Stocks in deepest funk 'in 30 years'

National Post ^ | June 8, 2002 | Steve Maich

[FITZ]

I would invest in real estate but taxes here make that impossible.

[unbiasedtruth]

Something else to add to this: watch for the democrats to start screaming this fall leading up to the November election, "this is the worst economy in 30 years."

[sarcasm]

Is real estate the next bubble to burst?

[demkicker]

"We're paying the price for tolerating "the decade of frauds" that preceeded this era. It will eventually shake out."

***Bingo***... I agree. I just hope it will rebound quickly because there's no way in hell Social Security gets reformed in the midst of sustained down turn of the stock market. Geeze, I can hear the Dems howling and fear mongering already.

[Stallone]

Is it any wonder that most investors end up losing?

Real estate is up, but it wasn't 3-5 years ago when we started buying.

Funny, it was around the same time that we were selling stocks at all time highs.

So guess what we're buying now?

Bingo! Stocks, the new winners (in 3-5 years).

Novice investors will always follow the past instead of anticipating the future - a costly mistake.

Emotions have no place in Affairs of the Chart.

[Huck]

AND...there are little jobs out there....it's choice for employers

Well, software engineers and programmers had a ball while it lasted. Hard to believe only 3 years ago software programmers were able to make all sorts of demands. Now it's a buyer's market. In the long run, this probably is going to help those companies, if it pushes wages down. Not only that, if more people are competing for the same jobs, theoretically that enables the employer not only to select a cheaper applicant, but also a more talented one. This would, theoretically, make those companies more productive at lower cost. Good for shareholders. And another thing. A more competitive job market spurs more workers to seek training, further their education, and learn new skills in order to compete in the marketplace. This means an increasingly productive workforce. Another boon to shareholders.

Of course, none of that helps if you are the one getting the boot. That's why during this great boom time I squirrelled most of my money away. I figured if these were the best days ever (and they weren't THAT spectacular--I still shopped at discount stores), I'd better prepare for the fall that will come, and hopefully it won't be a doozy. And it hasn't been. Of course, the war is the big question mark. Bottom line: Not only does no one owe us a living, no one owes us a standard of living. My salary went up quite a bit between 1998 and 2002. But I never forget that it could just as easily drop back down. It's up to me to a)improve my skills, b) stay competitive, and c) provide for my own economic well-being.

Anyway, I'm just babbling. I am sure you know all this. My dream is to start my own business. That is what I am saving for. It might be a sandwhich shop, or a guitar shop, or a pretzel stand. I'm not sure yet. Good luck to you. Hope you keep your job.

[Jhensy]

But real estate HAS to be topped out right now. My wife and I are looking to buy our starter home here in Westchester County, NY, our lifetime home. We know it's an expensive area, but we make pretty good money, and are perfect candidates for a starter. But $350,000 to $400,000 in the lesser areas? And don't even ask about the ones in good school districts.

We're worried that we'll buy in at the very peak of a seller's market, the worst possible time. Should we wait a bit? The NY economic outlook is not very rosy, people really ARE losing jobs here.

[cgbg]

You asked for advice, so here goes. How about taking all that cash you were going to spend for a down payment and using it to buy a great house in a great neighborhood in a lower cost area (well outside of metro NY).

Yes, you would have to find jobs in the new area and that might take time.

But you can really can make a radical improvement in your quality of life by staying out of high cost areas.

[Jhensy]

Ahh, talk to the wife, cgbg! She won't even consider NJ or Long Island, it's gotta be Westchester. In her defense: we've got an 18-month-old and the family network is very helpful, and our whole life is here. She won't budge. "Period. Case closed. Go back to your Internet, honey."

[steve50]

Only difference I see is when they get caught fixing a horse race somebody usually goes to jail, when you get caught defrauding investers.......

[backhoe]

The only thing the Left has to peddle these days is fear, and outrage. I hear them tuning up on stocks & So-security, too... they are so predictable.

What they aren't mentioning is that SS was a fraud from the get-go... you weren't supposed to live long enough to collect it, back when it was started...

[bimbo]

Investors are voting their disapproval of Wall Street Analysist con games, Corporate Accounting frauds, etc., etc. When these messes are cleaned up, the investors will slowly return to the Market.

[FightThePower!]

Tyco itself will be proven to be a fraud.

[demkicker]

"The only thing the Left has to peddle these days is fear,..."

Victory and revenge can be very sweet... so can irony. For the Left to be so desperate that they can only peddle fear, how does that reconcile with their beloved Harry Truman's famous quip?

[bimbo]

And some horses still never even show, much less place or win, yet folks put good money down on a horse they believe has a chance to win.

Good horse players do not gamble good money only on a horse's "chance to win." There is another important factor that is ignored at the gambler's peril - "the expected payoff."

If the expected payoff exceeds the the horses chance to win, it is worth a bet. This is comparabe to an investors assessing a Risk / Reward ratio before investing. (You do that, don't you?) If one evaluates things that way, you can say that "Every horse in every race is worth a bet - if the payoff will be great enough; and every marketable stock is worth buying if the price is low enough."

In the stock market, I can see the possible rewards out there, but I am waiting for lower prices to reduce my risk before committing hard earned money.

[bimbo]

... investing in real estate, which in many areas is appreciating at 10-30% a year...

Real Estate is still in a bubble-expansion phase. There is a deep and healthy recession out there, somewhere, for real estate. Those getting in now are probably certain that they are not the greatest of the "greater fools."

[cynicom]

philman...

Lot of similarities to the track...

First, all of the players are "experts", whether they pick the nag or someone else does.

Second, No one ever admits to losing, everyone always wins or comes out even.

Third, the money players control the race from the gate to the finish line.

Fourth, it is always the little guy that goes home shirtless, sooner or later.

[Voltage]

So, have P/E ratios now become reasonable, or is there a need for additional slippage?

No, they have not yet reached a ratio of 10 times earnings, which would be a reasonable value. There is a long way to go.

[Willie Green]

No, they have not yet reached a ratio of 10 times earnings, which would be a reasonable value.

But with P/E's that low, the befuddled lemmings won't know which direction to run.

[philman_36]

Lot of similarities to the track...
I thought it was a pretty good analogy myself.
I've been hearing for a large portion of my life about "playing the stock market" and I simply noticed the similarities in the two.