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Is a (Stock Market) Crash Coming? Ten Reasons to Be Cautious
Wall Street Journal ^ | August 13, 2010 | Brett Arends

Posted on 08/13/2010 10:16:20 AM PDT by Zakeet

Could Wall Street be about to crash again?

This week's bone-rattlers may be making you wonder.

I don't make predictions. That's a sucker's game. And I'm certainly not doing so now.

But way too many people are way too complacent this summer. Here are 10 reasons to watch out.

1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. ...

2. The Fed is getting nervous. ...

3. Too many people are too bullish. ...

4. Deflation is already here. ...

5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It's the debt, stupid. ...

6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. ...

7. Housing remains a disaster. ...

8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." ...

9. We're looking at gridlock in Washington. ...

10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while still positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks (though the most recent signals have looked somewhat better). Europe's industrial production in June turned out considerably worse than expected. ...

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Front Page News; Government; News/Current Events
KEYWORDS: crash; doommonger; economy; stockmarket; stocks; top10; topten

There is more information in the article indicating cause for alarm

1 posted on 08/13/2010 10:16:24 AM PDT by Zakeet
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To: Zakeet
I think so, yes. For months now, the big money boys have been desperately engineering things to try to sucker regular people back into the market.

What they don't seem to be able to understand is people just don't have money to throw away any longer!

2 posted on 08/13/2010 10:19:37 AM PDT by jpl (It's "My Big Fat Deadly Greek Riot", coming soon to a bankrupt socialist state near you.)
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To: Zakeet

Granted most of the points are valid. However, gridlock will be good, not bad for stocks. Also, it is hard to say too many people are too bullish when all you get are a steady stream of negative reports and warnings of a coming crash. Doesn’t this article itself belie that point in and of itself?


3 posted on 08/13/2010 10:21:53 AM PDT by Truth is a Weapon (If I weren't afraid of the feds, I would refer to Obama as our "undocumented POTUS")
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To: Zakeet

In a word?

YES.

As part of a word:

Abso-frakin-lutely

As every word in the sentence:

Well, you get the idea....


4 posted on 08/13/2010 10:27:26 AM PDT by RachelFaith (2010 is going to be a 100 seat Tsunami - Unless the GOP Senate ruins it all...)
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To: Zakeet
What ever monkeyshines the Liberals did to successfully spook everyone before the last national election ... they will do again in November

IMHO

5 posted on 08/13/2010 10:28:54 AM PDT by SMARTY ("What luck for rulers that men do not think." Adolph Hitler)
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To: Zakeet
9. We're looking at gridlock in Washington. ...

This one can be good. It will, at least, stop the slide. In two years, hopefully we can change the direction in the freedom and liberty of this country.

6 posted on 08/13/2010 10:31:10 AM PDT by Onelifetogive (For the record, McCarthy was right.)
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To: blam

What say you Blam?


7 posted on 08/13/2010 10:31:12 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Zakeet
Ten Reasons to Be Cautious

1. Obama
2. Biden
3. Pelosi
4. Reid
5. Frank
6. Dodd
7. Geithner
8. Bernanke
9. Every other Dem elected official
10. Everyone who voted for a Dem last time around.

8 posted on 08/13/2010 10:36:24 AM PDT by dirtboy
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To: Zakeet

“Easily the most feared technical pattern in all of chartism (for the bullishly inclined) is the dreaded Hindenburg Omen...

“The Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash...

“Granted, the Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to reoccur within 36 days for reconfirmation. Yet the statistics are startling: “Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty-days.”

“The last Hindenburg Omen occurred during the lows of 2009. Today, we just had another (unconfirmed) Hindenburg Omen. It is time to batten down the hatches - something big is coming.”

http://www.zerohedge.com/article/hindenburg-omen-here


9 posted on 08/13/2010 10:37:13 AM PDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: Zakeet

I am not a financial whiz by any stretch so let me ask this question - what’s the best thing to do with a 401k that’s based on index funds to avoid a 2008 style regression?


10 posted on 08/13/2010 10:38:56 AM PDT by Personal Responsibility (In a time of universal deceit - telling the truth is a revolutionary act - Orwell)
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To: Zakeet
9. We're looking at gridlock in Washington. ...

That's the only bright spot, actually.

11 posted on 08/13/2010 10:41:14 AM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Zakeet
9. We're looking at gridlock in Washington. ...

That's actually a positive. The LACK of gridlock is what has turned a recession into a depression.

12 posted on 08/13/2010 10:54:02 AM PDT by OrangeHoof (Washington, we Texans want a divorce!)
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To: Zakeet

Asking a stock broker if now is a good time to buy is like asking a barber if you need a haircut. The answer will always be yes regardless of reality.


13 posted on 08/13/2010 10:55:38 AM PDT by festusbanjo (It's not your car, they're not your keys, it's not your country. I'm taking them back punk!)
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To: Onelifetogive; Truth is a Weapon; Lurker; OrangeHoof
9. We're looking at gridlock in Washington. ...

However, gridlock will be good, not bad for stocks.

This one can be good. It will, at least, stop the slide. In two years, hopefully we can change the direction in the freedom and liberty of this country.

That's the only bright spot, actually.

That's actually a positive. The LACK of gridlock is what has turned a recession into a depression.


Actually, gridlock is considered highly negative my most analysts.

The problem is that, while gridlock will prevent the Rats from enacting any more of their bright idea social programs, it will also prevent the opposition from cleaning up the mess. The emphasis will be on compromise rather than meaningful reform. In other words, we will be stuck in a situation where, at best, we bottom bounce and, at worst, we continue our downward trend.

Frankly, I consider gridlock inevitable until we either (1) get rid of the Wee Wee, and/or (2) get a veto proof majority of true conservatives in both the House and Senate. Unfortunately, neither of these can happen in this year's election.

14 posted on 08/13/2010 11:08:23 AM PDT by Zakeet (The Big Wee Wee -- rapidly moving America from WTF to SNAFU to FUBAR)
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To: OrangeHoof

I agree. There is no ‘gridlock’ in Washington and that is exactly the problem. The Dems have the Presidency, the House, and can break filibusters in the Senate most of the time. This is the farthest from gridlock that we’ve had in my (40 year) life. And that is the problem! Look at what they are doing with their power, that is the problem!!


15 posted on 08/13/2010 11:11:20 AM PDT by Liberty1970 (http://www.caringbridge.org/visit/lydiablievernicht)
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To: jiggyboy

Interesting. Hadn’t heard of this predictor.


16 posted on 08/13/2010 11:12:16 AM PDT by Girlene
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To: Kartographer
Yes!

However, the DJIA is up ten as I type. See here.

17 posted on 08/13/2010 11:30:17 AM PDT by blam
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To: blam

The answer I expected! ;-)

And agree with.

but I need to let you know you’ve been ‘slacking’ everyone else has had to post for you! ;-)


18 posted on 08/13/2010 11:31:52 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: blam

“However, the DJIA is up ten as I type.”

Hey the FED has to spend all that money they are printing somewhere! ;-)


19 posted on 08/13/2010 11:33:12 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Zakeet

Excellent article — not ‘scare mongering’, but factual.

“Just 61% of the adult population, age 20 or over, has any kind of job right now. “

Things are going to get worse, before they get better.


20 posted on 08/13/2010 11:34:49 AM PDT by SmartInsight (Bad officials are elected by good citizens who do not vote. ~ G. J. Nathan)
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To: Kartographer
"but I need to let you know you’ve been ‘slacking’ everyone else has had to post for you! ;-)"

I had to go to town this morning, then lunch and a small nap, ahem.

I posted this yesterday:

DEFLATION'S COMING, Says Gary Shilling, And It's Going To Clobber The Stock Market

21 posted on 08/13/2010 11:37:33 AM PDT by blam
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To: blam

Just wanted you to know you were missed! ;-)

See post #4

http://www.freerepublic.com/focus/news/2569479/posts?page=4#4


22 posted on 08/13/2010 11:41:19 AM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Zakeet

I’d much rather settle for any kind of gridlock than what we have going on right now. At least stop the cancer from spreading to other vital organs. Then work on reversing the damage.


23 posted on 08/13/2010 11:41:55 AM PDT by Soothesayer9
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To: Personal Responsibility

Index funds by definition follow “the market” exactly.

Whatever the S&P 500 is doing, your index fund based on the S&P 500 index will be doing exactly the same — go up 20% or down 20%.

If you have anything significant there, you may consider diversifying.


24 posted on 08/13/2010 11:42:07 AM PDT by SmartInsight (Bad officials are elected by good citizens who do not vote. ~ G. J. Nathan)
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To: Zakeet
In other words, we will be stuck in a situation where, at best, we bottom bounce and, at worst, we continue our downward trend.

We are nowhere close to the potential bottom. The potential bottom is more like where Charles Taylor has Zimbabwe. We need to use this Fall's election to stop the freefall (toward Zimbabwe.)

25 posted on 08/13/2010 11:49:22 AM PDT by Onelifetogive (For the record, McCarthy was right.)
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To: Kartographer
"See post #4"

LOL.

26 posted on 08/13/2010 11:49:36 AM PDT by blam
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To: Onelifetogive

Glad someone mentioned ‘bottom’, for the DOW, about 7000, I don’t see it getting back to 6000, the value shoppers likely are not going to let that happen


27 posted on 08/13/2010 12:01:11 PM PDT by Son House (The Bush Tax Cuts Produced Better Results Than All The Democrat's Stimulus Bills Combined.)
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To: Zakeet

I certainly hope it crashes again. Why wouldn’t a rational person want to buy General Electric at $10 rather than at $20? Why wouldn’t a rational person want a 7% dividend yield rather than a 3% dividend yield? Stocks are the only thing people want to buy as they get *more* expensive. It makes no sense.


28 posted on 08/13/2010 12:09:25 PM PDT by WallStreetCapitalist
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To: Personal Responsibility
My 401(k) offers a fund called the Stable Value Fund. It is a cash fund. That is what I use to "get out" of the market when things like 2008 happened.
29 posted on 08/13/2010 12:30:18 PM PDT by 5thGenTexan
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To: Zakeet

What investors what is stability. In a stable business environment, they can choose the best course to take with their money. What they hate is instability - and that’s what the Democrats are offering them.

With enormous gamechanging ideas like Universal Health Care, Cap and Trade, VAT taxes, new regulations, etc., it is very unstable for businesses and so they are not going to invest when they have no idea where the market is headed because they don’t know what Washington will do to them next. Further, the markets are dealing with the first administration and Congress who are anti-business and anti-capitalism. So, they are just looking to survive, not thrive.

Gridlock at least tells them “it won’t get worse than this”. From that, they can devise a plan. But while anti-business communists run the country unchecked, they have no idea where the floor is. IMO, gridlock is going to be far better for them than what they have now.


30 posted on 08/13/2010 12:44:14 PM PDT by OrangeHoof (Washington, we Texans want a divorce!)
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To: Perdogg; Kevmo; AdmSmith; Arthur Wildfire! March; Berosus; bigheadfred; blueyon; ...

A crash will come in certain sectors, while others will roar back — just as soon as Iran starts the shooting war. Thanks Zakeet.


31 posted on 08/15/2010 9:13:23 AM PDT by SunkenCiv ("Fools learn from experience. I prefer to learn from the experience of others." -- Otto von Bismarck)
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To: Truth is a Weapon

Really? Gridlock will ensure that taxes will in fact go way up, that the health “reform” moves forward, that the death tax comes back at the 50% level. That our entitlements will explode and bankrupt us. And on and on. Not such a good thing for stocks.


32 posted on 08/21/2010 3:48:55 PM PDT by Kozak (USA 7/4/1776 to 1/20/2009 Reqiescat in Pace)
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