Skip to comments.Extreme Sentiment: Barron's Cover "Get Ready for Record Dow - We Told You So"; Top Call
Posted on 02/04/2013 7:57:39 AM PST by Kaslin
Looking for extreme sentiment?
Look no further than the cover of Barron's magazine.
The cover speaks for itself, but check out some of the commentary in New Highs in Sight
The party is far from over. The early-year rally that on Friday took the Dow Jones Industrial Average to within 1% of its record high, set in 2007, could have a lot further to run. For starters, stocks aren't expensive. The Standard & Poor's 500 index is valued at about 14 times estimated 2013 profits and the Dow fetches less than 13 times projected 2013 earnings. At the market peak in 2007, the Dow traded for 16 times forward earnings. Given ultralow interest rates, the market multiple has room to expand even if earnings growth remains modest.
There's a huge amount of money that could shift into stocks because individuals until recently have favored bonds over equities, based on mutual-fund flow data. "If there is a great rotation going on from bonds to stocks, we may be only in the top of the first inning," says Jason Trennert, chief investment strategist at Strategas Research Partners in New York. Trennert cites the TINA -- or "there is no alternative" -- factor, as yield-starved investors move into stocks.
Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that "South Florida is working off of a totally new economic model than any of us have ever experienced in the past." He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely.
"I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat."
"I look at this as a short-term investment," said Mr. Farquharson, 36, who works for a venture capital firm, "and plan to unload it as soon as things look dangerous."
No, don’t believe Barron’s. Believe the lunatic blogosphere who constantly predict doom. My average last year was +15%.
Oh, sorry. Back to our regularly schedule panic.
Maybe Barrons is right and maybe they’re wrong. Likewise, maybe the ‘blogosphere’ is right or maybe the predictions of doom are wrong.
Fact is nobody knows the future.
I don't believe that a blog has a $5.00 price on it's cover
To be fair, many of these sites like ZeroHedge are right in pointing out how sick the economy and the markets really are. Just because they are going up and you can make some easy money, largely due to QE4ever, doesn't mean they are healthy.
But yeah, it is kind of comical. Much of the blogosphere, especially the libertarian sites, predict doom and gloom pretty much constantly. If you listened to those sites you'd have missed a massive market run up, have all your money invested in gold coins - which would be packed away in your bug out bag or buried underground at strategic locations. These sites really need to chill out, stop rooting for economic disaster (mostly because they want to be proven right), and admit they really don't know how much debt we can pile up without an implosion. We just may be able to kick the can down the road for many years to come and a lot of millionaires and billionaires will be made during that time.
Isn’t that the truth
Ahhhh.....I remember my professor explaining THE RATIONAL MAN THEORY OF INVESTING. He ended the lecture by saying that that theory doesn’t explain modern investing.
2013 begins..."the "unemployment" rate notched UP to 7.9%. Employment saw little or no change re: manufacturing, business and professional services, financial activities, government. Transportation and warehousing sector down."
Seems the govt always Finds the #s to support 'like' they find ballots which determines the outcome of said[D]election in a basement or trunks of cars.
Eventually Americans won't 'feel the magic' when a white dove flies out of the govt.magician's sleeve after knowing it has been completely dehydrated, kept in small space, then re-hydrated, flying back to life need be but confused.
"The U.S. economy posted a stunning drop of 0.1 percent in the fourth quarter, defying expectations for slow growth and possibly providing incentive for more Federal Reserve stimulus." [Trillion dollar deficits yr aft yr]
"The economy shrank from October through December for the first time since the recession ended, hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles." Source
Fact is nobody knows the future.
Actually, the future is pretty clear. It’s the timing that’s the rub. Who knew, five years ago, that we would be doing the absurd things we are doing now to continue to kick the problem down the road. But the road DOES come to an end. And the fall will be biblical. It has to be. This is the whole civilized world we are talking about, not Zimbobwe.
Whatever medications are taken in the interim, the final outcome is highly predictable because it will be involuntary and the end for all fiat currencies: Runaway inflation followed by chaos. In this case, probably war more devastating than WWII. Especially for the US, who came out of that one the least impacted.
Congratulations on your + 15 % However, when you factor in the true cost of inflation I would imagine that your returns are not quite so spectacular. IMO the new normal will be advancing stock prices that cannot keep pace with the decline in the dollar, so real returns will not be as they appear. There is no other game in town really so it may not matter much until it REALLY matters. YMMV
No, dont believe Barrons. Believe the lunatic blogosphere who constantly predict doom. My average last year was +15%.
He got trimmed back to size in 2000, and that is grossly understated. In my case I HAD to take my money out in January of 2000. Thank God. The Lord works in mysterious ways.
My point: You do well until you don’t. And if you are really good, you can make big money shorting the crazy highs. As I’m sure you know, the 1929 (and subsequent) crash made a lot of people rich.
The market is heavily subsidized, and investors might as well get in on the party while it lasts. Too bad the rest of the economy can’t be so easily manipulated.
I know only ONE thing regarding stocks::
IN 1997, when I left the Tandy repair job—I had some of their stock. 35 shares..Over the nexst 3 years...it split THREE times—and in late 2000..it topped 10k in value!! I thought it would ALWAYS be “great”. but, sometime near Christmas...SOMEONE who came into the repair shop I was workng at then..convinced me to “roll that stock into Oracle”. Fr SOME reason...I just accepted his word, without much questions—and did so. Not long after that...the market tumbled..That Tandy stock TANKED...and it NEVER came back. oracle DID. I got 281 shares of it from the Tandy stock—and sold 50 last year for a “need for property taxes”.
Move forward to today...I still have the 231 shares of Oracle. It is worth almost 8000. had I kept with Tandy—that 140 shares is now worth a little over 4 HUNDRED!!
I never even really knew this guys name. But...he did me a HUGE favor!!
The Dow will go even higher as Obama continues to devalue the dollar.
Here's a little lesson from history:
Yes, the 90's were fun weren't they. Could buy an "unknown" Alaskan Internet stock for $2 on Friday and sell on Tues next for $22. But that was "play". Splits common. EZ as watching CNBC + their stock hypes for the day. But better to be have knowledge/or be part of a company in the tech/internet/equip maker related sector at the time. You know who was strong, who was not.
The reason for my first post was when govt, politics and/or Elections r involved-- the reckless rethoric for Votes caused serious financial consequences to all investors, the whole world as well. Again the "uninformed voter" spurs on a "good crisis" set into action by politicians.
In Washington: One can run for office with very little money to one's name and wind up with over a hundred million dollars by the time you become Sec of State [marrying up also helps ;)] Very little risk involved.
I happily still rely on the advice + "long term" services provided by my financial professionals. It's not just buying this or that co. stock anymore.