Comments on: Ned Davis on Secular vs. Cyclical Bull Markets

By: Economic Perception Versus Reality « Endowed by my creator…

Economic Perception Versus Reality « Endowed by my creator… — Tue, 04 Aug 2009 16:06:43 +0000

[...] http://www.ritholtz.com/blog/2009/07/ned-davis-on-secular-vs-cyclical-bull-markets/ [...]

By: Friday links: hot coffee Abnormal Returns

Friday links: hot coffee Abnormal Returns — Fri, 31 Jul 2009 16:46:08 +0000

[...] further notice, this is a cyclical bull market. (Big Picture also The Pragmatic [...]

By: dead hobo

dead hobo — Fri, 31 Jul 2009 12:26:14 +0000

Above, I wrote:

$1,000,000 / $15,000 = 66,666 cars.

I meant:

$1,000,000,000 / $15,000 = 66,666 cars

By: dead hobo

dead hobo — Fri, 31 Jul 2009 12:22:39 +0000

Economically speaking, Uncle Stupid would have created a better economic effect if he bought the cars outright and gave them away.

Assume a cost of $15,000 per car

$1,000,000 / $15,000 = 66,666 cars.

Add 66,666 to the estimated 202,000 sales that would have occurred anyway and the total for the week exceed the actual total by about 18,666 cars. This alternate approach would have reduced inventories even further, added more to the manufacturer contribution margin, potentially put people back to work sooner or given those working something to do, and maybe spurred additional sales.

By: dead hobo

dead hobo — Fri, 31 Jul 2009 12:10:10 +0000

gregh Says:
July 31st, 2009 at 12:31 am

i’m not sure what to make of the cars issue.

Reply:
———–
http://www.autoobserver.com/2009/04/goldman-ups-its-2009-car-sales-forecast.html

Excerpt
———-
Goldman Ups Its 2009 Car Sales Forecast
April 23, 2009

Goldman Sachs has increased its forecast for 2009 new vehicle sales from 10 million to 11 million.

******************************
Now, do the math:

250,000 sales * 52 weeks = 13,000,000 annualized rate.

10,500,000 / 52 = 202,000

Implication: a $3500 – $4500 guaranteed trade in on top on massive discounting brought about 50,000 additional sales to the dealers.

-OR-

$1,000,000,000 /50,000 = $20,000 => Uncle Stupid paid about $20,000 per car for the marginal increase in business this week. News reports state he wants to overpay for even more cars.

By: flipspiceland

flipspiceland — Fri, 31 Jul 2009 10:45:24 +0000

Nearly everyone on here is smarter, deeper, and likely nicer looking than any of the current Goldman Sucks employees, future hires and alumni that lurk in all the dens in all the G20 halls of finance.

IF ONLY they worked in our treasury department how much better off this country would be

By: Andy T

Andy T — Fri, 31 Jul 2009 04:37:29 +0000

gregh.

I interpret it to mean that in that in the last 12 months car buying fell off a cliff. There were actually people hanging around willing and needing to buy a vehicle but held off. Chrysler, and maybe others, have been offering “double cash for clunkers” programs (i.e. steep discounts) to people to trade in some old shit and buy some new shit. Bottom Line: When things get cheap enough (deflation) and people really would like to buy something, then the forces of supply and demand actually begin to work….

By: Mannwich

Mannwich — Fri, 31 Jul 2009 04:36:03 +0000

@gregh: Me-thinks it might be largely the latter. I mean, it’s basically been J6P who has gotten hammered the most in this mess. Even with the gov’t subsidy, can most of these folks credibly afford a new car and car payment right now? Count me as one who is very dubious. The feds can’t make people borrow if most people feel highly financially insecure based on their own less than stellar mortgage, credit card debt and employment situations.

By: gregh

gregh — Fri, 31 Jul 2009 04:31:25 +0000

i’m not sure what to make of the cars issue.

Does this mean americans are again making big-dollar purchases (despite other savings rates going up)? Or is this just more fools taking 60 month loans they can’t afford?

Are people this desperate to get rid of their gas guzzlers? We ‘good Amuricans’ can’t quit loving our suvs overnite can we?

By: Thor

Thor — Fri, 31 Jul 2009 04:29:48 +0000

Manny – good article – what stood out for me was this:

““I think the property and stock markets will come under pressure probably around October time.”

Ties in nicely with the predictions a lot of the folks here have made for the fall.