(Plotted these weeks ago.)

I think we are at a point now where the public is ready to start buying again, so long as this downside correction remains small.

DOW1k, until the news starts to look relatively too bad again.

that’s a pretty interesting take, except that I’m in the credit deflation camp. To understand real value I don’t like to price things in paper or nominal terms. this leads one to think they have real wealth when a DOW is sitting at 14,000 when things are on fire all around in the real economy. A look at the DOW priced in real money terms (Gold) shows you just exactly how deep this crash has really been. Another preferred measure of value for me instead of p/e ratio.

thanks anyway for posting that, it was interesting to look at.

@Onlooker,

Yes, that’s what I’m expecting, a huge drop once we reach the peak of this rally. I don’t think we get to the div yields I talked about above b/c DOW stocks start raising payouts. Not thinking that way at all.

“The market is very symetric, we had two months down, and two months up”

Really? I sort of remember it a little different. I remember 17 months down so far and 2 months up.

Don’t confuse your guessing with someone like MW or Barry. When they put capital on the line, they aren’t guessing.

Here is an idea for you. Go back and look at how many January’s ended down since 1950, and then tell me during those years what the market ended up doing by 12/31.

It’s a little better than 50/50 accuracy.

or, since those banks are such a good value you should buy more of them and prove me wrong.

Each year can be marked as a positive liquidity year wherein we have money supply growth, also known as M2 ( total of all physical currency part of bank reserves plus the amount in demand accounts (”checking” or “current” accounts plus most savings acccounts, plus money market accoutns, plus retail money market mutual funds, and small denomination time deposits (cd’s under $100,000) and/or credit expansion when banks are lending. The opposite would be a negative liquidity year wherein we have credit contraction/credit freeze like we currently have today.

Average P/E in a liquidy year is 19.1. Average P/E in a negative liquidity year is 11.1. Data all the way back to the early 1900’s

Standard & Poor’s currently projects 2009 earnings on the S&P at $54.15.

So applying this data, and forecating that we will continue to have a negative liquidity year in 2009, fair value of S&P 500 for today would be as follows based on:

2009 being a negative liquidity year: 11.1 x 54.15 = 601

and if you happen to really believe that credit conditions will somehow improve dramatically this year, then

2009 being a postive liquidity year: 19.1 x 54.15 =1034

I present the data, you decide what camp you are in, and how you see the economy playing out for the rest of the year.

I do like how thinks get vetted out here. The rules of participation early on at the site seemed to culled out the flame throwers and bombastic posters and have left people that think, write, and have discourse. I haven’t been the most bullish person for the past few years, but I am earnestly looking to be one…but I am not going to go for some rah-rah stuff or smoke and mirrors stuff as we’ve experienced in the last few months. Real recovery is going to take time. People are impatient. Politicians, a sub-class of people, are worse b/c they are impatient and shortsighted. Wall Street likes nothing like a good cheer. And those are all the normal states of being for those groups. So the only way to protect yourself is to “find the other side” of the arguments. This is the place. There are other places too, but finding a balancing argument is important.

My attitude towards investing is to spend all my time focusing on risk and poking holes. When I commit money to an idea, “the street” will take care of the rest. They don’t need my pom-poms to make things go up. The hard thing now is vetting the ideas, have a short-term outlook, mid, and long-term…

It is interesting how similar things are at the extremes. In a sky-high market, it can be a challenge to find value b/c it all looks expensive. In a extremely oversold market, the challenge is everything looks cheap… and we all know there are things out there that are not.

interesting pick, even the Days get Shorter, at that Time (NH-estilio, anyways).

This market wave has climbed the wall of worry and is running on fumes of exuberance. My guess is the “quant” that can peg the turn will make his bones on shorts riding the next down leg.

Still, we need some serious bad news and storm cloud warnings to turn the herd. I’ll put my neck out and peg the solstice as the turning point. (Seems as good a day as any – worked for the druids, good enough for me).

I am up by 300-400% betting against her without any leverage, up 400% on BAC, up 300% on WFC, and up 300% on C since I went against her last recommendation to sell banks.

I have documented “loading up” on the bank shares on this message board after her call to sell banks and on the same day when Barry Ritholtz went on Bloomberg Radio to declare Citibank “going to zero” [BR: It went to $1.] (it was a third contrarian confirmation after Roubini and Krugman declaring “the end of the world” two days earlier”)

I have to give credit to Kass (the smartest bear out there – second to none) for calling the March bottom, but he got this pseudo correction completely wrong and got out too early. Doug Kass recently claimed that the market has gone “ahead of itself”. He was blind to see that it was a misconception.

In reality the market has gone nowhere. The market is very symmetric, we
had two months down (January and February) and two months up (March and
April) in 2009, and after this round-trip we are still where we started
2009 – far from “ahead of itself”.

We have at least another 20-30% higher before I agree with Kass.