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Conrad: while I will not dispute the depth of your concerns and the fact that you might turn out to be ultimately correct in your conclusions, I personally think that you have not taken into account the worldwide resources available for bailing this mess out. The markets are fluid and dynamic enough to roll with the various punches you have foretold. If nothing had been done to address the current situation, I have no doubt that all the bad things you have predicted since last summer would have come to fruition. But since the market is not static, I think that we will avert the worst of what you thought possible.
JTS
Couldn't have said it any better. It is not in the best intrest of every other country around the world to let us go into a 30 year downturn. We are the largest consumer worldwide, and without us, every other countries economy will begin to flounder. For that reason, other countries will continue to flood our market (stock, bond, housing) with money to prop us up. I am sure that many investors outside of the US feel that its a pretty safe bet to put money into our country, because we aren't going anywhere anytime soon.
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For any of you that are interested in reading a great book regarding the economy, stock market and just overall investing strategy....I suggest you read Ken Fisher's book The Only Three Questions That Count. One thing that he does go over in that book is that things can never be as bad or as good as anyone predicts. And if everyone is predicting the same thing (like everyone is predicting a sustained downturn in the stock market), that can't happen for the simple fact it is already priced into the market.
Conrad, I understand where you are coming from with this, and I am in no ways bullish on the market for the upcoming year, but I think things will end up much better than you seem to feel. If you ever are up early in the morning or have TIVO, record some of the international shows on CNBC or watch CNBC over in Europe, while they are concerned about the US Economy, all of them are shifting a large portion of their holdings into the US Market. This is due to two reasons; one the US Dollar is cheap as well as many stocks are undervalued due to the large sell off to start the year (over 8% since Jan 1 I do believe). If you look at large industrial companies such as Honeywell, they are experiencing their best quarters due to more international growth. With the US Dollar being so weak right now, many foreign countries are seeing this as an opportunity to buy quality US goods. I believe that once the Credit Crunch figures itself out and there are no more surprises with these write downs the market will rebound.
So while I don't think we will end up seeing a good year (up 10%+ for the markets), I think we will gain back most to all of this early year loss and probably end up in the -2 to +3% range. I am in no way calling the bottom now, but I think we will get a better feel of the market after next week. Once we get past the Fed meetings and earnings season we will get a good feel for how bad the last quarter actually was. The fact that companies like Apple are still beating earnings shows that people still have money to spend and are spending it.
But, while this is not a great time for the market....I do not believe that we are in for a sustained downturn. I am still holding my current posistions because I am in for the long run.....and like Shane said, unless you are expecting things to trend down for the next 30 years....we will rebound and there are ALOT of good value buys out there right now. There just isnt anyway that every financial and homebuilding stock will stay down forever.
Fisher is a Finance-Stud...
I believe 2008 will be a period of slowing economic activity. It will feel like a recession, but I really don't believe we'll see back-to-back negative GDP quarters...
I think todays rumors about a potential federal bail-out of the bond insurers had a huge impact on the market today. Combined with the 3/4 point rate cut, along with the impending cut to be made next week, there are some growing positive signs...
Of course, there remains a great deal of unknown when it comes to the credit issues and additional write-downs to come...
And - as long as the Dems continue to speak of whacking the Bush Tax cuts (though Obama seems to be much softer on this issue as of late - particularly with regard to the Capital Gains tax...), they will continue to create a great deal of angst...
But, as always, I never saw the type of cataclysmic disaster Conrad has been screaming about for the past 6-9 months... We've been hurt. And there's some more hurting to come... But honestly, we've had it damm good for quite a while. What, in the history of our great country, would lead anyone to believe that good times last forever?
what i don't get is why there was a big rush for bonds yesterday when bonds don't seem so reliable anymore. it was like everyone was living in 1990 again. i figured there'd be a bigger rush for gold and foreign currency, but I guess they're all hurting because of a weak dollar. japan isn't real happy with the american economy right now.
what i don't get is why there was a big rush for bonds yesterday when bonds don't seem so reliable anymore. it was like everyone was living in 1990 again. i figured there'd be a bigger rush for gold and foreign currency, but I guess they're all hurting because of a weak dollar. japan isn't real happy with the american economy right now.
Actually, while still relatively "weak", the dollar has been holding up throughout the wild ride...
Commodities have been steadily falling or flattening... Oil below $88. Gold below $900...
U.K. is supposed to be dropping rates as their economy slows... The ECB however remains overly concerned about inflation... If they would have gotten on board with rate cuts, I think our market would have jumped even higher...
Should run to about 1442 on the S&P cash max then it's all over but the crying.
The market was horrifyingly oversold, would have crashed but for the rate cut, now the suckers rally is on, buy buy buy.
BTW, I am 100% in cash right now after being short a good part of this.
Don't forget to buy yourself a dip today!!!
I kid but actually it's quite serious, homes are just as overvalued as ever, loans while cheaper are harder to come by than ever, economy still woefully over extended in debt.
See you at the bottom!
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At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
Should run to about 1442 on the S&P cash max then it's all over but the crying.
The market was horrifyingly oversold, would have crashed but for the rate cut, now the suckers rally is on, buy buy buy.
BTW, I am 100% in cash right now after being short a good part of this.
Don't forget to buy yourself a dip today!!!
I kid but actually it's quite serious, homes are just as overvalued as ever, loans while cheaper are harder to come by than ever, economy still woefully over extended in debt.
See you at the bottom!
Conrad, I see your reasoning behind why you feel the market will continue to go down. But don't you think that with all of the international markets being so closely tied, that even if things do get worse, the surrounding markets will lessen that blow?
Also, don't get me wrong....I do not feel that people should be buying in this market right now. For the average person there is too much volatility and even people within the industry really don't have a feel for where this market is going. But at the same time, there are a lot of values out there and once this market begins to calm down, we are seeing more volatility than we have in almost 6 years (excluding that two week period in late July/early August). Once this market gets any kind of footing (either from rate cuts, tax cuts, or just some other event), I think we will slowly see the bulls chip away at these early year losses.
But at the same time, I am only 24…..so that means I only have about an 8 year window from my investing to compare this to (and it has been a great run, so I don't have much Bear experience). I guess what I am saying is that from all I have learned in school, read, seen is that I just can't see the rest of the world let us enter a sustained downturn....there is just too much good that comes from us being active in the global economy.
That may be in some markets, and it may be in certain portions of Phoenix, but the greater Phoenix market is about near bottom. The only thing driving prices down now is surplus. What you pay now will likely be less what a home is worth in two or three years, in some cases considerably less.
May the lord have mercy on your holdings because I do not think the market will.
Actually I would recommend selling on the rallies if you have been in for awhile. The Dow is still 2000 points higher than it was in November of 2004 and almost even with this time last year.
Put your money into rental property. Appears there's going to be a lot of people needing to sign leases and plenty of houses for sale.
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5-11 with 'em. 5-11 without 'em.
Wow I got to buy NYX at 69. SIXTY NINE! I bought some etrade at 3.01 some rad at 2 even. Some FMD at 14. AEO at 18.80. LYG at 32 for crying out loud and I hope they go lower!!!!
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Goal for 2008: Half as many penalties.
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