Don’t know if a CFA forum is the proper place to post finance stuff…
BUT, you can see why 7,500 is such a critical level (and why so many “pundits” are calling, (or more like hoping) a bottoming process is in place.
http://www.mrci.com/pdf/dji.pdf
Next stop, 4K
Reliability of pundits is inversely proportional to the amount of money they actually have invested the markets.
Give me a break.
MP Noonan
At least 5000-6000 range. Only suckers are buying…I am keep loading up on inverse ETFs. Thank you sucker longs!
7289 is the critical number. If we stay above that we’re good. If not, the whole world will explode.
Between 7289 and 7289.7 merely indicates depression
^^ I disagree.
The fact that the DOW is trading where it has only traded before in complete panic says that this thing is going to die as all signs point downwards. The low is not the support, the trading range support is the support.
although, ST, 7700 looks like there are some buyers
We ARE in the mother of all Depressions right now.
please…we may go to 6500…
I’m 100% equity now…25% of it emerging.
Pick up a history book why don’t you and read about real hard times…this has NOTHING on the real GREAT DEPRESSION.
we may go down in the 6000s but not this early in the year. by end of year i can see us going down…to that level
There are only two tragedies in life: one is not getting what one wants, and the other is getting it - Oscar Wilde
CFA_Halifax Wrote:
——————————————————-
> please…we may go to 6500…
>
> I’m 100% equity now…25% of it emerging.
>
> Pick up a history book why don’t you and read
> about real hard times…this has NOTHING on the
> real GREAT DEPRESSION.
100% equity? Did you skip the benefits of diversification section in every CFA textbook you read?
louisvillegrad Wrote:
——————————————————-
> At least 5000-6000 range. Only suckers are
> buying…I am keep loading up on inverse ETFs.
> Thank you sucker longs!
You are always bearish
MP Noonan
I scoff at your technical analysis
100% equity is just funny to me even if your time horizon is 100 years having that 30%+ cut off the top hurts no matter how hard you try to rationalize it.
Here come the clowns :) .. just kidding …
I like the 7289 number. nice looking number . Looks like a support to me :) If we break it sell all and run as fast as you can :)
king_kong Wrote:
——————————————————-
> CFA_Halifax Wrote:
> ————————————————–
> —–
> > please…we may go to 6500…
> >
> > I’m 100% equity now…25% of it emerging.
> >
> > Pick up a history book why don’t you and read
> > about real hard times…this has NOTHING on the
> > real GREAT DEPRESSION.
>
>
> 100% equity? Did you skip the benefits of
> diversification section in every CFA textbook you
> read?
Nope…but I also have read a thing or two about market cycles…not to mention the fact that I have another 41 years until retirement.
MattLikesAnalysis Wrote:
——————————————————-
> ^^ I disagree.
>
> The fact that the DOW is trading where it has only
> traded before in complete panic says that this
> thing is going to die as all signs point
> downwards. The low is not the support, the trading
> range support is the support.
btw, my statement only holds true if it closes below this range, which it no longer is.
Louisville grad strikes again. This is really fng bad, but we have a ways to go before we hit 20% unemployment.
Studying With
Dow to 4000 = a P/E of 5
I just don’t see the US market being valued at 5X earnings. Just sounds ridiculous
^ some analysts claim we have 17%+ unemployment right now. Don’t know if that’s true or not, but intuitively it sure seems like we have more than 8% (have you read the headlines?)
It’s that the Government doctors their stats (e.g., drops off claims over 6 months long, does not count those who stopped looking because it’s fruitless). In the 30’s, there was no such measure of unemployment as there is today - the Gov made sure to have control over that stat in the future, as they have control over inflation with a CPI number. Anyone else notice their chip bags have less chips in them? :)
I can’t speak to the unemployment figs, but I know the govt doctors up the CPI figs pretty good…makes them look real pretty!
Studying With
BosyBillups Wrote:
——————————————————-
> Anyone else notice their chip
> bags have less chips in them? :)
Yes and I fking hate Doritos for doing that. Took me while to figure it out, but I did it. And when I did I was most disgusted man alive.
You know how Doritos charges the same amount for a bag, but adjusts for higher inputs on their end? Less chips. You know who needs 2 bags of Doritos, when 1 bag use to suffice? You. Is this inflationary in a deflationary environment? Yes. Is it annoying to ask and answer your own questions? Absolutely.
BosyBillups Wrote:
——————————————————-
> ^ some analysts claim we have 17%+ unemployment
> right now. Don’t know if that’s true or not, but
> intuitively it sure seems like we have more than
> 8% (have you read the headlines?)
SA U6 is at 13.9%.
4444.44
Isn’t 6500 a critical level?
CFA_Halifax Wrote:
——————————————————-
> please…we may go to 6500…
>
> I’m 100% equity now…25% of it emerging.
>
> Pick up a history book why don’t you and read
> about real hard times…this has NOTHING on the
> real GREAT DEPRESSION.
We can easily go down to 6500. Stocks are still overvalued.
I’m a bull right now. I don’t think we’re going into depression. World trade stopped for 3 months after the Lehmans collapse hence we are seeing exports collapse across Asia and annualised GDP contractions of 10% to 20% in many countries. However, I think things will slowly normalise from here as credit becomes more freely available.
I reckon the BDI is a decent proxy on trade levels. It fell 95% from May to December (>98% for panamax!) and is up 200% since. I can see it hanging around the 1,500 to 2,000 mark for a while, which still represents a major recession. The period below 800 was a blip in my opinion brought about by a massive reluctance from financial institutions to issues letters of credit. I believe the really extreme financial market conditions (think ted spread etc) have improved over the last two months and should continue to do so as long as the central banks don’t make any fresh new errors. Just using the BDI as an example, but I believe lack of finance has been a key cause of so much of the economic horrorshow since Spetember and that is now easing.
US corporate earnings as a % of GDP peaked at 10.7% this cycle - the highest ever. The previous peak was about 9% in 1929, so you can see the insane levels of leverage that were being used. This year, profits are going to be around 4.3% according to the latest figures I’ve seen. 5.9% is the 50 year average and most bear markets have troughed in the 3% to 4% range. In the great depression earnings went negative! If you believe we get to 3% as a % of GDP - i.e. earnings falling over 70% peak to trough - then I think markets won’t set new lows. I think we would have to see markets earnings approaching zero to see Dow 6000. Not impossible, especially with the massive deleveraging process now underway worldwide, but thanks to the massive effort from global central banks and governments I think we can avoid depression.
None of us have a crystal ball of course, so we’ll have to wait and see.
Stocks overvalued? based on what? Not earnings multiples.
Carson Wrote:
——————————————————-
> I’m a bull right now. I don’t think we’re going
> into depression. World trade stopped for 3 months
> after the Lehmans collapse hence we are seeing
> exports collapse across Asia and annualised GDP
> contractions of 10% to 20% in many countries.
> However, I think things will slowly normalise from
> here as credit becomes more freely available.
>
> I reckon the BDI is a decent proxy on trade
> levels. It fell 95% from May to December (>98% for
> panamax!) and is up 200% since. I can see it
> hanging around the 1,500 to 2,000 mark for a
> while, which still represents a major recession.
> The period below 800 was a blip in my opinion
> brought about by a massive reluctance from
> financial institutions to issues letters of
> credit. I believe the really extreme financial
> market conditions (think ted spread etc) have
> improved over the last two months and should
> continue to do so as long as the central banks
> don’t make any fresh new errors. Just using the
> BDI as an example, but I believe lack of finance
> has been a key cause of so much of the economic
> horrorshow since Spetember and that is now
> easing.
>
> US corporate earnings as a % of GDP peaked at
> 10.7% this cycle - the highest ever. The previous
> peak was about 9% in 1929, so you can see the
> insane levels of leverage that were being used.
> This year, profits are going to be around 4.3%
> according to the latest figures I’ve seen. 5.9% is
> the 50 year average and most bear markets have
> troughed in the 3% to 4% range. In the great
> depression earnings went negative! If you believe
> we get to 3% as a % of GDP - i.e. earnings falling
> over 70% peak to trough - then I think markets
> won’t set new lows. I think we would have to see
> markets earnings approaching zero to see Dow 6000.
> Not impossible, especially with the massive
> deleveraging process now underway worldwide, but
> thanks to the massive effort from global central
> banks and governments I think we can avoid
> depression.
>
> None of us have a crystal ball of course, so we’ll
> have to wait and see.
At what point did earnings reach negative levels in the late 20s, early 30s? It takes time for earnings to collapse, just as it takes time for the credit system to reach its breaking point and stop. Its fair to remember that the bottom on the ‘29 crash was in late-‘32 and that ‘29 was an up year even though it crashed and ‘30 was only down 7%. the actual, serious market crash began in 1931 and lasted 2 years with a decline from 1931-1932 of 83% on top of the “decline” in ‘29.
referring to the bdi which was hardly tracked back then, if even, and an inclination that the sharp decline in earnings will stop like a locomotive with midas brakes is a ridiculous statement that goes against everything known in finance. trends remain until confirmation says otherwise. i think we have no reason to believe that we will not see another 80% down from this point. if a 5.5% return on equity is the actual LT RoR inherent in equities (which we have now only reached AFTER the decline), then in a major recession/depression, we will see levels that bring this average down below its all-time average and this could easily mean a decline of 80-95%. I wouldn’t be bullish for more than a year, then sell if I’m ahead, and go the other way.
and to comment joemontana’s ‘stocks not being overvalued based on earnings multiples’: the fact that we do not know what future earnings will be and that past earnings mean nothing because they were the result of the best 20-years equity has ever seen, its impossible/invalid to value stocks based on multiples as there is no actual frame of reference comparative to the next 5 years. multiples are useless.
gotta love this CFAs point of view
http://www.amazon.com/Dow-2008-Different-This-Time/dp/1893958701#reader
remember this one?
invidious Wrote:
——————————————————-
> CFA_Halifax Wrote:
> ————————————————–
> —–
> > please…we may go to 6500…
> >
> > I’m 100% equity now…25% of it emerging.
> >
> > Pick up a history book why don’t you and read
> > about real hard times…this has NOTHING on the
> > real GREAT DEPRESSION.
>
>
> We can easily go down to 6500. Stocks are still
> overvalued.
I respectfully disagree that they are overvalued. We could go lower short term sure..I think in 3-4 years we’ll be seeing the Dow back in the 12000-16000 range…not a bad return in my book.
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