Posted on 06/28/2008 12:32:37 AM PDT by TigerLikesRooster
The top ten likely effects as the bear market bites
Patrick Hosking: Business Commentary
There is now no doubt about it. Even the cheeriest of optimists would have to acknowledge that we are in the grip of a pronounced bear market. The FTSE 100 has slumped by more than 500 points in the past month and from the peak of last October is down by 18 per cent. At one point yesterday it dived to 5,470, close to the nadir of the Bear Stearns panic in March, although it managed a half-hearted rally at the end of the day.
One of the most fabulous bull runs of modern times, a golden period stretching from the start of the second Gulf War in March 2003 to the first shudders of the credit crunch in August 2007, is well and truly history. The slide in share markets since then can no longer be characterised as a blip.
Until share dealers start to believe the economy can pick up again, sentiment is likely to remain sour. And with policymakers seriously boxed in by a nasty bout of inflation and (in the UK's case) a stretched fiscal position, the short-term prospects are not good. If there is light at the end of the tunnel, it is a distant pinprick.
(Excerpt) Read more at business.timesonline.co.uk ...
7. There will be much talk of the merits of “bottom-fishing” - especially by investment bankers trying to persuade private equity bidders and sovereign wealth funds to snap up cheaper-looking UK assets.
8. There will be sucker rallies. The bounce in share prices in May proved to be just that as investors took too sunny a view that the credit crunch was easing.
sucker-fishing with the talk of "bottom-fishing" and "the worst is over." Happening right at FR.
Ping!
I think we have to realize that tough economic times historically favor the election of Democrats/socialists who promise salvation. And since we have the Messiah running on the Dem side, it’s even more likely./s
The possibility that a shellshocked electorate inflicts this POS upon itself as alleged savior, ignorantly committing an act of partial suicide, scares the hell out of me.
I have most of my money in 100% growth stocks over the course of the next 20 years. Any need to re-evaluate in your opinion?
6 months ago I made a $100 bet with a co-worker that a Democrat would be elected President following an “Its the Economy, Stupid” campaign. My bet is looking good.
11) Goldman Sachs, whose egos believed they were exempt from the subprime and credit mess by bankrolling it while shorting it at the same times takes it up where the sun doesn’t shine as so richly as they deserve.
Just like everyone else on wall street, they got caught chasing the yield curve and eventually got bit by what it was feeding. Welcome to the party you created.
Most who try to pick a bottom end up living in van down by the river.
Let the suckers try to pick the bottom. Wait for a bottom to occur, watch the blood flow, and then start going long once the carnage is over.
Oh, scares the dickens out of me as well. Higher taxes. Destroying our health care sector. Even the recent Heller decision from SCOTUS — look for 3 more Ruth Bader Ginsbergs on the court after Osama Obama is done with us.
And what an empty suit he is. Every lib who plans to vote for Osama Obama should be forced to watch the movie “the Candidate.” “What do we do now?”
The only time to buy is when the prevailing attitude is that you’d have to be crazy to buy. We’re a long way from that point.
I’m already hedging against what I pay at the pump by investing in natural resources in my retirement account. Has paid off nicely and will for decades to come.
I’m not sure I get your point but you would be crazy to buy. House prices keep falling. Houses that were selling for $350,000 a year ago are going for $150,000. I used to think that was the bottom but someone shortselling at $139,00 for the same house.
They have had lookers and seemed optomistic they would get out only having lost $100,000 on the sale.
9. dow 7250.
Is this your wild guess or calculation based on some analysis? The number seems rather specific. Or is there some coded message in this number?
7
2
5
0 dds
My Forex trading buddy says “only monkeys pick bottoms.” XD
“””sucker-fishing with the talk of “bottom-fishing” and “the worst is over.” Happening right at FR.””””
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“sucker-fishing”, lol, we used to fish for suckers on Upper Lake Michigan with a bow and arrow.
A couple of posts above mentioned a DOW 7250, I believe, maybe they said 7500. But that’s about exactly the target I have in mind. 7250-7500 corresponds with DOW lows from Sept 1998, Oct 2002 and March of 2003.
I would not be bottom fishing here unless you plan on waiting 10 years or so to get even again.
Now, since everybody on FR loves GOLD, (sarc), how’s about that nice $65 move in the barbarous relic in the last two days and a 13% increase in gold/silver stocks over the same two days.
Yeah, those boys won't take gold as payment, even if all currencies disappear.:-)
Let the suckers try to pick the bottom. Wait for a bottom to occur...
I don’t think you’ll find many allocation models suggesting that strategy is OK even if your your 20’s..
I think McCain's chances are improving, but only on condition that he hang oil and gasoline prices around the democrats' necks. Energy prices are the primary drag on the economy right now. They are also the primary thing spooking consumer sentiment and souring the electorate.
For the last 30 years, one Party has been generally in favor of increasing production of all forms of domestic energy. The other Party has been generally opposed. If McCain can connect the dots, over the opposition of a liberal media that will do everything in its power to muddy the issue, he'll win.
40 years of leveraging the US economy with debt is the primary drag on the economy. In trying to inflate the banks past that rock Bernanke ran us up on the shoals of commodities prices. Turns out he can only help the banks so much before he has everybody screaming. I guess not many folks figured it would be gas prices that would finally puncture the Ponzi scheme, but it was going to be something.
If only, but I despair that the numbnut Pubbies will figure it out.
Yep. Right alongside class-envy sentiments and calls for tighter regulation on eeevvvillll corporations.
Just don't be fooled by any of the little fake 3-6 month mini bull markets coming up within this secular bear. Trade them, but "long term buy-and-hold" of domestic equities is dead, dead, dead as an investment strategy for the next seven to ten years - and unfortunately, it's the only thing this generation of post-Reagan-economy investment advisors knows how to do.
Well, I’m not a financial advisor. But, I would say the following. Generically, I’d say yours is probably a fairly undiversified port. What are “growth” stocks? Many of what were growth stocks in the 90’s do not appear today to be growth stocks. Why is that? Because so many companies jumped on “growth” in the 90’s that “growth” became commoditized. For example, computer memory; which as far as I can see is more often than not engaged in competitive price reductions in order to gain market share. I think that’s an exquisitely important dynamic. When too many manufacturers get into so-called growth, the next or next-next phase is that they see the market was overestimated, is now overpopulated, and in order to survive, those players have to lower their pants further and further just to stay alive. Gazelle turns into goat.
Another aspect is that growth stocks typically sell at highish PEs as a reflection of their projected growth. IOW, they are expensive. You are buying air. Well, when you buy an investment that’s expensive, there’s an increased chance it will become less expensive. Expensive, you understand, is not absolute price. Expensive is buying growth that may not pan out according to the way the Wall Street hucksters pump it.
Yet another aspect is that growth stocks (and it should be clear by now that I don’t exactly know what you mean by “growth” stocks) rarely pay dividends. Dividend income and fixed income investments are VERY important parts of a balanced port, and they have been pooh-poohed for many years as stodgy things for old people and you should jump on growth. Many financial advisors think the younger you are, meaning, the more years you have to have your investments grow, the more wild bets you should make. There is SOME truth to that, but those many years of div or coupon accumulation, at compound interest, can produce staggering gains over long periods of time. No need to do only one or the other. The idea is to judiciously participate in both.
We’re in a clearly DRAMATICALLY shifting investing environment, and I say that not because of what may happen to the DJIA Monday, next week, or for the rest of the year. In our networked, DNA’ed, GPS’ed, bar-coded and RFID’ed world, we are coming to the realization that horrible, ugly, crappy businesses like coal and fertilizer and steel and PARTS of the oil biz and mining and farming are not only things we cannot get along without, they also cannot be dreamed up by two dudes in their dorm room. The producers require years of permitting, remediation, and typically infrastructure buildout to bring their goods to market. There is also consideration as to the relative quality of the goods. The best example to me are coal stocks, which I am gaga over. Coal?? Yes, coal! Steam coal from the Appalachian mines happens to have a very high BTU content, typically > 12,500 BTU. It sells for between $110 and $150 a ton. Coal from PRB Powder River Basin has much lower BTU content, about 25% less, 8500-9K BTU. And it sells for $10-$14 a ton!! Huh? PRB coal is far more distant from shipping terminals than App. coal, which has existing rail lines to Harper’s Ferry, VA, a huge port.
And finally, what means “growth”? Is it...growth within an existing market, IOW, an increasing market share? What about if that market is declining? I mean, the #1 buggy-whip manufacturer isn’t such great shakes. Is it being first or second to market in a yet-to-be-established market? Is it...margin expansion by production impovement? Or is it acquisiton of other producers and growth by virtue of economy of scale? Of some combo of the above?
Now, as to growth stocks TODAY. What train(s) are your growth stocks hitched to? China? Brazil? The US? What sector? You have to really really dig down and answer that question and be sure about the nature and long term sustainability of that train.
One caveat. Reality makes no difference. The truth makes no difference to the mass of the brain-dead electorate. All that matters is who is the more convincing liar and who’s commercials tell the more convincing lie.
The nation is so idiologically polarized, most liberals will vote for Osama Obama and most conservatives will hold their nose and vote for McCain(D-Arizona). Of course the usual group of disgusted conservatives will write in Ron Paul or Michael Savage or something, helping Osama Obama, or will just stay home and clean their guns.
The brain dead masses in the middle will elect the president and they will believe the better liar, who is CLEARLY Osama Obama. He is a much more convincing liar than McCain(D-Arizona). By the time the election rolls around, it will be about NOTHING but the economy, gas prices, the bear market in stocks, collapse housing and ALL of it will be blamed on Bush, with Osama Obama framed as the Messiah who will lead us to the Land of Milk and Honey.
Thats MHO. The truth won’t matter in this election any more than previous elections. It doesn’t matter than McCain(D-Arizona) is better on energy and the economy than accomplished liar Osama Obama. Obama will have the sheeple wrapped around is little Islamic finger and will be elected Pre... well, I can’t even type the line. Puke.
I learn something with every one of your posts.
Thanks for the kind words!
Thanks for your useful contributions. Many of us, me included, spew a lot of words that don’t contribute to the knowledge base.
Date um, don’t marry um.......
That’s a great line.
Coming down hard on this mentality is not class-envy. Market requires transparency. Misleading information should be drastically curtailed.
Otherwise, you fail to maintain competitive market and any benefit coming out of it.
Elections are decided by the illiterate, distracted margin of votors who don’t know their ass from a hole in the ground and vote their pocketbook almost exclusively. They will watch 2 or 3 commercials for Osama Obama and then elect him. Some votors are informed, rational and logical. Most are not. That may sound elitist, but it really is the truth.
We have the hard left wing (30%) who will oppose anyone with an “R” after their name.. We have the hard right wing (30%) who will never vote for a liberal. The 40% in the middle always decide the election, and if enough Republicans are disgusted with McCain as our choice, they will just stay home and not vote. The libbys who are hurting financially will come out and vote for Obama.
I can’t see your scenario. I don’t think McCain has a chance. I’ll hold my nose and vote for the RINO but I think the die is cast. I think Obama has already won the election. I’ll be thrilled if I am wrong.
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