Comments on: S&P500 Top 50 Trivia Question (w/Answer)

By: Rally off March 9 lows is strong compared to the past similar periods (in other news, the sun rises in the east) « KLD Capital Management

Tue, 20 Oct 2009 07:41:36 +0000

[...] » Though the link to http://www.ritholtz.com did not work via Google Reader, it seems As seen at this link, the folks at The Chart Store conducted a similar exercise as we did here and ended up with the [...]

By: The Window Washer

The Window Washer — Tue, 20 Oct 2009 05:33:26 +0000

Obviously things are fine because the green shoots are blossoming, we’re in line with the 38′ recovery.

15 4/2/38 11/12/38 65.79%

What’s with all those dates in 33′ ?

By: impermanence

impermanence — Mon, 19 Oct 2009 23:07:53 +0000

HWangner writes:
“Mannwich: Yes, some minority of them may have been priced near correction. However, the overwhelming majority were priced for doomsday.”

History suggests that pricing for doomsday is when the Dow goes lower than an ounce of gold. That was nowhere near doomsday pricing.

Although I generally enjoy your perspective, you do have a tendency to add a lot of bogus statements in an attempt to support your views. No need to do this as you generally are on pretty sound ground.

By: call me ahab

call me ahab — Mon, 19 Oct 2009 20:50:58 +0000

“stocks are getting back to their fair value. To say they’re prolonging the inevitable is an assumption that the economy will falter again. I don’t see how this is possible at this time.”

more words of wisdom from a person who is at best a dull normal on the bell curve-

it’s ok- he won’t understand what i am saying anyway

By: The Chartmeister

The Chartmeister — Mon, 19 Oct 2009 20:13:30 +0000

For those who may not know the history of the S&P Composite, here are some selected highlights gleaned from the S&P Directory – 2003 Edition:

1926 – S&P creates a 90 Stock Composite Price Index comprised of 50 Industrial, 20 Railroad and 20 Utility stocks.The new composite has a base period of 1926=100 and is calculated and published weekly. Historical values are available back to 1918.

1928 – S&P 90 Stock Composite Price Index is calculated and published daily.

1957 (actually March 4, 1957) – Computers are introduced, and the 500 is calculated and disseminated at one-minute intervals throughout the trading day. To create a lengthy historical time series, the new 500 is linked to the 90 Stock Composite Price Index – daily S&P 500 Index prices become available back to 1928. The modern S&P 500 consists of 425 Industrials, 60 Utilities and 15 Railroads, and has a base period on 1941-43=10.

1976 – Effective July 1, the S&P 500 is restructured to 400 Industrials, 40 Utilities, 40 Financials and 20 Transportation stocks.

1988 – Effective April 6, S&P removes the fixed-number structure set on the four major industry sectors. The 400 Industrials, 40 Utilities, 40 Financials and 20 Transportations are allowed to float.

In other words, what we now know as the S&P 500 did not come into existence until 1957. Financial stocks were not introduced into the index until 1976 and now total 79 companies, the most of any sector.

And yes, the daily high, low, close for the old S&P 90 does exist.

By: constantnormal

constantnormal — Mon, 19 Oct 2009 20:05:02 +0000

Back in the 30’s, the government and the financial industry pumped for all they were worth to boost the markets to the peak in ‘38, but they got scared as they saw the magnitude of the deficits they were building, and raised taxes to address that problem (possibly there were concerns about financing the coming war, I dunno), and the economy promptly collapsed.

Bernanke has vowed to “not make the same mistake”, and true enough, he and Geithner have dug a fiscal grave so huge that their counterparts from the 30’s would have had heart attacks and died upon contemplating such a horror.

The only thing that makes the current valuations sustainable is the zero interest rate environment. Any increase in rates will collapse the stock markets and shrink the economy accordingly. And it’s not as if the economy today is sized anything comparable to that of 2006.

So now the dynamic duo is riding the tiger, and face the same problem — how to transition back without being eaten?

And the other question being, how long can we run our economy on zero rates from the Fed, and what are the harmful consequences from doing so? (I think we can all understand what the consequences of not doing so are)

By: Mannwich

Mannwich — Mon, 19 Oct 2009 19:48:43 +0000

@Wanger: Some of these companies that have run up to ridiculous levels (not your Apple’s of the world) have not improved their financials not one iota. In fact, many of them have financials that have gotten worse while their stock prices have gone parabolic on nothing but increased liquidity floating around the market looking for somehwere to park for a while. I know of one off-hand that I will not mention. I am renting it right now though, although I have trimmed my position.

By: HarryWanger

HarryWanger — Mon, 19 Oct 2009 19:44:08 +0000

Mannwich: Yes, some minority of them may have been priced near correction. However, the overwhelming majority were priced for doomsday. That didn’t happen so the stocks are getting back to their fair value. To say they’re prolonging the inevitable is an assumption that the economy will falter again. I don’t see how this is possible at this time.

By: Mannwich

Mannwich — Mon, 19 Oct 2009 19:32:34 +0000

@Wanger: Did you ever think that many of those companies that were priced for extinction were priced correctly? Granted, some may make it back from the dead and be fine, but a good many others will not in the end. They’re merely prolonging the inevitable.

By: HarryWanger

HarryWanger — Mon, 19 Oct 2009 19:30:10 +0000

Singer/Mannwich: This is that argument I seem to hear alot now – stocks are up over 100%, etc. but they were down just as much or more. We’re just returning those individual stocks back to realistic levels that were brought down over 100%. Why is it everyone seems to forget that they fell so much but are shocked when they rise by the same amount?