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 ...
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
Just wanted you to know you were missed! ;-)
See post #4
http://www.freerepublic.com/focus/news/2569479/posts?page=4#4
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.
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.
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.)
LOL.
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
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.
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.
A crash will come in certain sectors, while others will roar back — just as soon as Iran starts the shooting war. Thanks Zakeet.
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.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.