Wondering if alot of people are trying to get 1Q performance up there and this will all fall apart April 1st. With all the bad news coming out… what has changed? Nothing…
denial won’t bring 7% back, sorry
A little early for boosting Q1 performance. Who’s to say the rally will hold until the end of the quarter?
what bad news is left? i’ve heard every doomsday scenario possible since 6 months. Most stockmarkets were 60% down peak to bottom. Is this recession really any worse than 73-74? There might be a “L” shape recovery, but to I believe the worse is behind us.
former trader Wrote: ------------------------------------------------------- > what bad news is left? Hyperinflation. I think we are *maybe* done with ROUND 1 “The Mortgage Crisis”…now there is a lot more that could unfold in ROUND 2. Round 2 is the disaster started by the solution to Round 1. Or maybe Round 2 is another bubble pop…there are plenty of big ones ready to blow. Sorry to be cheery these days but the fundamentals aren’t so sweet and you can’t just cover up the taste of poop with a bunch of sugar. ^^
former trader Wrote: ------------------------------------------------------- > what bad news is left? > > i’ve heard every doomsday scenario possible since > 6 months. Most stockmarkets were 60% down peak to > bottom. Is this recession really any worse than > 73-74? There might be a “L” shape recovery, but > to I believe the worse is behind us. Echo this. You’d need some pretty terrible news to continue going lower, and while the market was clearly oversold and is now somewhat overbought, we’re only now at the November lows.
purealpha Wrote: ------------------------------------------------------- > former trader Wrote: > -------------------------------------------------- > ----- > > what bad news is left? > > Hyperinflation. > > I think we are *maybe* done with ROUND 1 “The > Mortgage Crisis”…now there is a lot more that > could unfold in ROUND 2. Round 2 is the disaster > started by the solution to Round 1. Or maybe > Round 2 is another bubble pop…there are plenty > of big ones ready to blow. > > Sorry to be cheery these days but the fundamentals > aren’t so sweet and you can’t just cover up the > taste of poop with a bunch of sugar. ^^ Obviously before we see hyperinflation, we must first see a level of inflation. And a healthy dose of inflation (by this environment of stimulating reflation) is beneficial to the equities market. So expect a recovery before you see any signs of hyperinflation. We obviously cannot consistently time the market, but it’s still a wise move if you start nibbling away at these opportunities. I say dollar cost average your way in for the next year even for those who still have a little fear in them.
Well, we could still see massive credit card defaults. No letup on job losses, even if the new jobless claims level off, there could be massive CDS defaults that take down several standing banks. Iran could have nukes and threaten to use them on Israel. China could lead the world away from dollar assets, or purchase our equities at an enormous discount and own most of our employers. Home prices could fall farther, making it impossible for underwater homeowners to refinance even if banks are now lending, and these people are locked into adjustable rate mortgages as inflation pushes rates higher. So there is plenty of bad stuff that can still happen, yet.
bchadwick Wrote: ------------------------------------------------------- > Well, we could still see massive credit card > defaults. No letup on job losses, even if the new > jobless claims level off, there could be massive > CDS defaults that take down several standing > banks. Iran could have nukes and threaten to use > them on Israel. China could lead the world away > from dollar assets, or purchase our equities at an > enormous discount and own most of our employers. > Home prices could fall farther, making it > impossible for underwater homeowners to refinance > even if banks are now lending, and these people > are locked into adjustable rate mortgages as > inflation pushes rates higher. > > So there is plenty of bad stuff that can still > happen, yet. The markets, being the forward looking beast it is, is probably discounting that some of these events could happen. Job losses is expected to be bad throughout the year (10%-11% unemployment factored in?) and we are already expecting negative growth in 09 and flat growth in 2010. I’m not saying we will be back to the highs next year, and flat trading for the next decade is not out of the question. But, I think we would need massive bad news to break that 6,500 low again.
On the bright side: Credit Cards are small relative to mortages, etc. Higher unemployment will hurt consumer spending but the speed at which we can shed jobs will ultimatley help us get back on track more quickly. I think we can all agree that most companies become more efficient in terms of staffing. How many of you are doing 2x the workload from this time last year? So, with capacity utilization low and productivity increases and earnings expectations low, maybe we can have some positive surprises down the road. While unemployment is high relative to US standards, its still better than normal employment levels in many developed countries. On the CDS front its pretty scary but with the government’s attempts to buoy asset prices will certaintly help the majority of financial institutions. . . and if a big one were to get in real trouble they will likely take steps to keep it afloat. (Like it or not). I’m not really worried about Chinese capital investment, bring it on, we need it. What’s up with Abu Dhabi buying a stake in Chrysler?. . . suckers. As far as them not buying our debt, we are too dependent on one another. . . they need us spending or they are screwed. Home prices hopefully are stabilizing by finally reaching market clearing levels, 4% mortgage rates can only help. Guessing the timing and intensity of the rally is futile but there are really compelling values in the equity and credit markets for those willing to deal with the volatility and have a sufficient time horizon. I am concerned about our deficit levels and inflation over the long-term, who knows what bubble/crisises this will create.
Well, yeah, markets could have priced everything in, so all is hunky dorey. Invest away. Of course you have to ask how it was that markets didn’t price in all this stuff as of August 2008, or July 2007. The answer is that you have very complex interdependencies where pulling on one part of the system creates stress in a separate part that was seemingly unrelated. Given that things have to be just right for optimal growth, but a lot of things can muck stuff up, any unintended consequences of markets or policy are more likely to be bad than good. Also take a look at Jeremy Granthams estimates of recent profit margins compared to historic averages and recent leverage levels and you realize that there is a decent fundamental argument that the market as a whole is not oversold. Definitely proceed with caution. Who knows where the bottom is? But I’m not at all convinced that the worst is over. All I hope is that the very rapid drops are over.
Well, yeah, markets could have priced everything in, so all is hunky dorey. Invest away. Of course you have to ask how it was that markets didn’t price in all this stuff as of August 2008, or July 2007. The answer is that you have very complex interdependencies where pulling on one part of the system creates stress in a separate part that was seemingly unrelated. Given that things have to be just right for optimal growth, but a lot of things can muck stuff up, any unintended consequences of markets or policy are more likely to be bad than good. Also take a look at Jeremy Granthams estimates of recent profit margins compared to historic averages and recent leverage levels and you realize that there is a decent fundamental argument that the market as a whole is not oversold. Definitely proceed with caution. Who knows where the bottom is? But I’m not at all convinced that the worst is over. All I hope is that the very rapid drops are over.
I’m thinking we’ll see things taper off quite a bit as job losses pick up which will lead to more mortgage defaults. There’s just a break in the clouds right now take some profits from the recent rallies and load up on puts.
… the earth could be hit by a massive asteroid, thereby ending life on earth as we know it, and also disabling… the New York Stock Exchange!
commercial real estate and credit card receivables
wow
bchadwick Wrote: ------------------------------------------------------- > Well, yeah, markets could have priced everything > in, so all is hunky dorey. Invest away. Awesome +3 
The market “priced in” argument is silliness. The assumption is that the people who make up the market aren’t idiots and somehow know something, but that just isn’t the case. We know what the current price is Dow = 7729. We don’t know if that is too high or too low but we *definitely* know it is the wrong price. People are just stumbling around blindly trying to figure it out. We can’t assume just cause this is a “really low” price that everything must be priced in now.
Check out http://www.zealllc.com/2001/rallies.htm While examining the infamous chart shown above, it becomes quite obvious that there were six primary intermediate bottoms before the ultimate bear market bottom in 1932. From the depths of these intermediate bottoms sprang forth great rallies that turned out to be classic bear market rallies. They are marked with the arrows and numbers in the graph, with green showing the intermediate lows marking the beginning of bear market rallies and red showing the intermediate highs marking the end of bear market rallies.
bchadwick Wrote: ------------------------------------------------------- Also take a look > at Jeremy Granthams estimates of recent profit > margins compared to historic averages and recent > leverage levels and you realize that there is a > decent fundamental argument that the market as a > whole is not oversold. bchadwick - where can I find these estimates? I took a look on the GMO site. Do I need to register to see this stuff. Thanks!