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1936 repeats....



February 18, 2009 – Comments (8)

1936 was the last time there was a loss in earnings in the market...

I guess the S&P companies were supposed to be so special they'd never have a loss?  First time it has had a quarterly loss.

I didn't expect earnings to get this bad, however, I have been chided about being too bearish about my outlook on value for the S&P because "balance sheets are strong and flushed with cash and earnings are strong so the P/E is cheap" or something similar.  How do you do a P/E on negative earnings?  I didn't agree that balance sheets would remain strong or that earnings would remain strong.

There was enormous leverage of earnings of companies that do business around the world when the dollar tanked.  The US dollar picking up strength simply wiped out the only place the market had good earnings.

8 Comments – Post Your Own

#1) On February 18, 2009 at 9:55 AM, Option1307 (30.63) wrote:

Good video, except for when the analyst "predicts" a 45% rally in the S&P 500. Ya right buddy, keep dreaming...

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#2) On February 18, 2009 at 10:01 AM, cmoney85 (< 20) wrote:

Good Morning DWOT

Learned a lot from your blogs (thanks)

 I see you are short gold, but couldn't find anything on OIL??

I'm thinking oil is as safe an investment as anything is right now, or atleast will be if it hits the twenties.  But not sure which stocks of EFTs to invest in.

 Where do you have your money? Just all Cash?   

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#3) On February 18, 2009 at 10:18 AM, BigFatBEAR (28.26) wrote:


I'm invested in USO, which I believe to be a screaming buy. It may continue to scream for another few months/years, however. I stopped looking at the OIL ticker after it showed significant technical weakness compared to USO.

If you're looking for something that more closely correlates with the prices of gasoline at the pump, UGA is a good bet.

Hope this helps.


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#4) On February 18, 2009 at 11:03 AM, cmoney85 (< 20) wrote:

Thanks BFB

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#5) On February 18, 2009 at 11:23 AM, burnsme (< 20) wrote:

What do you guys think of IO?  It is an oil play of a sorts that has historically performed well especially as technology has improved.  The stock along with the market has been battered and beaten.  It is preparing to report its earnings next week.

Also, although I agree stocks are incredibly cheap I do not believe that there will be this incredible rally within a year.  This will be a long process to recovery, mainly due in part to the world magnitude. 

My play is on companies that have been around for decades and produce goods that we continuously depend on.  All the while their prices have been beaten down to single digits.  There are numerous plays across the sectors.  Diversify your risks.   

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#6) On February 18, 2009 at 1:16 PM, angusthermopylae (38.75) wrote:

I've been an on-again-off-again follower of IO for the same reason:  "oil play of sorts."

While I believe I have a fair understanding of the oil industry (as much as an outsider layman can have), it's too volatile and subject to "disaster of the day" treatments for my taste; worse, it can and does react to good and bad news in the opposite direction of what an initial analysis dictates.

IO, on the other hand, is right up my alley.  Being a company that supplies goods and services in finding oil means that it's a little more predictable (since  such services have to be planned ahead), and therefore a little more..."rational."  The long view is usually understandable--the knee-jerk reaction is usually a touch psychotic, imho.

I'm going to be watching the earnings and the reaction to IO, also.  I haven't owned in it forever (the high price of oil last year made me nervous...apparently, rightfully so.)

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#7) On February 18, 2009 at 5:47 PM, dwot (28.99) wrote:

Yep, in cash...

I would like to get into homeowner again, but not until prices correct.

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#8) On February 21, 2009 at 6:41 PM, RootnToot (29.30) wrote:

Good info, thanks D.  I agree, 1307, that Mr Paulsen is overly optomistic. I do not see the optimism in the market that would generate this kind of energy. Me thinks he doth project too, much!

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