminar and was seated next to the owner of the biggest commercial appraising outfit in the city. He just laid off 8 commercial appraisers and told my boss that there is literally no new business coming his way. He relies on new purchases and refis.
It is all coming down. It is going to get very very ugly.
On stimulus, there's stupid stimulus and smart stimulus.
Stupid stimulus is sending out $500 checks so people can go shopping (which they didn't). That's just pissing money away.
Smart stimulus is building things that get America an ROI. Roads, bridges, light rail systems, schools, job-training programs. If there's no ROI then the money shouldn't be spent.
And if one for f*cking check gets sent out to sheeple I'll think about turning in my citizenship.
Ok, I'll take a stab at it:
1. OPEC won't continue fucking around like this forever. This dip is temporary and oil will come roaring back sooner rather than later. Besides, we're due for a geopolitical shock to the system - whether fabricated or real - oil will be brought back up come hell or high water.
2. Commodities are actually starting to be artificially driven up and with so much liquidity beginning to slosh around, they will definitely be headed up as the dollar begins falling. With commodities priced higher but sluggish demand, we've got a recipe for stagnation.
3. Massive and historic stimulus vs. massive and historic unemployment and dollar weakness.
4. $1 trillion money bomb is not guaranteed and his pie in the sky dream of putting 2.5 million to work (bullshit if I've ever heard it) will not offset the job losses that are coming. Furthermore, those jobs are not shovel ready and will dissipate shortly.
5. News can get MUCH more horrific, Keith. Any geopolitical event can send this market reeling. Try "Islamic militants park fertilizer bomb in Saudi refinery - oil at $95/barrel" or how about "Slumping oil demand causes social unrest in Iran".
6. Massive layoffs = foreclosures = reduced tax revenue = social unrest = reduced consumer spending in economy 70% reliant on said consumption . . need I go on?
7. Actually, everyone I know is far too stupid to understand what underpins this economy. It's still Gossip Girl and very little brain activity. The bobbblhead dolls I'm listening to are extremely bullish right now. I don't know who you listen to (mainstream) but the Cramer crowd is very much up and to the right. Most Americans are starting to fall back into the bull camp after being persuaded by 60 minutes that its GD time. Roubini, Schiff and Rogers are bearish and they've been far more accurate than the bulls.
8. Had a gander at the qualifications for refis, Keith? Not a whole lot of deadbeat flippers and fraudsters rockin' the 750+ FICO these days. There's a few good articles out today. Although this will undoubtedly help out.
9. Stocks going up - that remains to be seen how much and for how long. We're just one bank failure away from another wave of panic. You don't honestly believe we've bottomed out, do you?
10. Obama approval rating? HUH?! Let's wait until the man gets in office and makes his first fuck up. And BTW, the approval ratings I saw for him on Gallup were not incredible by any means. Compared to Bush, sure, but standing alone - nothing special, particularly in economic matters. Oh, you mean world peace as in Mumbai massacre and saber rattling between India and Pakistan? The Iran situation is not over by a damn site and with Israeli/AIPAC puppets lined up behind Obama, this should get very interesting very quickly. Wait until American boots are off the ground (which is looking pretty unlikely at this point) in Iraq and tell me whether peace broke out or not. Look for a genocidal rampage to ensue the minute the last Blackhawk lifts off.
11. Hedge fund liquidations almost over? That's just too funny. I won't even touch that. I will mention that hundreds more are set to fail however. Does that count as a liquidation?
12. Geithner, Rubin and Summers - demented free market assholes one and all are almost on board. They should do wonders following the Keynesian playbook. Time for a new perspective and fresh thinking? Maybe?
13. The "huge piles of depreciating dollars on the sidelines" myth was recently debunked in the NYT & WSJ. I'll have a gander and see if I can't find the article. And even if there were, it will take a good deal of time to get it back in the game. Will wild market gyrations stop anytime soon? Doubtful, besides, where does a country with $14 trillion in personal debt come up with all this hot money?
Smart stimulus is building things that get America an ROI. Roads, bridges, light rail systems, schools, job-training programs. If there's no ROI then the money shouldn't be spent.
Hey Keith. If it's to be spent on building vital infrastructure then it's not "stimulus" it's investing in infrastructure and public works.
The question of course is can you truly guarantee a return on investment and is the government the best arbiter of how to tax the people, invest their money and gain a return on that investment.
And where do you draw the line at vital infrastructure?
Example: Is a laptop for every child a wise use of public funds when many families live in the ghetto, can not afford healthy food and don't have health care?
History (especially recent history) shows pretty clearly that the government is an utter failure when it comes to return on investment and efficient use of public funds.
That is why so many of us are opposed to "stimulus" and massive New Deal style public works programs.
There is no moral or logical argument for saying that you can tax the people either directly or indirectly and then stimulate the economy with public works programs.
Let the free market work. I guess this leads to a fundamental question for you Keith. Do you believe what we've had is a free market and do you blame the current crisis on the free market or government intervention in the free market?
What makes you think Obama's version of the New Deal is going to be any more successful or beneficial to America? What indication tells you that Obama will be successful where every other government program for "stimulating" economic growth has failed?
Can't you see that Obama is just another cog in the corrupt Washington machine? What does it take to realize this? A full term?
Okay - so we end the war and bring the troops home....
Where will these troopsjobs when a million others can't? Has the government thought this far out?
Rasbary
DANM - re: Heinz, perhaps you should buy an investment grade bond ETF?
December 18, 2008 2:41 PM
-----------
I know. I've been keeping an eye on them but they're just at 7%. If there are more defaults, the yield might go higer.
Also, the interesting ones are US and I'm in Canada. CAD dollar just dropped 20%. I think the US dollar has some downside and 7% does not cover the extra risk.
You know what's really funny, I just realized that as an expat I'm paying tax dollars so that you b*tches can soon ride around on nice new roads, travel in new light rail systems, and your kids can go to new high-tech schools.
I get nothing.
N-O-T-H-I-N-G.
And that's the problem with the US and US tax laws.
And one more reason why the income tax should be scrapped, and we should go with a 100% consumption tax. Think about it - you'd be taking in taxes from foreigners as well - the illegals in the US and also all the tourists who come there.
Okay - so we end the war and bring the troops home....
Where will these troopsjobs when a million others can't? Has the government thought this far out?
The economy is a system of finite resources that works to balance itself and reach an equilibrium just like a natural ecossytem or any other complex system.
In the hypothetical situation of all the troops coming home at once then yes they would have trouble finding a job. Especially in the economy's current situation where it is over burdened by government expenditure and massive debt.
If the government reduced it's spending on war and actually returned that money spent on the wars in Iraq and Afghanistan to the taxpayer then you would see a proportional expansion in economic growth which would return jobs to the private sector providing jobs for those troops.
Of course, none of this happens overnight. Complex systems take time to adapt.
The important question is how does the complex system work most efficiently.
Does it work most efficiently when a core group of individuals plan the operation of all of the small components (businesses) in that system and attempt to stimulate some parts of the system at the expense of other parts of that system?
Or does the system work most efficiently when the individual components (business owners) are provided the most freedom to conduct their affairs and conduct the operation of their business?
We're talking about the decisions of a few arrogant and typically clueless and detached mandarins in Washington versus the decisions of millions of on the ground, intimately familiar with their areas of business entrepreneurs and business owners.
The answer should be obvious and yet we still have morons in government like Bernanke and just about every fool or corrupt scumbag in government that believes they can conduct the economy better than the next guy. It's an example of complete and utter hubris to think that you can centrally plan something as complex and huge as the economy of the USA.
The only inflationary pressure right now is the Fed and other central banks. Can someone name one other inflationary pressure in the world economy right now? Even oil is crashing despite peak oil and opec cuts. Insanity.
Excellent thread, one of the best, thanks. Only go into this market if you are an adept trader.....too many negative uncontrollable conditions... Trader's market only.
WOW a couple people on here did a real thorough job of the bear-argument list, even remembering things like cities and states hurting from property taxes crashing and the coming baby boomer stock outflow wave.
Saves me a lot of typing.
But here's one I don't think anyone caught yet: due to low interest rates, the enforced pension contribution obligations of many companies, states, cities, counties, etc are way up and squeezing cash flow right at a time when they have less cash. Think your city or county job is job security? In the coming year expect a big wave of layoffs due to this, and even a few bankruptcy blowups and pension defaults from this--as well as less investment in the market and in innovation and future growth, among for-profit companies, during the cash flow crunch.
Then again, since Keith was recommending AAPL at $180, I suppose by SOME definition, $90 is a MOABO. Unless it goes to $60, in which case we'll here THAT is the MOABO...
By the way--someone should check the 30-day performance of the market after each of the recent fed rate cuts, and use it to project/predict the mid-January market level. I don't think you'll find it encouraging--since the idea that rate cuts help the market is a MYTH continued by the CNBC types. (Then check the market performance for each 30-days during the last rate INCREASE series--perhaps you'll be convinced to WAIT WITH ME FOR THE FIRST RATE INCREASE.)
Word spread fast through the vast urban slums ringing Rosario. There was food on the freeway -- and it was still alive....
"And yet there I was, with my own bloody knife and piece of meat," Banrel said. "I felt like we had become a pack of wild animals . . . like piranhas on the Discovery Channel. Our situation has turned us into this.".........
I saw that! That was that Madonna movie, right?
Come on in, the water is fine.
For the record my aapl is at $130. Sucks today, but again, my recommendation was buy if you have a 5-year horizon
AAPL will be MUCH higher than $130 in 2013. And if you think otherwise, you're a fool
Keith,
You forgot one very important thing you didn't take into account.
None of your points matter if the consumer doesn't go out and spend.
Consumers are tapped out on debt and most are under on mortgages. Again, Keith, you know this very well and stocks are all about profits not money bombs!
Your in deep I can tell but you played the wrong cards by thinking that the housing bubble would provide a good opportunity for bears like you to capatialize on. You were wrong, were all going down!
AAPL @ $130? I see $89
You got it - nice 30% haircut on AAPL
But again, wake me up in 2013 and let me know the price, OK?
Day traders and condo flippers - look for tips somewhere else. But if you're a long term investor, not a gambler, with a 5-year horizon, today is your day.
4) Alt-a bomb is about to go off
-----------------------------
the interest rate reseting higher fuse of the alt-a bomb has been defused. most adjustable mortgages are going or about to adjust down lowering their monthly payments.
problem is, it doesn't solve the problem that a lot of the alt-a are underwater and losing their jobs.
Smart stimulus is building things that get America an ROI. Roads, bridges, light rail systems, schools, job-training programs. If there's no ROI then the money shouldn't be spent.
--------------------------
not sure that I would call it "smart". can the government really do anything that would be defined as "smart"?
building roads and bridges is definitely better than stimulus where the stimulus goal is simply to juice consumer spending.
we have benefited greatly from some of the stuff that was built during the "make work" years of the depression but that spending did not get us out of the depression. The "make work" economists realize this and their answer is that FDR did not spend enough. If only he had spent more it would have gotten us out of the depression.....
Guberville Smack said...
I saw that! That was that Madonna movie, right?
What is it about dripping bloody knives and raw meat that make people think about Madonna?
Nope ur thinkin Night of the Living Dead.
Got guns Goober?
"...Can't you see that Obama is just another cog in the corrupt Washington machine? What does it take to realize this? A full term?..."
Since you asked, I'll proffer a sincere answer:
The last guy set the bar INSANELY high, yet it took around 1.9 terms for it to finally sink in.
Even then it was quite close. Think this guy is up to rivaling 43 in sheer, craven servitude to the monied class?
{you. bet., Rube}
AAPL will be MUCH higher than $130 in 2013. And if you think otherwise, you're a fool
-------------------------------------
i predict otherwise. In 5 years Steve Jobs will not be CEO. They will bring in a Carly Fiorina in that will crater the company.
Isn't it funny and ridiculously hypocritical how we lambast the Little Shrub for his economic "stimulus" checks but when Obama writes checks over three times bigger we think it's great?
--------------------------------
yea, i have noticed the same thing.
Next thing we will hear is the NY Times extolling the virtues of Obama ordering water boarding for interrogations.
Day traders and condo flippers - look for tips somewhere else. But if you're a long term investor, not a gambler, with a 5-year horizon, today is your day.
Their day was about two weeks ago when shares prices were really in the tank. Things are still too sporty at this level.
We are NO WHERE CLOSE to a bottom in the housing market folks!!!
They won't be able to GIVE houses away by the time we are...seriously!
When rates are 2%, and housing PRICES are back in line with historical fundamentals, call me. That is when it will make sense to buy a debt-trap.
HOUSING PRICES MUST BE ALLOWED TO FALL BACK DOWN TO THEIR NATURAL LEVELS. THE LONGER OUR GOVT. TRIES TO MEDDLE AND KEEP IT ALL PROPPED UP, THE LONGER WE DELAY REAL RECOVERY!!!!
Personally, I got ready for this crash years ago. You would have to be retarded NOT to have seen it coming.
For most people, their standard of living- all financed with mountains of debt and teaser rate loans, is going to have to implode.
We don't have a credit ACCESS problem, we have a DEMAND problem! Most consumers are entirely tapped out, losing their jobs, homes, and minds.
They realize the only way out of this mess to pare down and SAVE THEIR MONEY like there is no tomorrow.
The government meanwhile, just wants the spending to continue, or this whole house of cards that we call our "economy" is going to come crashing down.
There is no stopping it now. Hope you are all hunkered down and have cash in the bank!!
STOP SPENDING, START SAVING!!
Our faux economy is the biggest powder keg right now. I mean come on people!! If we don't continue INSANE levels of living beyond our means and spending at 2005 levels, we are going to implode!!
Whatever you do, DO NOT buy a house right now. Hold out until prices fall, and rates hit at least 3%. If they can't get buyers into the markets, that is what will happen!!!
Vote with your WALLETS and take your country back. (Or at least feel better that you know your lack of spending is REAMING them, as bad as they have reamed us)!! We will all benefit from lower prices and rates
PHUCKKK THE BANKERS~
Who are the buyers? Could be flat / down for 10 years.
Obama won and Keith is now a bull. ( drum roll )
Responses in CAPS:
1) Massive drop in gas prices = hundreds of billions more available to spend (or invest)
WILL HELP BUT WON'T CAUSE A BULL MARKET. THE EFFECT WILL BE MARGINAL.
2) Big drop in price for nearly all commodities and consumer goods
I HAVE NO IDEA WHY PEOPLE THINK PRICES ARE DECLINING...MAYBE FOR A FEW THINGS, BUT FOOD PRICES ARE GOING THROUGH THE ROOF. THE DISCOUN SALES WE ARE SEEING NOW ARE TEMPORARY IN ORDER TO GET RID OF INVENTORY ORDERED MONTHS AGO. ONCE GONE, PRICES MAY GO UP AGAIN.
3) Massive and historic stimulus by the Fed
WILL ULTIMATELY CAUSE INFLATION AND BRING DOWN THE ECONOMY AGAIN...AND THE STOCK MARKET WITH IT.
4) $1 trillion money bomb on the way from Obama
SAME AS 3.
5) Bad if not horrific news now priced in
MORE BAD NEWS TO COME THAT IS NOT PRICED IN: LIKE ALT A AND OPTION ARM RESETS.
6) Massive layoffs = companies getting lean
ACTUALLY, IT MEANS PEOPLE FIRED CAN'T SPEND MONEY AND THOSE THAT HAVE JOBS ARE TOO SCARED TO SPEND. YES, COMPANIES DO GET LEANER BUT THAT WON'T CONTRIBUTE TO A BULL MARKET.
7) Nearly everyone is a bear and thinks a Great Depression or worse is on the way
GD2 COULD BE REALITY; A SEVERE RECESSION DEFINITELY WILL HAPPEN.
8) Mortgage rates at historic lows - refis lowering monthly payments with some likely taking cash out
YES, WILL PUT MORE MONEY INTO EXISTING HOME OWNER POCKETS. WON'T DO MUCH TO SPUR HOUSING MARKET THOUGH.
9) Stocks going back up = new self-perpetuating wealth effect
THERE WILL BE RALLIES HERE AND THERE BUT THESE ALL WILL FAIL EVENTUALLY.
10) Huge Obama approval rating, world peace breaking out, Iraq war ending
THIS IS LAUGHABLE. HE'S GOING TO GET CREAMED BY THE WORLD AND THE ECONOMY SOON.
11) Hedge fund liquidations almost over
NOT YET. AND IF THIS MARKET STARTS TO GO DOWN BELOW ITS OCT/NOV LOWS, YOU WILL PROBABLY HAVE INDIVIDUAL INVESTORS, 401KS, AND RETIREES DUMPING SHARES, WHICH THEY DID NOT DO IN THE SEPT/OCT MELTDOWN. I DON'T KNOW ONE PERSON WHO SOLD ANYTHING IN THEIR PORTFOLIIOS. IF THE MARKET HEADS DOWN TO 6,000, YOU CAN BET YOUR BOOTIES THE BAILING WILL BE BIG.
12) Bush, Paulson and Cox nearly gone
IRRELEVANT.
13) Huge piles of depreciating dollars sitting on the sidelines with no other place to go
MOST PEOPLE DON'T HAVE MONEY SITTING ON THE SIDELINES. YES, MONEY HAS BEEN PUT INTO TREASURIES AND OTHER "SAFE' INVESTMENTS, BUT MOST PEOPLE I KNOW DON'T HAVE A LOT OF MONEY TO START THROWING INTO THE MARKET. THOSE THAT HAVE MONEY IN CASH WON'T BE PUTTING IT INTO THE MARKET SOON.
THE REAL ISSUE IS THAT WITH PEOPLE GETTING FIRED, FOOD PRICES INCREASING, AND TAXES INCREASING WE ARE HEADED FOR A SUSTAINED PERIOD OF LOW/NO GROWTH. ADD IN THE INFLATION FROM THE MONEY BOMBS AND IT WILL BE VERY ROUGH.
IN SUM: PERIODIC RALLIES, PERHAPS SOME SUSTAINED FOR SOME LENGTH OF TIME; BUT IN THE LONG RUN THE ECONOMY AND THE MARKET WILL GO DOWN.
I DON'T KNOW ONE PERSON WHO SOLD ANYTHING IN THEIR PORTFOLIIOS. IF THE MARKET HEADS DOWN TO 6,000, YOU CAN BET YOUR BOOTIES THE BAILING WILL BE BIG.
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In Canada stats show that only 15% of investors did anything in reaction to the market drop.
They all believe that you should not market time.
It's not obvious that if you just lost 40% in equities that you'll move more into equities because they just tanked.
The only ones who would do this are the closet indexing institutional investors who must follow a policy and could give two hoots about nominal returns.
Peter Schiff thinks you're an idiot, Keith
Uh, last anon, thanks for posting that Schiff show
Schiff says EXACTLY WHAT I'M SAYING BECAUSE I'M A FOLLOWER OF PETER SCHIFF
Man, did you even listen to the show?
He says GET OUT OF THE DOLLAR NOW BECAUSE IT IS ON THE VERGE OF COLLAPSE.
Get it?
So get into gold. Get into miners. Get into commodities. Get into investments that will protect your wealth as the dollar collapses.
Again, thanks for posting that. I hope all of you listen to Schiff.
He's right.
This Madoff case is very interesting. I see certain parallels to how our entire economy is run. The entire big Ponzi scheme of how we were conducting business and running our country is called into serious question right now. I have no idea of what the outcome will be but it has the potential for a very unhappy ending.
Re Schiff:
He's a smart dude and should be commended for standing up to the real estate blowhards on CNBC and Fox News. But wasn't he suggesting that the world economy would decouple from the U.S. economy? That prognostication has obviously been incorrect. the BRIC countries have suffered just as much, if not more, than the U.S. economy. I sold a lot of my DODFX shares, but the remaining shares have gotten crushed.
Let me know what you think about decoupling, Keith.
1. In a deflationary environment, the real rate on those historically low rates are much higher than you think.
2. There is an overwhelming supply of homes. Plus, lending standards have hardened. Further, the sub-prime segment of the market is gone for about 10 years.
3. Stock buybacks and lofty dividends are over for a long time. Cash preservation is essential.
4. Matching company 401-k stock purchases and wage increases are on ice.
5. Hedge funds will continue to liquidate in 2009. They've temporarily banned client redemptions until next year. Might have something to do with year-end bonuses.
6. The 1 trillion stimulus will be divvied over 2 years. Most of it will go toward shoring up state budgets (medicare, unemployment, food stamps, and so on). The remainder to unfunded earmarks.
7. Ultimately GM and a bunch of other corporate entities will seek Ch 11 bankruptcy. Auto and a bunch of other retail sales are not coming back for years and years. Americans need to save.
8. There is a chance we might see riots and other types of civil unrest across America as a result of rising unemployment, foreclosures, and bailout envy, especially bailout envy.
9. Commercial real estate is about to blow up. Expect another chain of banker write-downs.
10. When no one cares about what happens to the stock market it will bottom. Do you remember the last bottom?
SAVE YOUR MONEY!!!!
Do whatever you can NOW to downsize your life, unless you are independently wealthy.
Things are going to get verrrry ugly soon..your government is not telling you the truth about how bad things are.
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