Another ugly day in the markets — the Dow Industrials down nearly 6%, while the Standard & Poor’s 500 (SPX) index lost 6.7%.
This is the lowest point since April 14, 1997.
Some interesting numbers:
• The 7500 area is the March 2003 low;
• The 2002 closing low is 7286 (intraday is 7197):
• 1997 Asian contagion bottom was 7161; intraday was 6971;
Some of the most serious fallacies of traditional economics have been due to confusion between optimum and equilibrium conditions; the apparent influence of Dr. Pangloss upon the development of economic thought is for the most part nothing but pure intellectual error. —J. R. Hicks, "The rehabilitation of consumers' surplus," Review of Economic Studies 8(2), February 1941, pp. 108-116, footnote 1, p. 112.
I know its late Friday and I'm sorry for the rant but a headline across the tape forced my hand. From a speech on June 25th to the BIS that the Fed officially released today, Fed Vice Chairman Kohn said that "the root cause of our problems was the underpricing of risk as the financial sector interacted with nonfinancial sectors" and that "leverage was a symptom rather than a cause of the underlying crisis." He has a Ph.D and I don't but I want to correct him that easy money policy under Greenspan that had the fed funds rate at...
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November 20th, 2008 at 4:43 pm
“I love the smell of capitulation in the morning (evening).”
Actually, I don’t but these markets are starting to feel a bit apocalyptic so capitulation has to be somewhat near, right? Right?………
November 20th, 2008 at 4:44 pm
I’m curious as to when exactly the PPT jumps in here since people who lose at shorting seem to be perpetually whining about it..
Though, to be fair, whether a PPT or whatever exists.. it wouldn’t matter since the issues at hand are wayyyy to big to bail out.
November 20th, 2008 at 4:44 pm
I thought I actually heard a co-worker cry today… I hope it is near…
November 20th, 2008 at 4:45 pm
Gosh darnit… Sold off the last of my SKF and SRS in the morning at ~$241 and ~$250 respectively. Turns out I coulda held out for more. We truly live in historic times…
HCF
November 20th, 2008 at 4:48 pm
prince shoots-his-wad has been hanging out with the “gloved one” too much methinks…..he seems to have doubled down on his own “Neverland Ranch”.
November 20th, 2008 at 4:49 pm
Nice work on riding the SKF and SRS, HCF. Sip a glass of champagne for me.
Mannwich Says: November 20th, 2008 at 4:43 pm
“I love the smell of capitulation in the morning (evening).”
I was thinking more along the lines of … “the horror, the horror…..”
Can’t imagine being a long-only corpy, muni or stock guy today.
Joe Retail is gonna want ANSWERS, dammit.
Lot of college tuition gone down the plughole.
Perp walks, please, very soon and a bunch of them.
November 20th, 2008 at 4:49 pm
but best of all was Citi’s solution to its problems… ban short selling!
my father today asked me if the market can keep going lower. i responded “have YOU sold yet?” “no,” he said. “Then it can go lower,” I explained…
November 20th, 2008 at 4:52 pm
“Prince Alwaleed has now gone roundtrip on his 1991 purchase…”
True, Barry - but he flew in his private plane.
November 20th, 2008 at 4:53 pm
So? The Prince got all his money from oil and all we got for all that oil was a lousy Hummer.
And, yeah, that might be a pun.
November 20th, 2008 at 4:54 pm
And BNI is IN THE MONEY for the puts that Buffet sold due in early December. If there isn’t a rally soon, Berkshire is in deep doodoo.
Barry, I’ve got a hot tip for you:
Scientific labs are reporting that plastic, which has mostly replace glass in labs, is leaching so badly that they will have to return to glass. Glass has
“adsorbing” problems but with the oven treatment this can be overcome. When the public gets wind of this, glass is going to replace plastic everywhere so glass manufacturers should do well (e.g. GLW). Granted, tainted lab results don’t mean health hazards, but you never know and there’s a lot of people making plastic food containers that probably don’t want to know.
November 20th, 2008 at 4:55 pm
@KidDynamite (JJ): LOL. ‘Nuff said.
@lb: Exactly. Where the eff are the perp walks? I realize the feds are busy these days but there need to be a hundreds of these to ease the public’s bloodthirst for some scapegoats before any semblance of confidence comes back to the markets.
Also am kicking myself for not sticking with QID, SKF and SRS for a longer period of time. Still hold some SRS and QID but sold my SKF (for a small profit) a long time ago. Dumb, dumb, dumb but with the feds in there messing with things, that was a hard one to stick with and sleep easily at night.
Have nibbled around the edges at some longs lately and am already regretting that decision. We have to be due for a big rally any day now, don’t we? Don’t we? Wait, don’t answer that question……
November 20th, 2008 at 4:55 pm
Bend over, grab your ankles and kiss your wallet good-bye kind of week so far!
Rough guess … S&P should be down more than -50% from Oct 07 highs… hmmm
November 20th, 2008 at 4:56 pm
@leftback:
No champagne for me, since it’s ‘Beaujolais Day,’ when the first of the 2008 vintage comes out. Yeah, it’s crappy Beaujolais Nouveau, but it’ll do just fine =)
Would have been a better day if I did not buy a small UYG position to partially hedge my gains in SKF yesterday. Doh!
Well, falling knives and all that jazz… I’m a happy camper either way, sitting mostly in cash with most of my remaining bets on the short side.
HCF
November 20th, 2008 at 4:58 pm
I’m now certain that, like Sgt Schulz, everyone here knows nothing.
Except for Steve Barry.
November 20th, 2008 at 5:02 pm
I closed the rest of my “shorts” in EEV and DUG today. Even took some UYG at the close for a short-term roll of the dice. So that means the sell-off probably continues. But I have absolutely no confidence / feeling / belief about what is going to happen next. We have moved so far so fast that now there are no parameters to look to for guidance, all the landmarks are gone, we are lost in the fog – at least it feels that way to me.
Being 95% in cash now feels pretty good.
GLTA
November 20th, 2008 at 5:04 pm
To Steve Barry I say it again - “I am not worthy, I am not worthy”.
QID headed to $120+.
November 20th, 2008 at 5:12 pm
The entire five-year bull market from 2002 - 2007 has now been wiped out by the S&P 500. The Dow still has a little distance to go to its 2003 low of 7,524 and 2002 low of 7,286.
Interestingly, only 2.4% of the 500 S&P 500 stocks now trade above their 200-day moving averages - a crude indicator of the primary trend of a market or individual stocks. This indicates an extremely oversold situation, but bear markets have been known to stay oversold much longer than usual.
Oversold conditions have so far not produced more than a temporary reprieve, and nobody knows how far down this bear market will fall. Until we see more signs of base formations being developed, one should tread very cautiously. And remember the old Boy Scout adage: “Be prepared”.
http://www.investmentpostcards.com
November 20th, 2008 at 5:16 pm
Only reason for Prince to invest is to try to build confidence in the US banking and prevent depression. So we BUY OIL of course!
November 20th, 2008 at 5:17 pm
Where’s the PPT? It looks to me like the PWG and the whole lame duck administration had abandoned ship and is now following a scorched earth policy to leave Obama with an impossible mess to help ensure a one term presidency and perhaps a Republican resurgence in the Congress in 2010.
They are leaving the rest of the TARP money for Obama; they don’t want to help the automakers, at least they don’t seem to be pushing for it. Nor are they pushing fiscal stimulus, unless I missed it in the news recently.
And where is Ben? Deflation talk is everywhere, the stock market is dying, and no intra-meeting cut? Where IS Ben?
November 20th, 2008 at 5:19 pm
Citi is down 50% in the last week. Doesn’t sound as bad when you say it went from off 80% to off 90%.
The 10-year total return on the S&P went (way) negative this month. 10 years and nothing to show for it.
Trailing S&P dividend yield is higher than 10-year Treasurys.
dang, when everyone was calling you a bear, you were a gosh-darned optimist.
November 20th, 2008 at 5:20 pm
Remember how “there were no buyers for subprime?” Well, all the assets are subprime now.
November 20th, 2008 at 5:24 pm
@ KJ “Where’s the PPT?”
Someone borrowed their money for the bailouts… they are broke also!
November 20th, 2008 at 5:25 pm
I always thought we’d see todays levels. With the way things stand - Citi, GM, Ford & Co on the verge of collapse - if any one of them go we’ll be looking to DOW 6,000
BTW - has anyone heard the rumor about Citi and Goldmans merging?
November 20th, 2008 at 5:26 pm
whaddya mean venn data! its all on sale!
at least i told myself that on tuesday as i went long.
So now, in an attempt at not having to have 2 stiff drinks tonight I am trying to develop some confirmation bias.
So what was 20% off FMV is now in reality off 25% +++
Also, last time i take a gamble in the dark on earnings. Bought a small (100share) amount of STP and nibbled. I just lost half of my toe.
You know the line from big lebowski? “you want a toe… i can get you a toe!”
I think that might have just been my toe.
November 20th, 2008 at 5:28 pm
(10 years ago was Nov 1998 and the S&P finished the month at 1163.63 on its way to 1552 14 months later. So that 10-year return is going way way negative over the next year and a half)
November 20th, 2008 at 5:30 pm
Opportunity is breaking out all over. What an incredible time to be alive!
November 20th, 2008 at 5:31 pm
went long a little more.
November 20th, 2008 at 5:32 pm
Paul S Says:
November 20th, 2008 at 4:58 pm
I’m now certain that, like Sgt Schulz, everyone here knows nothing.
Except for Steve Barry.
Paul,
the easiest trade to make was to fade those fading Steve Barry..
~~
Oversold conditions have so far not produced more than a temporary reprieve, and nobody knows how far down this bear market will fall. Until we see more signs of base formations being developed, one should tread very cautiously. And remember the old Boy Scout adage: “Be prepared”.
http://www.investmentpostcards.com
PdP,
just so you know, when you start mentioning old adages like: “BePrepared”, and the ilk–even on these threads–it brings out, like some kind of magic inkblot, the “(I’m not a) “Survivalist”…, (I’m not a) “Gloom ‘n Dooomer”…, (I don’t believe in) X, Y, Z “Reality Denialists”..
Past that, keep up the good work, and, as you know: “Forewarned is Forearmed”.
November 20th, 2008 at 5:35 pm
In this market, it’s hard to get anything right, so I’m patting myself on the back. I just covered Christmas gifts over the past two days on SDS and EEM. From my post on Monday’s open thread:
TrickStyle Says:
November 18th, 2008 at 11:02 pm
Jeremy Grantham, a well-known value investor, recently wrote that we could expect a post 10/10 crash low of 50% below fair value S&P. His downside goes as low as 585.
Why not.
Reality still hasn’t set in among regular folk. The US consumer is out of money.
I’m expecting another 500 pt. loss day on the DOW in the next 5 trading days.
I think there’s another growing wave of fear and uncertainty.
November 20th, 2008 at 5:40 pm
Err, sorry. EEV. Ultrashort Emerging Markets.
Oh and I went “long with leverage” on the S&P - SSO - today at 3:55.
We should see 15%-20% dead cat tomorrow.
November 20th, 2008 at 5:42 pm
Nibbled on SSO at the end. Have a feeling I’m going to be getting a good slap in the face.
November 20th, 2008 at 5:42 pm
Wait for confirmation. The opportunity of a life time may not really be there yet. Plenty of time to decide weather to buy or not. Just think of the resistance levels this market has to pass through on the way up now.
November 20th, 2008 at 5:44 pm
At this rate, the markets are going to scare the “Merry” right out of Christmas, which will only serve to reinforce deflationary expectations and a downward spiral. At the risk of stating the obvious (D’0h!), Roubini’s Dow 7,000 prediction looks quite conservative at this point. Look 0ut below.
George W. Bush = Worst. President. Since. Herbert. Hoover
November 20th, 2008 at 5:46 pm
Louise Yamada on CNBC Sucks just now said target S&P = 400-600. the actual number is 450, for those playing the game at home, 450. i was saying 10/12 but now think it could happen any day now. and as to Alwaleed’s round-trip in C, may i be the first to say “good night, sweet Prince”. yeehaw
November 20th, 2008 at 5:49 pm
@mitchn: Correction: George W. Bush = Worst. President. EVER. End of story.
November 20th, 2008 at 5:49 pm
400-600 is right that’s 1 X book value. This is the same level as we did in the early 80s recession. What I’d be concerned about is banks are trading less than half book so therefore other companies investments are too high right now too.
Gold is likely to make a big move over the next 6 months.
November 20th, 2008 at 5:50 pm
Off topic. An analysis of your blog suggests you are an ESTP “Guardian” type.
http://typealyzer.com/
Interesting, but maybe not all that useful.
November 20th, 2008 at 5:51 pm
This is off topic but maybe not. The big auto manufacturers went from mostly cars to mostly tanks in less than a year back in 1941. This was before cad-cam and high speed computers with cheap memory storage. The other day an “economist” got on tv to say how difficult it is to retool and remarket to electric. It takes “several years”, he said. To show how big oil works with US big auto to lie and dissemble, read this:
There ALREADY IS a factory, PRODUCTION _ALL-ELECTRIC_ car on the road - the 2002 Toyota RAV4-EV.
The reason that Toyota STOPPED MAKING THEM in 2002, is because GM _sold_ the battery patents to Texaco, bought out by Chevron… who SUED Toyota for $30 million to STOP PRODUCING THEM!
http://en.wikipedia.org/wiki/Toyota_RAV4_EV
THAT BATTERY PATENT is running out - the Congress SHOULD MAKE SURE that ALL auto- and battery manufacturers SHOULD BE ABLE TO PRODUCE as many as possible!
They’ve been at this since Standard Oil started buying small town elctric trollies and replacing them with busses. Did you know that in 1935 there were 7 more electric locomotive engines than diesel. Today it’s 100 to 1 diesel to electric. This was not a coincidence. We need to flip these bastards on their heads. Patent protection was not supposed to be a coercive antiprogress mafia tool. In the name of expediency, congress should expire that patent now.
November 20th, 2008 at 5:52 pm
Now that was an UGLY day. 768 was my target to complete this move. I tried to buy 770 and got stopped at 765. My next target that must hold is 727. I’ve got two Elliot Wave targets at 727. The market really needs to flush out tomorrow and hold that level in order for any hope. The next step down could be a little below 600. The good news is that from the 1440 level, where the major third wave began, it’s now possible to see the shape of a nice five wave move, something that has been missing until this week.
We can also see very sharp daily and weekly RSI divergence. Commodities are very oversold and sentiment is hugely negative. After todays action, plenty of technicians are now calling for much lower levels. Carter Worth probably threw in the towel on his ‘early call.’
At good bottoms, everyone looks bad and nearly everyone is convinced we’re going lower. Fast Money had both Louise Yamada and Peter Schift on tonight talking about the apocalypse.
Make no mistake. We will see sub-600 next year. There is no doubt about this now. But I think we will see a pretty serious multi-month spring rally first. 727 is my line in the sand for tomorrow….
- AT
November 20th, 2008 at 5:55 pm
not that it matters but i meant 450 by Oct ‘10 not 10/12. by 2012 we’re in real deep, per the Incas
November 20th, 2008 at 5:56 pm
I had “Dow 5K sometime in the 2010s” back on June 6 when it was at 12,209 (http://cnbcsucks.wordpress.com/2008/06/06/michelle-caruso-cabrera/), then revised that call to “Dow in the 7s by the time Obama takes power” (http://bigpicture.typepad.com/comments/2008/10/consumer-credit.html). I don’t know why I am posting this because I know it won’t impress any of you, but if you aren’t going to gloat when you are right, when are you going to gloat?
What the hell happened to Jeff M.? Who the hell are you guys?
November 20th, 2008 at 5:58 pm
Sorry for the double post, but that formatting on my last comment looks awful. Unfortunately, there is no preview feature.
Nice going switching to WordPress, Ritholtz.
November 20th, 2008 at 5:59 pm
@CNBC Sucks: Jeff M. is here. Haven’t gone anywhere. Just changed my handle to Mannwich……..
It’s an old nickname of mine since high school. Thought I’d put it to use here.
November 20th, 2008 at 6:05 pm
According to my rough calculations (based upon split info taken from Google Finance), 100 shares of Citi purchased anytime in 1991 would now be 1191.02 shares. An 11 bagger. In ‘91 the stock traded between 2.50 and $3 until breaking to 3.50 at the end of the year.
So the prince is still up big time. I’m not saying it was smart to hold the whole time. I’m not saying Citi can’t go lower. I’m thinking that the prince is lucky enough to be SOOO rich that he looks for places to keep his money safe in the VERY long term, like 100 years, and just beat the overall market, which he has still done here, handily.
I believe he sees another nice entry point for a little chunk of change. We’ll bubble and bust again and in 2025 or so he’ll drop another half a bill’.
November 20th, 2008 at 6:27 pm
Ritholtz needs to have a thread where everyone discloses their pre-WordPress handle. My handle before the switch was CNBC Sucks.
Jim Cramer just said that he should be made Treasurer, Fed Chairman, and something else, and that Obama should take over now, and hold a press conference without Paulson. Now, I acknowledge that Cramer is half-serious often on the air, but that is just plain irresponsible. Everyone on this blog knows what kind of Obama nutcase I am, but to even make a joke about the orderly, Constitutional transfer of power or to suggest that Obama should do anything without the consent of the Bush Administration until he takes office is irresponsible. There are a lot of impressionable Americans who watch Mad Money.
I also am getting tired of people like Jim Cramer accusing President Bush of tuning out. The President has a legitimate and fundamental difference with the Democrats on GM, so what do people want him to do? As far as I am concerned, the Bush Administration has more than performed its duty on the economy in 2008, so this type of criticism is unfair. (sincere left-wing rant balancing paragraph)
November 20th, 2008 at 6:30 pm
According to Jeremy Grantham’s post-crash analysis of ‘29, ‘65, and Japan’s ‘89, the market dives, bounces, and then drops to 50% below fair value. Using 10-years of S&P earnings, Grantham has calc’ed the S&P fair value around 975 +/- 25. He’s projected 20% to 40% overshoot on that, bringing it to a range of 780 to 585. His track record is solid and he’s not Jim Cramer, CNBC, and the mass of douchies out there who live in hype-ville. Gents, now is the time to be legging in. You don’t want to miss the bull market. To borrow from a quote I heard here - man who pick bottom usually end up with s*it on finger.
November 20th, 2008 at 6:32 pm
Pre-word press, I went by the handle of “Barry Ritholtz”. I started getting too much attention from the babes, so I switched to TrickStar. The babes love my charts.
November 20th, 2008 at 6:38 pm
Scorpio,
I’m thinking 480-ish, the top of the range from 1994, but that’s probably splitting hairs. Someplace between 450 and 500 is probably close enough for the purposes of deciding what to do now.
Even if it’s just 600 or so, the direction and the associated actions are still clear.
That said, a bounce in the next few days — maybe even a very big bounce — is quite possible.
-btc
November 20th, 2008 at 6:42 pm
Heh heh
Too much attention from the babes…
November 20th, 2008 at 6:43 pm
CNBC Sucks,
I see where Cramer is coming from. He obviously can’t “take charge” until January 20.
But if he were to announce a strong candidate for Treasury, and that guy got on TV with anything even resembling a plan, the market could easily rally 10% in seconds. More than likely,
kingemperor-without-clothes Henry would then come out and basically say “we’re going to start moving on the next administration’s initiatives, and we wish them well.”-btc
November 20th, 2008 at 6:44 pm
It looks like the longest fall-back in the Dow must have been about 24 years (1932 falling back to about a 1908 level). If we matched that now we’d go back to about 1984 and about a 1000 Dow - about a 90 to 95 percent drop.
November 20th, 2008 at 6:44 pm
Ugh,
In the above post, “he” refers to Obama, not Cramer. Missed that as I was editing the post.
November 20th, 2008 at 6:49 pm
CNBC Sucks: before WordPress, whatever that is, i went by the tag Prince Alwaleed!!! yeh, baby. BTC: call it 475, what’s really scary is that the whole world wants to get to the bottom NOW so we can restart the rally. this could take a while
November 20th, 2008 at 6:51 pm
I have been the same old BTC guy since the old days of the FC messageboard.
And no, I don’t believe that nobody here knows what that was.
-btc
November 20th, 2008 at 6:52 pm
I am in TrickStar’s camp (though I wish I had had the conviction of Steve Barry a long time ago…big props to him). The market might fall, fall, fall, but it’s going to dive and bounce and dive and bounce. I’ll stop out on the way down, buy again, and wait for a bounce, then re-set my stops. It’s not fun, but I’m not giving my money to anyone else to manage.
November 20th, 2008 at 7:13 pm
AGG Says:
November 20th, 2008 at 5:51 pm
AGG,
you keep squawkin’ the Truth like that, you too, will begin to attract the “Reality Denialists”.
LSS: all these people that keep pointing to ‘Cell Phones’, as an example of our technological superiority, have no idea that ‘Cell Phones’, with the very rare exception, don’t even exist anymore.
differently, the same crowd can’t even conceive that the vast majority of our Economy is predicated upon an Industrial Infrastructure/Process model that is no newer than 30 years and, often, older than 100…
November 20th, 2008 at 7:16 pm
Look on the bright side. I read somewhere that the bond market is expected to implode next year so I figure that most of “that” money will go back into equities. Maybe not.
November 20th, 2008 at 7:23 pm
Mark -
I heard Warren Buffay and Charlie Hunger suggest that we’re on the cusp of a 10 to 15 year bull market.
I turned that one over for three weeks ( yes, i’m slow ), trying to figure out why.
Then it occurred to me that they 1) expected the bubble, 2) understood it’s grave implications, 3) recognize that the only way out is through fiscal stimulus, 4) believe that fiscal stimulus will be aimed at building infrastructure that lays the tracks for a new and sustained period of economic growth.
From that perspective, depressed earnings over the next twelve months are easily diluted by strong revenue growth on the back of major infrastructure and more reasonable prices for inputs across the board (in the absence of distortionary credit).
Does that sound right?
If so, then it becomes easier to be bullish at these levels, or any level below S&P 900, actually.
November 20th, 2008 at 7:23 pm
Yeah can someone explain to dumb me what they think will happen to the govt bond market and why in the near future?
And please use small words if possible. Thanks.
I can’t believe we’re down to 1997 levels. I can barely remember 1997 and I’m not that young.
November 20th, 2008 at 7:29 pm
Well I think we found the next bubble. Gov’t bond market.
November 20th, 2008 at 7:43 pm
Ny Stock Guy:
Everyone is talking about how the govt bond market is a big bubble. The fact that so many people are talking about how much of a bubble it is tells me its probably going much higher, as there must be plenty of “professionals” very short US bonds v. all sorts of other crappy corporate and agency bonds.
- AT
November 20th, 2008 at 7:45 pm
KJ says:
Where’s the PPT? It looks to me like the PWG and the whole lame duck administration had abandoned ship and is now following a scorched earth policy to leave Obama with an impossible mess to help ensure a one term presidency and perhaps a Republican resurgence in the Congress in 2010.
I have to remind all here that I have been saying this would happen since fricken June…
Just had a weird premonition…it’s November…Obama just wins the presidency…the current administration immediately turns off all spin machines and behind the scenes machinations on the economy…Market crashes and common perception blames it on Obama getting elected and Wall Street being unhappy.
Posted by: Steve Barry | Jun 5, 2008 11:14:26 PM
November 20th, 2008 at 7:48 pm
Got it. Thanks AT.
Now I’m trying to figure out what to do with the limited options in my 401k.
November 20th, 2008 at 7:49 pm
@TrickStar
Love the idea that the next bull market will be fueled by infrastructure buildout (and investment in alternative energy), but does anyone think that’s going to happen in 2009? 2010? 2011? Why do so many “bears” here think that we just need to find a bottom and then up, up, and away we go? Ain’t gonna happen. We’ll find a bottom — after OB’s inauguration, because the Bush crowd is totally played and has probably already high-tailed it back to Texas — but it’s going to be a long, sideways grind — for years — after that. Prediction: Warren Buffett himself will not be around to see the next bull market.
November 20th, 2008 at 7:50 pm
If you have a net worth of about $2M you’ll be OK otherwise do no pass go and into the Reality Lounge
http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/11/in-the-reality-lounge.html
“I regard the most dangerous fantasy in America right now to be the wish that we can keep running things just the way they are now (my recurring synecdoche of WalMart, Walt Disney World, and the interstate highway system) by replacing oil and gas with “alternative fuels.” This just ain’t gonna happen. We’re going to use every kind of alt.energy there is and they will still require us to live very differently than we did the past sixty years. The public just doesn’t get this. I don’t know whether President-elect Obama gets this. I hope he does, and I hope part of his new mission will be to clarify this state of affairs for the public in clear and effective speech. It’s going to tick off a lot of them, but it’s the theme music playing in the reality lounge right now, and Mr. Obama would be advised to take up the tune”.
Cheers
November 20th, 2008 at 7:51 pm
@Steve Barry: I remember that prediction, however, I really don’t think the majority of the public is going to blame Obama for this mess.
Perhaps I’m overestimating the collective intelligence of my fellow citizens but I think all this does is further serve to soil W’s (and the GOP’s) legacy and possibly even calls into question nearly everything that has happened since the Reagan administration.
That’s why I’m not in the conspiracy camp here. I think the deepending of this crisis during the lame duck session only makes matters worse for himself and the GOP.
November 20th, 2008 at 7:51 pm
The only mustard seed I see is on my Pastrami sandwich. There are no shorts to squeeze now to start a capitulation rally. The fundamentals tell me that the S&P will trade at best at .7 times sales of 900 or so (my projection), which is 630. That is another 15% downside and should bring QID to 120, which coincides with my TA target on the 2 year rounded bottom. This could happen in a day, but likely will happen in the next month or so. At that point, I rotate into cash and wait for an entry into the gold miners.
November 20th, 2008 at 7:53 pm
I know someone pointed this out before, but anyone else notice that we’re still in a race to the bottom with the NIKKEI? NIKKEI now at 7,422, so the race is on with the DOW. USA! USA! USA!
November 20th, 2008 at 7:54 pm
Mann:
yes…fortunately most people did not fall for the trick and blame Obama’s election…but the fact remains, my market call went down to the day…it started the day after the election.
November 20th, 2008 at 7:55 pm
Gee, you guys are a depressing bunch of gloomy Gus’s … (tongue firmly in cheek)
How about some screaming cheap buys? Anybody seen any?
I’m thinking of stuff like AAPL — PE 15, $27/shr in cash, and in 2009 the deferred revenue from iPhones starts hitting the books. Plus, they have a legendary fanatical bunch of core customers who would sell their children to buy new Apple products. The Apple stores are the only stores in a lot of upscale malls that still have shoppers in them. Even if the USofA burns to the ground economically, whatever country buys us at the sheriff’s auction will be doing so to acquire companies like AAPL.
Just look at this list of companies and PEs: MSFT - 9, IBM - 8, GLW - 2 (!!!!!)
(caveat: I have done no investigation whatsoever, just looked down a list of PEs)
None of these companies is going to have their sales or earnings go to zero. It appears that GLW could take itself private pretty easily, just a paltry few billion — they could petition to become a bank (they probably have a credit union), use the TARP money to take themselves private, and be rolling in dough in just a few years. Why in the hell in this Saudi prince pouring money into Citi, when there are values like this out there? Is he nuts?
The list of outrageous screamingly good buys is getting longer and longer. Somebody list some others.
November 20th, 2008 at 7:56 pm
June 6, 1997: DOW 7435.78
Nov 20, 2008: DOW 7552.29
It’s been a good decade..
November 20th, 2008 at 7:56 pm
Oh boy, I just mistakenly tuned into Larry Kudlow slamming Warren Buffett. There couldn’t have been any political motivation behind Kudlow’s newfound negativity toward Buffett, could there?
@BelowTheCrowd: As I have said on my own blog, Barry Obama will name his Treasury Secretary when he is good and ready. I laugh at the idea that Obama should name a Treasury Secretary to preserve a few weeks’ returns on the stock market. The US auto industry imploding and causing waves of economic crapola throughout the country? THAT is a problem. The economy until Obama is inaugurated will be the same regardless of when he announces his pick: shitty. Treasury Secretary is too important a role for the next eight years of Obama rule to rush for the sake of Larry Kudlow’s Dow Jones False Prophet Index.
Anyway, I do see a 10-15 year bull market if we can sustain Democratic leadership, perhaps after eating economic shitburgers for the next year or two.
November 20th, 2008 at 7:59 pm
Larry Kudlow, circa 11/2007: “I don’t see a recession”
Larry Tonight: “I will argue there is no depression.”
Larry in 6 months: “Brother can you spare a dime?”
November 20th, 2008 at 8:01 pm
@Steve Barry: You’re right but I’m more inclined to believe the market was going down regardless of what happened with the election. I guess I’m not a true conspiracy-theorist in this case or believer in the PPT (call me skeptical is what I’m saying).
November 20th, 2008 at 8:04 pm
My question is when will the following lose their jobs?
(1) Kudlow - Does anyone even watch his show anymore?
(2) Cramer - Ditto.
(3) Wesbury - Does he still have his job? Haven’t seen him on CNBC sticking to his inflation worries meme.
(4) Kneale - Don’t hink I need to elaborate.
(5) Bowyer - Ditto.
(6) Luskin - Ditto.
November 20th, 2008 at 8:05 pm
How could you have made 40% in the last month? Here is my advice from a month ago on Warren Buffet and BRK:
About a year ago, Warren Buffet started to appear on CNBC quite often, usually with Becky Quick. Very recently, he pumped a huge chunk of cash into CNBC’s parent, GE. I said awhile back he had “jumped the shark” and now that he and CNBC are so intertwined, it’s time to fade Warren.
Posted by: Steve Barry | Oct 17, 2008 9:12:51 PM
November 20th, 2008 at 8:16 pm
CNBC Scott Nations Watch: Day 2
November 20th, 2008 at 8:23 pm
Mannwich (I love that name) -
(1) Kudlow - neocons and sadomasochists still watch Kudlow, so he stays…let’s jack up marginal tax rates on the highest income brackets while Kudlow still has income
(2) Cramer - I bet Mad Money will be most at risk. His audience is mostly housewives from Ohio and guys who call in to say “booyah”. The first ones to leave a market, never to come back
(3) Wesbury, aka Westbury in some of my previous comments - For about 4 months, I have contemplated writing a post on my own blog at the end of the year awarding the inaugural Brian Wesbury Worst Forecast of the Year Award to Brian Wesbury, who called Dow 15K sometime in spring, even when it was already evident that things were going awry
(4) Kneale - will be promoted to President of CNBC. It’s an idiotic network, so you need an idiot to run it.
(5) The little Ewok - might be useful if George Lucas decides to produce the Final Trilogy, after all
(6) Luskin - this man’s brand of a-holeness is purely genetic, so no change
November 20th, 2008 at 8:36 pm
and there are serious declines in Germany today too…(courtesy of Calculated Risk)
http://www.youtube.com/watch?v=bNmcf4Y3lGM
Real Estate Downfall
November 20th, 2008 at 8:51 pm
Okay, so I am NOT one of these conspiracy types.
That said, this was basically ANOTHER drop-down day on the markets
in the last hour.
Someone convince me this is not co-ordinated hedge fund selling.
Most of these guys are gonna be gone for good soon anyway, so why not?
Hedgie A calls Hedgie B & C. Says “Hey, I got about $100M in redemptions
to do, what do you guys have?” They all get together, and unload at the
end of the day driving the markets dwon in the last hour. At the same
time, said ‘managers’, knowing what they are doing to the overall market,
can take some personal short positions and clean up on the other side of
the trade.
Am I off? I just don’t think so.
November 20th, 2008 at 9:05 pm
@Ny Stock Guy
same boat here. Half my money is still in my 401k mutual funds which were all growth and aggressive growth funds. Oops…didn’t wanna go to cash and take the penalties, but I coulda switched to bonds funds I guess. Buy & Hold is still something i’m dreaming about (don’t wake me up) - Any ideas? There are some fugly names in my mutual funds (pick any financial) and I feel I should at least switch to index funds or something. I’m 33, so any advice for longterm?
November 20th, 2008 at 9:08 pm
for all you trivia zealots . on dec 5 1996 some words were uttered that changed the landscape of markets worldwide. those words were NEVER uttered again by this maestro. thye may even be engraved on his tombstone when he meets his maker.
November 20th, 2008 at 9:21 pm
If 90% of investors are waiting gleefully for capitulation, then we have not reached capitulation. In fact we are not close to true capitulation in the real sense of the word. The market will not allow 90% of investors to be winners and 10% to be losers. Investors watching patiently don’t realize they are simply marking time until they too, reach a state of panic.
If every investor is using the same playbook, then the outcome will be different than what the experts have predicted. Just because we don’t make the same mistake twice managing the depression doesn’t mean we are taking the correct action. I suggest our great grand children will be making grandiose claims how the second great depression could have been prevented if only we had taken this action: (you fill in the blank) .
In this market, the only thing we know is that it is not like anything any of us have seen in our lives.
November 20th, 2008 at 9:25 pm
gregh: Any money market funds in there?
November 20th, 2008 at 9:31 pm
Oops, accidentially posted this on an old thread, so excuse the dupe if you’re getting the comment RSS feed.
Here’s a little piece of market irony. When GS was around 200, Goldman was calling for Oil the same price - $200.
Today, Oil touched just under 50, Goldman’s intraday low was 49. They’re in a race to 40 it seems - anyone taking bets on which gets there first? Long term, the world still needs oil. Long term, the world would be a better place without Goldman Sachs.
If one good thing comes out of all this, I hope it is the death of massive hedge funds. All those people pushing redemptions right now are out of the market, they may never return. I suspect a large number of those that do return will be a lot more interested in trusting their financial future to the only person who truly has it’s best interest in mind - themselves.
November 20th, 2008 at 9:35 pm
Let’s make this worse:
As everyone says, the s&p is the same as April 14, 1997 in absolute numbers.
But that’s UNCORRECTED FOR INFLATION?
What date would it be equal to, in inflation-corrected prices?
November 20th, 2008 at 9:42 pm
For ^SPX @ 752, what is “irrational exuberance”?
November 20th, 2008 at 9:59 pm
BelowTheCrowd @ 6:43
“…if he were to announce a strong candidate for Treasury, and that guy got on TV with anything even resembling a plan, the market could easily rally 10% in seconds”.
True. But he would have to say something that stock market investors want to hear. Something pro-business and pro-economic growth.
Obama has been awfully quiet lately. If Bill Clinton had just gotten elected president for the first time, it’s unlikely that he would be so shy.
November 20th, 2008 at 10:00 pm
OK, but hasn’t “Long Treasuries, Short every index” become the equivalent to “Long commodities, short Financials”?
Is this possibly the final bubble to burst?
November 20th, 2008 at 10:52 pm
the righteous wind behind the bear, so far, is about to get into some turbulence.
will that turbulence be a short-term effect or if it pulls the bear down remains to be seen.
November 20th, 2008 at 10:57 pm
Also, the final traingle on AAPL’s daily chart has a target of $60. will it get there remains to be seen.
If it gets there , imagine where QQQQ and SPY will be.
November 20th, 2008 at 10:59 pm
dano:
You’re off. Maybe hitting the pipe a little too much. If you haven’t been paying attention, 768 was a MAJOR, MAJOR level for a lot of technicians. When that level got breached, loads and loads of SELL orders were initiated.
In fact, some would suggest THIS is how a low gets made….
When everyone is looking for a certain level to HOLD, chances are that LEVEL will not hold. I’m seeing 727 as the next line in the sand.
I should probably be short tonight, but I see the risk/reward STRONGLY favoring being long stocks as we approach key levels, like 727, tomorrow. I’m not suggesting being long right now….I’m saying tomorrow…in the first few hours…when everyone is SELLING….might be a good time to dip a toe in.
If 727 gets snapped….then just forget what you’ve read here…….
- AT
November 20th, 2008 at 11:40 pm
who’s so f—’ing dumb that they’re not paying attention to, either, Steve Barry, or AT?
forget what I’ve posted, you, still, have GTFKM..
explain it to your progeny, a la Steve Spears in nearby Video Thread..
November 20th, 2008 at 11:46 pm
Denise Yamada has pointed out that 13 of the Dow 30 stocks have recently traded below their 2002 lows. Doesn’t bode well going forward.
November 20th, 2008 at 11:53 pm
AGG,
This is a reponse to a post WAY up there. I used to do patent research for for private equity firms when they were considering investing in different companies. This is REALLY boring, so sometimes I would look for some of these patents, and I found a ton of them. It seems like all the big oil companies have been buying these up for a while now. It got so bad that engineers started trying to get patents on inventions that they never even made in the hopes that they would get “bought out.” It was pretty amusing when I would find out about some of these phony inventors who never actually made anything but would patent it. These patents would be so esoteric and unclear (more than normal) and I finally understood that most of this was to try and fool the oil companies into buying them out. It didn’t work all that often, turns out texaco can hire even smarter engineers to figure out that most of this was BS.
On a side note. If you ever want to do some fun research checkout “Rudolph Gunnerman” he “invented” a formula to combine oil and water to get better gas mileage for your car. He even made the front page of USA today newspaper. Turns out you can’t mix oil and water (who knew)? This guy has made Millions making fake companies and selling them off with inventions that don’t do jack. Amr Elgindy or Anthony@pacific.com figured him out right before he went to jail. His stocks still trade “SUF.” Fun stiff to read about.
November 21st, 2008 at 1:11 am
I wonder how much faith we can put in attempts to guesstimate the probable lows, even a range.
Assuming Mish Shedlock is right about deflation (and he presents a pretty compelling case IMO) being the situation we’re in now, how valid are the methods we normally use to evaluate a “fair” (logical, etc. take your pick) market price?
Just curious.
November 21st, 2008 at 2:08 am
Friday will be a big up day in stocks. Options expire then and PPT can do their big push up for the weekend and help the US psychology. Then next week we will continue down.