Since the market peaked in October 2007, I have pointed out (repeatedly) when TBP traffic soared in response to the credit crisis. Each time, we noted this was a good contrary indicator, and used it as a good short term buy signal for a trade.

And after each short term rally, the public angst was proven correct, and lower lows were had.

This month, I could not help but notice the opposite — that traffic dropped substantially,- from over 2.5 million page views in March to just over 2 million in April.

Not coincidentally, we had a rip roaring rally over the same period of time (during which we were suitably bullish). As the economy’s free fall slowed (improving 2nd derivative), the traffic slipped.

Whether it was the stimulus or the Fed funded parachutes opening, people searched less for news on the crisis. I presume this is a function of psychology — investors are less nervous, spend less time flailing about for answers, and revert back somewhat towards their old media consumption habits. AKA Complacent.

I contacted a dozen other bloggers, and nearly all were experiencing the same traffic slide. (Even the exception said their traffic was mostly due to a new Twitter related project).

Which leads to the obvious question: From a sentiment perspective, does this have any meaning? We did well using the oversold/high traffic spikes as a long side entry point — at least for a trade. Does this mean we can use the overbought, traffic drop off as a sell signal?

We clearly do not have enough data to draw a firm conclusion. However, if the pattern holds, we should see a short term pullback (not a wild conjecture given how far this market has run in so short a period), followed by higher highs.

The psychology has clearly shifted. But so too has the risk/reward calculus.

>

Previously:
Blog Traffic as a Contrary Market Indicator (February 4th, 2008)

http://www.ritholtz.com/blog/2008/02/blog-traffic-as-a-contrary-market-indicator/

Traffic Peaked Again Near Short Term Bottom (July 18th, 2008)

http://www.ritholtz.com/blog/2008/07/traffic-peaked-again-near-short-term-bottom/

Crazy Fannie/Freddie Traffic Spike! (September 8th, 2008)

http://www.ritholtz.com/blog/2008/09/crazy-fanniefreddie-traffic-spike/

Category: Contrary Indicators, Markets, Psychology, Web/Tech

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

134 Responses to “Blog Traffic Reading: Complacent!”

  1. Super-Anon says:

    Sentiment seems to be changing from “bear market rally” to “bear market is over”.

  2. YouthInAsia says:

    Hi Barry, I am a very small time player (60k in my 401k and 20k trading account as a “between jobs” 27 yr old engineer) but your blog plus a couple others were my heros when you guys convinced me to get my 401k the hell out of the market just before the plunge in September, saving me 25% in losses. I spent plenty of time here reading where you thought the market was headed and reading the responses. But since you started writing the book, your in depth commentary and your personal thoughts about where you thought we were headed basically disappeared. Personally, I’m not interested in seeing the videos you link to without your thoughts. I enjoy the guest authors you have here and value their opinions, but they haven’t been as helpful as you were in figuring out the direction of this thing. Like I said, I haven’t paid much as much attention lately, but I can’t remember the last time you gave us a little taste of what your Fusion software was telling you.

  3. leonardcrook says:

    I’ve been visiting less frequently, I know. Mainly because less seems to be happening each day. For the past few months, the news has so dominated everything that I turned to your wonderful blog to try to make sense of it all and for some sensible commentary. Still a loyal reader, just not 8 times a day. What this says about market sentiment, I haven’t a clue.

    ~~~

    BR: thanks for the kind words. The book was fortuitously timed.

    As to trading the bounces, we had some good calls in Oct, Jan and March. (I’ll dig up the links)

  4. Mike in Nola says:

    I came here to read about how bullish the new unemployment numbers were. What can be more bullish than record high continuing unemployment claims. And all I found was this. Sheesh.

    ~~~

    BR: I was tra?elling today — the Macro Notes covered the UE data (at right)

    Learn to click thru there for some quick color on new releases (I,d be less cranky and more appreciative, you crustry old goat!!)

  5. jason in charlotte says:

    I guess the question for us going forward is:

    Will Barry now lean on the market in order to drive up traffic? Inquiring minds have their suspicions :)

  6. ben22 says:

    I don’t think you can draw much from this observation, it’s too short of a period of time. I made the comment yesterday that the money poll in Barron’s showed 59% bulls (I would think it would be higher before this rally ends 80-90%)

    I’m also still seeing lots of big money “selling” the rally. Bob Doll is a good example. On CNBC this morning he seemed to be looking for a correction or sell off any day now. Lots of people saying the same thing. Bob Doll called the bottom maybe 100 times last year. He once again said today that 3/9 was the bottom but the very next statement was he was looking for correction. In other words, he is skeptical and lots of people still are. I take this as a better signal. Still looking for 965-1000 on SPX before another major drop, certain there will be some corrections or sideways movement like we had in April along the way but for now the general trend of the bear market rally still seems to be up.

  7. ben22 says:

    Deflation/Inflation:

    anyone see the article on page C1 of the WSJ today?

    Very interesting article about debit-card use and how it has recently overtaken credit use. Great chart at the top of the page as well. This seems to me to be a very important development.

    When I read the article and looked at the charts it seemed to me to almost prove Credit Deflation is in full effect. If this is the case the bottom was not on 3/9.

  8. Mike in Nola says:

    ben22: Don’t read thw WSJ except if I find a free page. Thanks for the heads up.

    Sounds like what I thought about yesterday’s Visa report that the increase in debit card use v. credit card use is more evidence of a shrinking amount of credit and is deflationary. Pretty simple concept, although no one in the MSM seemed to pick up on it yesterday that I saw.

  9. aitrader says:

    So you’re not just blogging for fun, eh? There is an ulterior motive. Admit it Barry, we’re all just guinea pigs. Yup, just cogs in the Ritholtz-o-matic trading machine. I knew this place was too good to be true.

    I’m gonna line my cage with a copy of your book…*squeek*.

    :-)

  10. CNBC Sucks says:

    Republican Ritholtz, even my traffic from Web searches on terms such a “trish regan breasts”, “dennis kneale blithering idiot”, and “erin burnett panties ebay” is down. Let me tell you why: The United States can print as much money as it wants, so much so that it can print money to pay off its own enormous debt! It can print money without fear of inflationary repercussions because the rest of the world prints money to try to make sure the US dollar stays strong, so that not only can they continue to export to us, but also to make sure the stockpiles of paper money we paid them for our gluttonous prior consumption continue to be “worth” something.

    When you can print money with impunity, you can reflate any economy. Even the ‘tards at large US banks should be able to make money when their cost of borrowing is virtually zero. Couple that ability to manufacture a consumption-driven recovery – one of the few things the US “manufactures” well, BTW – with systematic fudging and / or spin of economic data such as GDP, inflation, unemployment, and earnings, along with politically friendly rules changes in the middle of the game on things like short selling and mark-to-market accounting, and all the fundamental factors that should determine genuine economic health fly out the window. Of course, Larry Kudlow’s hocus-pocus reflationary economic system should eventually pay the piper in a truly catastrophic meltdown, but doomsayers have been saying that for a while. Guys who try to think rationally like Mannwich and lefty have no chance against the global fiat monetary system and the world’s need to sustain an economic systems of deficits and debt. The economy is becoming a non-issue again, for now.

    Page views go down because crack is back on the menu, crack addicts.

  11. ben22 says:

    Wow, good article over at Zero Hedge about the Bidens and a possible hedge fund scam. Might be completely wrong but still worth a read.

    I loved this line at the end:

    Regardless, it is only a matter of time before Joe Biden ends up on the list of people in which the president has 100% confidence

  12. I-Man says:

    Sounds right on to me…

  13. leftback says:

    Complacency? Sure, the bear market is already a fading memory*. It’s Morning in America.

    I come here just to hang out with the other bitter, twisted, wounded bears.
    Meanwhile, young franklin411 is bullish and popular and is getting all the chicks.

    The bulls have happy CNBC anchors, fast cars, yachts, Rolexes, champagne, caviar and beautiful women.
    The bears have Barry and Mish, a Chevy Impala, a row boat, black coffee and last night’s pizza.

    Sounds like Bobby Doll was thinkin’ of selling the Spoos and buying the Twos.
    ben22: you must be seeing a lot of long interest in pets.com today?

    * Please engage irony detection.

  14. CPJ13 says:

    I can only speak to my engagement personally but I’m 100% out of this market for the time being – and financial blog page views have dropped. There are only so many ways one can re-phrase what I think we all see happening, and frankly I don’t need any more information to understand that this ‘market’ is a joke. I’m buying distressed RE backed securities – something with a tangible, understandable value based upon the underlying collateral – and I’m not going to be back into equities any time soon. It’s not a market when it’s not free, and this is most definitely not a ‘free market’ atmosphere.

  15. ben22 says:

    @ Mike,

    That’s how I’m reading it as well. The media won’t pick up on deflation if that’s what we continue to get until we are deep deep into it.

    Another comment I made yesterday is that if we approach 1k on the SPX then instead you will hear the dummies on CNBC making comments about how the govt has done enough and all is well. They will ignore any signs of deflation at that point and only focus on the “green shoots” it will be a replay of how all this started.

    Rememeber? Sub-prime was contained….

    Keep a close eye on the long bonds in the coming weeks.

  16. karen says:

    LB, not sure where I fit into your Bull/Bear descriptions. I prefer to think of myself as a Realist, I guess.

  17. ben22 says:

    lefty,

    lol @ pet.com.

    that’s calmed down some. I think a few johnny retails just stuck money in C at $4, and they have lost. They aren’t sure what happened yet but confident it will come back? It’s cheap remember. Then again, they probably also bot AAPL at $120, so they’ve made a couple $’s.

  18. hopeImwrong says:

    Traffic down = news (and especially bad news) exhaustion. For most people, summer is coming, they are checking out (from intense economic worry) and chilling out, and focusing on their lives (a very healthy option). Some have a plan for the future related to investing, others don’t, but they all are a little tired of this. They need a break. They don’t see an advantage to informing themselves further to try to game the market. After all, it’s rigged.

    The market (except for the still elevated daily volatility) is dull right now. The economy and unfolding events is not really dull in my opinion, but that’s a different beast.

    Never short a dull market.

    Buyers are still in control. We seem to need a disruptive event to shake confidence for a down move of any significance. Over bought conditions just don’t seem to be enough right now.

  19. ben22 says:

    Karen,

    I’m thinking gold to 680. I’m not going to short but it looks like it is correcting and the trend is down right now.

    What do you think?

  20. cttfinder says:

    Anxious people are coming to your blog just like anxious people watch CNBC.

    The decline was overdone in part due to all the anxiety raising by folks like yourself.

    The bear is over so get used to your lower traffic.

    ~~~

    BR: Yes, it was all my fault.

    Not the irresponsible lending or the huge leverage or the derivatives — No, it was the commentary that did it.

  21. Marcus Aurelius says:

    We’ve gone back to ignoring the 1 ton (formerly 800 lb.) gorilla in the living room.

    Every day, horrid news — news that would formerly make the front pages of most major newspapers and send the markets reeling, like today’s: “Chrysler to file for Bankruptcy” — is added to the already unprecedented level of negative economic indicators, yet the market goes up.

    Something here is badly broken, and at an undetermined point in the future we will pay the price for not fixing it.

    Someday, perhaps when we run out of bananas, the 1 ton gorilla will get up off of its haunches and give us the thrashings of our lives.

  22. franklin411 says:

    @aitrader:
    I think you’re actually right. Barry is using us: If you haven’t noticed, every time the comments section fills with wacky tinfoil hat theories and angry “why won’t this damn market go down?” posts, we gain 10%?

    ***We are the contrary indicator, people!*** :)

  23. karen says:

    ben22, i actually think today’s low, $880, should hold. But nothing lower than 860 as we sketch out the right shoulder on this giant R H&S. (My real line in the sand is $840, however.)

  24. Chubby Davis says:

    Traffic is down all over.. yesterday I was heading out to the beach and before I knew it I had a Sailor Jerry and Grapefruit in front of me!

  25. Marcus Aurelius says:

    Gold is behaving in a very interesting way. The downs, which have been frequent in the US markets and occasional in the European and Asian markets, have been big fast moves, followed by steady increases following immediately on their heels. Institutional gold holdings are being sold, private gold holdings are being bought. Big players need liquidity in spite of effectively negative interest rates. I think that the nature of these large drops in gold paint a very bearish picture.

  26. DL says:

    karen 10:12

    There are three types of realists: (a) long realists, (b) short realists, and (c) in-cash realists.

  27. C_G says:

    We need to get past Obama’s first 100 days with flying colors.
    They also want good press on all of the Sunday shows this weekend.
    After this coming weekend the markets are allowed to fall.

  28. ben22 says:

    Karen,

    I was also watching that $880 number. Gold got hit hard earlier this week but failed to go below $878.67. If we hit the low levels and can’t bounce above $919.40 I’ll probably maintain the short term bearish outlook.

  29. karen says:

    ben22, yeah, the day we didn’t take out 920 i was trying to sell my ugl but got greedy for a couple pennies… typical of me : )

  30. catman says:

    This is not a morality play. For the moment it would be wise to ask yourself if the average bear can grab its ankles.

  31. Mannwich says:

    Another day, another bull market. Unemployment claims came in a touch lower than the 4-week moving average. Seems like a healthy economy to me. I’m standing aside these days and watching with mixed emotions, part amusement/bemusement/horror.

  32. karen says:

    Jeff, this explains everything:

    Chicago Business Index Signals End Of Recession In December
    10:34 AM ET 4/30/09 | Dow Jones By Howard Packowitz

    CHICAGO (Dow Jones)–An index measuring business activity in the Chicago area climbed sharply in April from a nearly 30-year low in March.

    The data released Thursday by the Institute for Supply Management-Chicago suggested that the economy may have hit a bottom in March and that the “deep” and “broadly based” recession will conclude by the end of this year.

  33. Paul S says:

    Chrysler just went under. I suspect traffic will be back up soon.

  34. rww says:

    It looks like we have achieved stability and that feels good to the market, as it should. But it is at a very low level of economic activity and there is nothing in sight to drive the economy higher from here.

    The housing numbers for March were atrocious and unless the Spring “selling season” materializes despite March, we will have another year of losses for the banks and another year of economic stress for too many families.

    Sooner or later that reality will sink in. Probably later.

  35. Marcus Aurelius says:

    Paul S Says:

    “Chrysler just went under. I suspect traffic will be back up soon.”

    Rally!!!!

  36. Mannwich says:

    @karen: If that’s true, I smell a double dip coming. And not the ice cream variety. I think these “green shoots” are a major head fake. The feds are trapped now. The minute they stop backstopping everything, it will all fall apart again in even bigger fashion than before and if they keep backstopping everything, some other adverse (unintended?) event will cause it to fall apart in a different fashion.

  37. franklin411 says:

    @rrw
    Never fear. Spending from the Economic Recovery and Reinvestment Act should kick in in earnest during the 2nd half of 09 and the first half of 10.

  38. harold hecuba says:

    the squeeze continues. path of maximum frustration for bears is still higher. it would have been to easy for everyone if the market had gone straight back down. on another note i have to just sit and think in amazement. here we are where no one has to work, people are compensated hundreds of millions for driving their companies into the ground. we have a fed chairmen and treasury who are doing everything they can to cover up massive fraud, we have an economy that is supported by gov. we have a gov that owns a car comapny an insurance compay, investment banks, we have a gov that backstops all your risk of loss people don’t need to pay mortgages. the taxpayer has bailed out the banking system so they can loan money to us but they decide to simply speculate and pay bonuses and we have a WHO category five virus floating around. all the reason for assets to skyrocket thank god for those green shoots

  39. Bruce in Tn says:

    I did notice something interesting about the spending numbers released this a.m.

    Wages and salary actually went down .5%

    and savings ticked up from 4.0 to 4.2%

    http://briefing.com/Investor/Public/Calendars/EconomicReleases/income.htm

    This seems to me to be the prudent thing to do (the savings rate is trending up at a moderate rate) and I don’t see how peeps will feel wealthier if wages and salaries are going down at this rate…

    Will stick my toe in with the trend next week…

    Good luck to all.

  40. Mannwich says:

    @rww: I drove around my area yesterday to meet a friend for lunch. Counted for more “For Sale” signs than “Sold”, by far. I’ve been beating this drum for a while now, but if those homes don’t sell this spring, they won’t sell this year, period, and I wonder how many of them HAVE to sell? Otherwise, why would anyone in their right minds sell now?

  41. ben22 says:

    @Mannwich,

    I went to visit a client in center city Philly last week. They live in a higher end area downtown, not sure what this means but I noticed tons of For Rent signs where previously they were all for sale. Several were on the clients street, they said the people didn’t want to take the offer prices so just decided to try and rent instead. Many HAD to move b/c of job change/job loss.

    Not sure exactly what that means but that’s what I saw.

  42. Mannwich says:

    @ben22: I’ve seen those too – more “for rent” signs. I’m telling you, higher end homes ($600/$700K – $1MM+) are not moving AT ALL here in South/SW Mpls. The homes that I see moving here are more in the $150-$350K range.

  43. rww says:

    @Franklin. If you think the stimulus is large enough, then you have no idea how deep and widespread the hurt is.

  44. leftback says:

    DL Says: “There are three types of realists: (a) long realists, (b) short realists, and (c) in-cash realists.”

    So true. (c) in-cash realist – is looking good and mostly where I am today.

    Karen, as of this week, you are gold, caviar, champagne and a perfect Southern California beach day.
    I am scrap aluminum, cold pizza, Schlitz and freezing rain with sleet on a grey day in Mechanicsville, PA.

  45. usphoenix says:

    Our brains have a very nicely evolved ability to kick endorphins in after intense pain, numbing us out. Our little neurons can only fire so long before they give up. I suppose that includes reading and writing about angry, anxious topics.

    So I would say we are into the Boiling Frog phase of things. Ah, the water feels so comfortably warm now that the market’s up. 401K sheeple can take comfort in their rising values. And expect continued gains.

    As we gradually ease our country deeper into the Banana Republic of America phase with the GS oligarchy firmly in control, and the market remains low volume driven by a few big traders (read investment bankers like GS), you have to be a six sigma masochist to persist.

    We all still knows what has to happen, we just don’t know when.

  46. Bruce in Tn says:

    Unemployment claims since 2008:

    http://www.ows.doleta.gov/unemploy/wkclaims/report.asp

    take a second or two to see if today’s numbers are much different or not…

    Since the end of January, how many times have we been under 630K?

    Hmmmm…..

    Wages, salaries…down by two full per cent since November…

    Savings rate from negative to now 4.2% (Velocity of money?)….

    Initial claims about 640K for months….

    All of us here (except some of the newbys like Frankie) know that very much of the market is due to psychology….and that is so subject to change…

    Interesting…anyway.

  47. Onlooker from Troy says:

    More than at any time since this rally began there really feels like a complacency setting in to the market. The VIX is down, and across the blogosphere even those who’ve been bearish are giving in to the “inevitability” of this “new bull.” My own emotions are screaming for me to drop my bearish outlook and buy, so I know that’s what’s happening to others. That of course is a big contrarian signal, along with the many technicals indicating we’re topping.

    So I’m holding on, with my gut wrenching. I’m certainly rather new at this active market watching, and I definitely underestimated the power and psychology of a bear market rally. No wonder it’s so tough to resist the siren song of a rising market.

  48. call me ahab says:

    I do not understand the rally- spending down, income down, Chrysler BK which could convert to liquidation and additional unemployment-

    what gives- I am mostly cash but do have some short ETF’s that are upside down- major players trying to flush out shorts?

  49. Mannwich says:

    @Bruce: Nevermind with those pesky “facts”. It’s spring! People want to be happy and believe things are improving. This could go on for a while just like the nonsense we saw in ’06/’07.

  50. HCF says:

    The word I keep hearing in the MSM is “unexpected.”

    GDP is unexpectedly worse than predicted; Weekly jobless claims unexpectedly rise; Weekly jobless claims unexpectedly fall; Company ABC unexpectedly beats estimates; Company XYZ unexpectedly misses earnings.

    In short, the data is fairly split and the future is very murky. Also financial analysts are terrible at prediction, but of course, we all knew that… Of course, most of us are terrible at it too!

    Still think we’re headed down in the intermediate term (months), although it could easily test 200 day MA on Dow and S&P (around 9k and 960 respectively). Of course, I’m just another monkey flinging darts at the board so I’ll probably be wrong!
    =)
    HCF

  51. bubba says:

    Mannwich says,

    “I’m standing aside these days and watching with mixed emotions, part amusement/bemusement/horror.”

    Have you thrown in the proverbial towel, Manny? just loaded me a chunk of SRS in the 22′s; been in and out of this horror show since the high 30′s and have the scars to show. For the Leftbacks of the investment world, it’s only one of my three “kitchen sinks.” (Here’s hoping LB can see his nonsensical use of figuratives. Perhaps it’s that English sophistication that I need to acquaint myself with.)

  52. tranchefoot says:

    I think this rally is nearing its end. Bernanke said no plans to increase treasury purchases. He was certainly aware of the GDP numbers, the likelihood of Chrysler bankruptcy, etc. The market has really been counting on more QE in response to bad news. Now what?

  53. harold hecuba says:

    sorry nothing has been resolved. bank assets will continue to deteriorate, just look at the goodwill writedowns. high end real estate foreclosures are just starting. CRE will bust, credit card debt will bust and sooner or later most likely later but who knows the bond bubble will bust. it’s at this point we will have the levelling off.

  54. Mannwich says:

    @bubba: Not at all. I haven’t sold any of my short ETF positions (trimmed SRS a little during the one rally we’ve had in the last 25 weeks, it seems), but that’s it. I’m just not doing anything further right now. That could change at any minute, of course. I’ll be a buying SRS, QID and maybe FAZ and SDS again in the future. Have been adding TIPS and GDX to my longer term portfolio as an inflation hedge. Have DIG as well.

  55. karen says:

    bubba, i think you need to acquaint yourself with a lot more than English sophistication. LB’s use of ‘figuratives’ is one of my favorite aspects of him. And, as my mother always said, if you don’t have anything nice to say, don’t say it at all.

  56. tagyoureit says:

    I guess you could use overbought/low traffic as a sell point, it’s not much different than overbought/low volume. I check the blog a couple times everyday during the work week, but I guess I should keep eye on the sitemeter too.

    Long SPY position closed this morning, I’ve been mostly an in-cash realist since Jan 2008. I’m expecting a pullback some time in the next month or two, but I’m not confident therefore I’m not shorting. It feels too risky for someone like me to short, it’s Joe vs. Pro and I’m Joe. I’m out of the rally for better or worse.

  57. KJ Foehr says:

    Complacency is the norm, and, like bull markets, it can continue for years.

    It can be a contra-indicator in a bear market, but not in a bull market. So the question is, are we still in a bear market or a bull market?

  58. Mannwich says:

    @KJ: It’s not even close to a real “market” anymore. More like a “bullshit market”. Hasn’t been a real “market” for quite some time now but this is truly the uber-bastardized version of it.

  59. Oleg says:

    I am about to stop reading TBP blog for the simple reason that I haven’t read any fresh thoughts here lately. People read blogs not so much for knowledge as for entertainment: clever ideas, fresh outlook, nicely turned phrases, plain funny stuff. Once the blogger gets complacent – the readers go elsewhere, including to all those sites from which the fancy charts are copied on TBP.

  60. EAR says:

    “You know why the put oxygen masks on planes?”

    “Oxygen, gets you high. In a catastrophic emergency, we’re taking giant, panicked breaths… Suddenly you become euphoric, docile, you accept your fate.”

    Substitute oxygen with a mix of optimism and an inability to comprehend the worst case scenario.

    Maybe it will be enough to keep society on an even keel when we drop again?

  61. Chubby Davis says:

    Were in a Swine Flu market! But is it Kosher? Oy!
    Good Day Now.

  62. Greg0658 says:

    BR – “traffic dropped substantially” me – there were server issues with at least a couple regulars

    YouthInAsia – “Hi Barry, I am a very small time player … you guys convinced me to get my 401k the hell out….”

    airtrader – “Admit it Barry, we’re all just guinea pigs”

    me – hum .. didn’t mean to create a traders world turmoil environment .. just showed up to understand how drop of near 500 points happened in a second about 18 months ago .. & got caught with this industries traits

  63. Onlooker from Troy says:

    KJ Foehr Says:
    April 30th, 2009 at 11:39 am

    Complacency is the norm, and, like bull markets, it can continue for years.

    It can be a contra-indicator in a bear market, but not in a bull market. So the question is, are we still in a bear market or a bull market?<<<<<<<<<<<<

    Good point. We have so much negative news ahead of us that it just seems unbelievable that this market is priced for all that.

    As Dr. Hussman says: “the Market Climate for stocks was characterized by mixed valuations – moderately favorable on measures that assume a sustained recovery to above-average profit margins, but overvalued on measures that assume normal historical profit margins in the future.”

    But that’s probably based on those old quaint notions of valuation. It’s a new world, don’t you know?

    What kind of profit margins would you bet on? Some time in the future we’ll get to real bear market bottom P/E levels. Who knows when. This world is still delusional and in deep denial. I’m starting to understand just how hard that is to fight.

  64. H Salmon says:

    Reality is reality. And some of us made some money on the downturn. But we are facing a storm of industry and government PR combined with a populace and media that believes in buying dips, buy and hold, and thinks that nothing has fundamentally changed.

    Those of us who believe that this time is different and we are witnessing a secular change may be proven right but right now it is too exhausting to face the onslaught.

  65. Transor Z says:

    It seems to me that what peeps need to know is who is buying. Without that crucial piece of information it is impossible to understand the sentiment that may or may not be driving the rally.

    I am fascinated by the ongoing discussions here by very intelligent people trying to understand what is going on. IMO discussion here has fallen into a bit of a rut over the last couple of months (I started reading the blog last September) but I think it’s a rut of people waiting… waiting… waiting… for something that all of their analysis and instincts are telling them should have happened/should be happening/should be shortly happening. But isn’t.

  66. Mannwich says:

    @Transor: I think it’s partly due to mental fatigue from that waiting. I can only speak for myself though. We need to remember that a crisis this big and complicated could well play out over several years. Pace yourselves…..

  67. hopeImwrong says:

    Getting close to possible bear trap category. As soon as the bulls think they have the all clear for the next leg (and the bears are sick of getting stopped out), we could correct here. Keep your eyes open and you options open here. Risk is high.

  68. CNBC Sucks says:

    Jeff – I think the can has been kicked. Our old age will probably be horrible, so why not just enjoy the Larry Kudlow Economy?

  69. Mannwich says:

    On a more important note, who will hire Bob Nardelli to be their next CEO now that he’s helped run two companies into the ground? I mean, since it’s the Tyranny of the Incompetent (hat tip, leftback) we’re dealing with here, this man will no doubt not only walk away with another shameful severance package but will also then be recycled at another company that he could bury yet again while he fills his own pockets with the loot. Who will it be? I’m guessing maybe Palm or one of the airlines or a big player in retail. Maybe Macy’s? Nice work if you can get it.

  70. cjcpa says:

    Ben22
    home town philly…..

    For Rent means that they could not sell it at a price that they either liked or covered the payoff. But the place is vacant. Renting is a way to cover most of the expenses while they wait for things to turn around. It is my opinion that holding it longer just means it will sell for less. Especially after rates rise.

    I sold my house last year for a crappy price while several around me switched to renting. I am still waiting for the houses around Merck to fall in price. Pharma companies have sustained this area longer than most of the nation. Sales prices are now officially down. Listing prices not so much. Again, they will either drop prices or hold out for better with a ‘for rent’ sign.

    IMO- I’d get less selling in 09. So, I’m out.
    Many others believe the turnaround is just around the bend.

    cjc

  71. ben22 says:

    Couple things to consider for May for all those getting short right now:

    Btwn 1985 and 1997 May was the best month with 13 straight gains, since then we are up 5 down 5.

    May is the 2nd best Dow and S&P month since 1985.

    Since 1973, post-election year NASDAQ Mays rank first. Given the recent strength in names like AAPL and RIMM I’m not sure it’s smart to buy QID right now.

    If you were using simple timing it would probably be smarter to go short the week ending prior to Memorial Day. Memorial Day Week the DOW has been down 7 of the last 12. Then the typical weak summer begins.

    As I look back over April the month moved sort of sideways instead of down after the huge spike in March, so maybe what we didn’t achieve in price we might have gotten in time, SPX to 965-1000 before the rally is over.

  72. centiare says:

    I’m surprised that CNBC is the only person who appears to understand what is occurring. Look boys & girls, it’s really quite simple: while the Fed & Treasury cannot create a new paradigm for economic growth, they certainly have the ability to prevent an economic collapse.

    This is how it works: the FedGov & homeowners are viewed as the engines behind the FIRE economy. With the Fed simply printing the money to purchase either T and/or GSE debt, this serves to keep interest rates low, and more importantly, act as an inflationary agent.

    The key is coordinated, global inflation so that all G20 currencies stay in relative position. Since this is the target, and easily within their ability (as has been demonstrated so far), why is it so surprising that the market is rising?

    At the end of the day, the house that is worth $500k with a $600k mortgage will be worth $1m, the guy making $100k will be making $200k, and the Dow will double to 16k. Has anything fundamentally changed? No, other than prudent savers will have lost all their savings.

    But, as I noted in a previous post, who are these savers? Well, they are typically older; which means they’ll be gone soon – no pension, no medical, no more “useless eaters”.

    In the mean time, we get a “zombie” economy where the state consumes all available resources, starving off capital investment in new technologies and emerging market opportunities. We’ll have 10%+ unemployment and lower living standards, but not Mad Max.

    Mad Max could occur when we finally get a de-coupling. At some point, a country/region will emerge that will be the new hot spot. They will attract entrepreneurs and other ambitious people who want to make something of themselves. The USA will merely resemble the last 200 years or so of Rome as it slowly decayed.

  73. DL says:

    karen @ 11:36

    “as my mother always said, if you don’t have anything nice to say, don’t say it at all”

    That might explain your aversion to more frequent posts.

  74. Mannwich says:

    I smell a bear trap here.

  75. Mannwich says:

    @centiare: I’m a saver. And I’m not old. And I’m pissed.

  76. karen says:

    DL, yup! : )

  77. asiankida says:

    I read this on my google reader, so I’m not sure if that counts as traffic

  78. CNBC Sucks says:

    centiare, thanks. I do not call myself The Great CNBC Sucks for nothing.

    Be prepared for Mad Max, someday. It’s gonna take more than a gun, a few bullets, some canned food, and a few ounces of gold. I still have faith in Boobs for Barack Obama, but he could well be The Greatest Can Kicker of All Time.

    In the meantime, enjoy the financial and economic equivalent of The Matrix, you crack addicts.

  79. karen says:

    my internet was down… looks like i missed something : )

    the matrix it is!

  80. Mannwich says:

    The old bubble = flipping homes to each other. New bubble = flipping stocks to each other. The end.

  81. centiare says:

    @Mannwich: Who outnumbers whom? Prudent savers or foolish spendthrifts? Now, in a democratic republic, why is it surprising that the same majority votes to utilize state resources towards their own personal advantage?

    Who is the greater fool – someone like me who lives conservatively, or my neighbors who HELOCed their homes, bought a bunch of toys (vacation homes, RVs, boats, cars, etc), and are now living rent free (using the old ‘show me the mortgage’ ruse)? All the while counting on both the USGov & Calif to pass add’l laws to prevent/forestall/delay/complicate foreclosures?

    Anger, or any other emotion, has no place in an investor’s toolbox. The key is to think like the USA isn’t your country – view it as Zimbwabe or some other external region/state that is all f*cked up. What are the short-medium-long term effects of the current policies? How can you make a buck and get out?

    That’s the key.

  82. CNBC Sucks says:

    karen, in The Matrix, people live in what they think is reality, but it is a mental concoction created by machines that have taken over the world. In our Monetary Matrix, traders trade based on what they think is reality, but asset values are governed by a financial and economic concoction by bankers that have always been in charge of the world. If you play by their rules, maybe the machines will let you think you are eating “steak”. The machines probably give you a better deal than the bankers.

    I take back what I said about Mad Max. I think there is a chance that even if the US regresses to a third world country over the next few decades, the transformation will be primarily non-violent. Still, the economic shit sandwich that will be served to average Americans will taste awful.

    Solution: Do not be an average American.

  83. dead hobo says:

    The market is being fixed by someone with a sense of humor. It bottomed at 666. It topped at 888. So, what’s 777 going to be?

  84. I-Man says:

    I got 777 or 770 as a solid downside target…

  85. Mannwich says:

    @centiare: Oh, I agree. That’s what I’m trying to do here. It hasn’t been working lately but I remain patient, but wholly irritated.

  86. I-Man says:

    And I’m not a Fibo expert… but that looks pretty close to a 50% retrace of the whole move off the March lows…

  87. Mannwich says:

    Slow, steady selling here (reminiscent of the slow, steady buying we’ve recently seen). Is this a turn or a head fake?

  88. dead hobo says:

    Karen,

    It’s not the matrix. Existence is only a computer program like the Sims, but very futuristic; maybe 500 years from what we perceive as now.This may be the penitentiary or what passes for life in a society with nothing else to do, or a science experiment in theoretical physics and we’re simply an interesting effect, or something else. God might be a snot nosed gray who likes to wear futuristic ear pods and he’s just bet on whether some ant in the maze will turn right or left.

  89. dead hobo says:

    Or the market is being fixed by someone who likes to fuck with bears, and we’ll see new highs in a few hours or tomorrow. HA HA. Stupid bears.

  90. bubba says:

    karen/Lefty’s mum Says:

    bubba, i think you need to acquaint yourself with a lot more than English sophistication. LB’s use of ‘figuratives’ is one of my favorite aspects of him. And, as my mother always said, if you don’t have anything nice to say, don’t say it at all.

    Lefty’s a big lad, surely he can fend for himself? I like calling BS when it warrants, just one of my many quirks — it’s what’s attracted be to Barry’s blog. Your boy Lefty, while no doubt being very knowledgeable (as I’m sure you are) on the financial markets/economy, (I don’t deal in this area in my day job, in fact one might say its the opposite arena…our goal isn’t really to make as much moolah as we can.), he strikes me as an over eager pretentious boob who likes to show off his wanker (financially speaking). So I like to have a little fun calling him out on his many little, shall we say “getthefuukouttahere” blurbs. e.g. where I am, when one says they’re “kitchen sinking” something…it means being “ALL IN” (yes, I know LB you mean on the short side). And if that’s so, you can’t be “all in” some more when the market keeps exploding higher….that is w/o taking a loss. But all we get from your boy Lefty is…”another great day for our snooty frooty fund blah blah blah….”

  91. Bruce N Tennessee says:

    I agree that the majority of the posting here is still of the wait and see variety…since I am of that persuasion let me just review a little of my own investment history.

    I have been in short term cd’s for the last couple of years…unlike Youth in Asia who posted early in the thread, my net worth and investments are typical of what Barry’s research has as the median for TBP..

    I have done my own investing for almost 25 full years now, and have learned that it is easier to invest in bull markets than any other time…when corrections occur, if you are not nimble, you can be severely hurt…and I have many friends who were crushed in the tech bubble, and again, here.

    I am never anxious any longer to buy because others are doing so…the market has to seduce me, and as grumpy as I can be about investments, that takes some doing.

    Unlike previous corrections, there are elements here I am not used to, and therefore am less willing to listen to the siren call of the bounce.

    Housing ATM, a very big part of the paper wealth, is NOT back, not close to back.
    Savings rates are, and have been, trending higher. People trying to repair destroyed wealth and get out of debt.
    As Steve Barry points out often, the consumer has not worked off all time debt levels…this is just starting.
    Overseas…Germany, Japan, England, Spain, Russia, France…and Canada, Mexico…these economic numbers are not yet showing anything other than some slowing in the worsening…read what you read…don’t read hope into hard facts.
    Fact is, when I invest, I don’t diversify..I narrow my investments in the surest environment I can find. I have been 100% invested since 1998 for less than 36 months total. One of my 1998 investment dollars in now worth about 6.50…so I suppose you could call me a market timer…but it is based on liquidity..and here I am having problems figuring out if liquity is still decreasing or now increasing…I would say based on the size of the problem, liquidity is decreasing (due to all the factors covered here and in the media)…

    So, there you have it…still waiting…still patient…still watching Franklin and glad he’s enthusiastic…

  92. MRegan says:

    F @ 5.80 that is a 100%. Thanks, Mr. Market.

  93. Mannwich says:

    Nice work, MRegan. I couldn’t pull the trigger. Damn.

  94. Transor Z says:

    The president harshly criticized the hedge funds and investment firm creditors that refused to go along with the deal accepted by [Chrysler's] larger lenders, saying that they had “decided to hold out for the prospect of an unjustified, taxpayer funded bailout.”

    Wow– what could those creditors have been thinking? As if the government would prop up an insolvent company in order to funnel bailout money to its largest creditors!

  95. Just a note: I didn’t read all of the above so if I’m repeating someone it is not intentional. We’re just on the same wavelength somehow :)

    I find I need to take a break from all the information overload that hits when panic is in the air. I’m sure others are the same way. If I don’t all the bad news just fouls my mood and affects my life but I do want to keep up on it for capital defense/opportunity reasons. As the crisis passes I then tend to back off a bit

  96. dead hobo says:

    Transor Z Says:
    April 30th, 2009 at 1:49 pm

    The president harshly criticized the hedge funds and investment firm creditors that refused to go along with the deal accepted by [Chrysler's] larger lenders,

    comment:
    —————
    To which, the proper response to Mr Obama would be, “Blow Me”.

  97. MRegan says:

    Mannwich-

    Now I can buy all the Reynolds Wrap I could ever need. It is the only protection from mule-raping GOP gubernatorial candidates from Georgia. (and wards off Walter Boomer).

    As an aside, two comments

    1) Why does everything suddenly taste like bacon?

    2) Did you all know that German has a lovely word for grief-eating?

    It’s Kummerspeck! (literally it means eating bacon)

    So, what am I saying? Is it time to pull your bacon out of the frying pan? Depends on how you like your bacon. Crispy?

  98. Onlooker from Troy says:

    Plus I refuse to believe that Jim Cramer could be getting anything right, long term! I’ve got to see him panic one more time in a downslide. :) Although someone’s going to have to tell me about it, I can’t stand to watch that whacko.

  99. roipaul says:

    as an avid blog reader, i took it the other way around, when posts number declines i know the big dogs are hunting, i observed it in several heavy load blogs, here, dealbreaker, calculated risk (well, he always right somthing) and some more and it was visible through the last period, its a miror of the described notion but to the inside, which somtimes can be more revealing and less of a lagging indicator..

  100. roipaul says:

    100 :)