This is a month old but interesting none-the-less and I didn't see it posted. Looking over the author's archives
, it appears he called this market crash a few years ago.
After saying normalized S&P earnings are likely to be no more $50 a share (they used to be $80 a share), he says:
But I can live with $50 trough earnings, say many. And at historical multiple of 14-16 times trough earnings, the S&P should stop its downside in the 700-800 range. But the point is, theyre not trough earnings, they are the new normal. And in the current slow (zero or worse) growth environment, a trough P/E of 6-8 times earnings is more likely. Put another way, we are about to get the worst of all worlds; below trend earnings, below trend growth from a depressed base, and below trend P/E, after having gotten the best of all worlds, astronomical P/Es on above-trend and rapidly growing earnings, about a decade ago. Warren Buffett now agrees, saying that we will get "almost the worst of all possible worlds
Things certainly look dire.
posted on 04/13/2009 5:34:53 PM PDT
posted on 04/13/2009 5:40:40 PM PDT
I’ve been long the market for a while, but I’m thinking of getting out again fairly soon.
posted on 04/13/2009 6:07:46 PM PDT
The guy is a CFA (Certified Financial Analyst) so he knows his stuff. No one with any intellligence has any confidence in Obama.
I doubt many businesses will be hiring as long as he is President. Obama, Rahm, Pelosi and Reid do not care about the economy. they want power and control. they are shooting for a Dem majority for decades like FDR and by then the country will be a third world hellhole.
If you had a Reagan like conservative you could probably turn it around mainly with domestic energy sources. We have 4 times the Saudis oil reserves onshore in the lower 48 states. This would create loads of jobs plus wealth creation. We had at least 4 mega periods where wealth was created due to energy and mainly oil.
1. PA around the turn of the century.
2. TX onshore.
3. CA 1930s to 1950s or so.
4. AK Early 1970s
5. TX & LA offshore.
4 & 5 happened about the same time.
Domestic energy production could reboot and recpitalize our economy. The problem is due to open borders we are becoming a third world country. Americans cannot afford to have children and start families because we are being taxed to death supporting illegals.
posted on 04/13/2009 6:21:38 PM PDT
(Boycott GE - they own NBC, MSNBC, CNBC & Universal. Boycott Disney - they own ABC)
I don’t understand any of this, but my gut tells me that we have to be prepared - for something. We’re paying off debt, buying extra supplies, and planting several gardens.
posted on 04/13/2009 8:10:40 PM PDT
( NO AMERICAN BOWS TO ROYALTY - From president to ditch digger - NO AMERICAN BOWS! "Jim")
posted on 04/13/2009 10:22:41 PM PDT
A repeat of the 30s that I grew up in where the market recovered after the first crash and then crashed again.
I believe this prognosis is right about in line with reality and this one will be much worse than the 30s.
posted on 04/13/2009 10:36:15 PM PDT
Estimates are that approximately 25-30% of the economy was built on home equity loans and credit cards. Americans were living way above their means on a false economy.
Yeah, this is a reset to real value. We are going to have to live with it.
posted on 04/13/2009 11:21:54 PM PDT
(It's time to Party like it's 1773.)
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