i want to long the market and keep rolling over as i think the chances of a big rally are much higher than a big collapse. what do you say?
amazing analysis here
what does it matter?
Well it’s not an unreasonable view to have. I’d say the downside risk from here is that the economy remains at current depressed levels longer than expected into 2009. At the moment macro forecasts for 2009 are factoring in a major rebound during the year. If we see four quarters this year like the quarter just ended, we’ll see huge downgrades and it could be carnage in the markets. How bad is the economy right now? Exports are almost 40% of Chinese GDP and are currently negative. Tarde dependent countries like Singapore in massive double digit GDP declines. BDI <1000. Global air cargo (35% of world trade) down 13%. World trade effectively stopped for a couple of months. >500k layoffs a month in US. How soon can we get things going again?
Carson’s right that it’s not an unreasonable view to have, but numi’s right that sameeragarwal didn’t exactly back up his gut feel with any analysis as to why one should agree with him or not. The real question is how much bad news has been discounted into the price versus how much bad news is going to happen in the economy (by the way, which economy?), as well as how depressed people are. Summing up: figuring out when/if there will be a bounce upward means having some view on: 1) How much and what type of future economic news is incorporated into present prices. 2) How soon we will be through the recession/depression and what kinds of unexpected surprises are likely to be out there (good or bad). 3) How depressed people are (i.e. risk appetite), such that prices will rise/fall whether or not there is any change in news or views. 4) Investors’ liquidity needs. These may have changed such that less money can rush into the market even if things seem to improve.
suggesting that there will be a big rally from this point on is just as credible as saying the bull market of 2003-2007 would continue forever. trends tend to last, but not last forever. we could be in a downtrend for 5 years, who knows.
In my experience markets fall faster and harder then when they rise. Be patient. This is not over.
I don’t expect a big rally for a while, since people are still licking their wounds, although there may be bear market rally events going on. Personally, I suspect that the market will trade fairly flat for a while; large downdrafts are not unthinkable, and a slight upwards trend is also conceivable (or slight uptrend with occasional large jumps downward). I think it’s unlikely that there will be rapid-and-lasting lasting jumps upward for a while, though - say June at the earliest. Right now, I think people are readjusting their portfolios to be conservatively optimistic, but recognizing that we are in a much higher volatility environment than recent years, and so even optimistic scenarios are not going to result in the level of risk exposure (and therefore buying) that we would have had before. That means high but slowly deflating demand for treasuries and baby steps into equity exposure. Relative value strategies may perform well, but only for assets that aren’t exposed to the toxic stuff. The toxic stuff is just too unpredictable. Anyone know of equity strategy job openings for me?
p(SPX<600) ~ 3* p(SPX>1100)
technically, in india, the market has never retraced more that 55% from its all time high before, this time it has already come off 60% fundamentally, market’s p/e is 8 which is historically low, p/b is 0.7 which is not historically low but near to that, as a trader, implied vol on calls is 30 while on puts it is 60, so without view also you would like to go long to say that rally from here would be a continuation of bull market which started in 2003 is not right, in secular bull markets corrections are not as deep as it is this time apart from all that its impossible to predict the markets all i can do is be all in when the tide turns and if the market continues its downward spiral i would increase my bet all the time all i want is to remain in job
Bush is gone…the economy will pick up soon.
marcus phoenix Wrote: ------------------------------------------------------- > Bush is gone…the economy will pick up soon. Yeeha… ‘We are ready for any unforeseen event that may or may not occur.’ - George W. Bush