Posted on 03/08/2009 3:48:15 PM PDT by maccaca
Just how low can stocks go? Despite Friday's small gain, the Dow Jones Industrial Average marked its fourth consecutive week of losses as it tumbled through the 7000-point mark and spiraled to new 12-year lows. The Standard & Poor's 500-stock index is trading below 700 for the first time since 1996. As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 at 500 looks a little less far-fetched. A decline to 500 on the S&P is 183.38 points and 27% away. The index already has lost 881.77 points, or 56%, since its peak in October 2007. The index, which lost 7% last week, hasn't been below 500 since 1995, when the tech-stock bubble was just beginning. After dropping 6.2% last week, the Dow is 1626.94 points and 25% above 5000, a level it also hasn't seen since 1995. Analysts and investors looking at valuations, history and stock-price trends are mostly predicting the indexes will avoid plumbing those lows, although all concede that, in this market, anything is possible. Even Wall Street strategists are crunching the numbers, while sticking to forecasts of a second-half rally. Goldman Sachs's David Kostin in late February presented three scenarios for the S&P, including a "bear case" that put the index at 400 to 500. Although Mr. Kostin says he doesn't anticipate the index will fall that low, "these are the cases that different types of investors are making," he says.
(Excerpt) Read more at online.wsj.com ...
The Dow average gives new meaning to Obama 2012.
Historically the market peaks in the spring and then declines for the summer. Selling in May and buying back in Sept nearly always is a winner. I can’t see much that will rally the market in the next month,but can list a lot of things that will send it lower. My bet is we will see 5500 in the next 30 days.
It’s the Barry/Barney market.
That’s only 24% lower. Housing will fall by more than that before the true bottom in 2011.
The rush to the bottom seems to be speeding up.I think we will see 5000 in 30 days.After that,who can say?
El Rushbo says rock bottom will occur at 3,350.
I would not argue one way or the other but do you know by what he bases that statement?
It’s not only possible, it’s highly likely.
What possible reason does anyone have to buy stocks? Yes, the economy is bad, but when investors look beyond that to the future - they only see far-left control from the top: higher taxes, inflation and massive Gov’t control and regulation of private business.
Time to short GS and GE again. What fun!
We need nobama out front spewing more of his market happy talk about “profit/earnings ratios” and other such nonsense.
Then we’ll really see the market take off. DOWN!
I’m not quite as bearish as Rush. I’m thinking 4500 for a low. Maybe 4000.
It's a buying opportunity!
Let’s plug in some numbers and see what patterns develop.
November 1992: Clinton elected President - Dow = 3240
November 1994: Republicans retake control of the House and Senate - Dow = 3807
June 2001: Jumpin’ Jim Jeffords gives control of the Senate to the Democrats - Dow = 10,990
November 2002: Republicans retake Senate - Dow = 8537
November 2006: Democrats retake control of House & Senate - Dow = 12,342
November 2008: Obama elected President - Dow = 8943
Today, four months since Obama was elected President - Dow = 6626.
Let’s review. During the first two years of Clinton, while the Democrats retained control of the House and Senate, the Dow increased but was relatively flat.
In 1994, the Republicans took control of the House and Senate. The Dow exploded, increasing at an annual rate of almost 18% per year for the next 6 & 1/2 years, the entire period while the Republicans remained in control.
In June 2001, the Democrats gained control of the Senate. The Dow then plunged at an annual rate of almost -16% until November 2002, when the Republicans regained control of the Senate.
From November 2002, until November 2006, the Dow increased at a rate of over 20% per year, until the Democrats regained control of both the House and the Senate.
In November 2006, the Democrats regained control of both the House and Senate. During the first two years of Democrat control (from November 2006 to November 2008), the Dow plunged at an annual rate of almost -15% per year. Since the Democrats gained control of the House and Senate in November 2006, the Dow has dropped over 46% or a total of over 5700 points.
Since Obama was elected President, the Democrat controlled plunge in the Dow has accelerated, and the Dow is now down over 25% in the four months since election day.
Anyone else notice a pattern here?
Republican Control = Bull Market and Prosperity
Democrat Control = Bear Market and Depression
It is not hard to do the math.
I’ve got my guess at 2500.
What possible reason does anyone have to buy stocks?
Putting it under the mattress, or into ammunition seems far more attractive.
When the dead cat bounce comes—and it will—it is going to be jaw-droppingly huge.
Many suckers will find it irresistible.
Bought Dow futures Friday at 3:32 for +220, and held half though the weekend. We may get a large rally this week before heading back down. Hearing all this bearish talk makes that feeling even stronger.
We're making new History these days.
.
/sarc
He will have already borrowed and spent everything possible, but he's going to have no more resources.
I remember that this was pretty much the story in Michigan when the state government went bankrupt (1959/1960 thereabouts). They continued to have high taxes and were collecting hundreds of millions but all the money went into special funds.
Obama is setting himself up with his special reserve fund for his health care reform ~ even as the economy recovers, which it will always do, such a large amount will be siphoned off for that reserve, with the rest going to pay short term securities, there will be no money to operate the government as a whole.
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