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catoismymotor (< 20)

Am I the only one that thinks a correction is around the corner?

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22

October 26, 2012 – Comments (22) | RELATED TICKERS: BRK-A , LUK , VV

Am I the only that thinks a correction in around the corner? I don't think something like what happened in 2008/2009 is going to happen. But I think a correction of 10% to 20% is very likely by March 2013.

Hey, odds are I'm wrong. But I have not bought anything since this past May so I have a good amount of cash just in case.

What do you think will happen?

-Cato

22 Comments – Post Your Own

#1) On October 26, 2012 at 11:15 AM, Mega (99.96) wrote:

Well a 10% correction is a lot more likely than 20%, and something people should always be prepared for.

I'm not seeing a shortage of stocks at low levels to invest in. LUK, GNW, INTC, GLW, etc are bouncing around fairly close to 2 year lows.

We could have a relief rally once the election is over and they work out a compromise to avoid the fiscal cliff.

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#2) On October 26, 2012 at 11:42 AM, ryanalexanderson (< 20) wrote:

Yep. And yes, I'd expect at least 20% because in the past, an interest rate cut would be used to check the damage of a recession/bear market. 

But now ZIRP and QEternity has already been implemented, and the stock market yawned it off. So what can they do now?

QEternity+1?

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#3) On October 26, 2012 at 11:52 AM, Melaschasm (54.00) wrote:

It feels like a slow motion correction has already started.  However, a relief bounce after the election seems reasonable, so we might avoid a correction for now.  

 

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#4) On October 26, 2012 at 12:04 PM, chk999 (99.97) wrote:

No, you aren't the only one that feels this way. We keep adding higher proof alcohol to the punchbowl, and the party keeps roaring, but you can't get stronger than Everclear and sooner or later the hangover is going to set in. And it will be a nasty one.

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#5) On October 26, 2012 at 12:04 PM, HarryCaraysGhost (99.61) wrote:

If if's and buts were candy and nuts we'd all have a merry Christmas.

~Don Merideth

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#6) On October 26, 2012 at 12:26 PM, outoffocus (23.48) wrote:

I'll be quite honest.  I've been trying to keep up with things as much as possible regarding the markets but with the decreased blogging activity in CAPS lately, I kinda got out of the market prediction business.  I guess its one of those "whats the point of saying anything if there's hardly anyone to hear it" things.

Having said that, I'm with chk999I thought of a different metaphor though. When it comes to this economy, its like a sick patient that has a tapeworm, so the patient is starving.  But in order to "treat" the patient, the "doctors" are overfeeding the patient in hopes of overfeeding the tapeworm and hence killing the tapeworm.  But only the tapeworm is merely getting bigger and the patient is still dying.  Anyone feeling me here?  

Its got me quite...uh...cautious I guess. 

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#7) On October 26, 2012 at 12:35 PM, kdakota630 (29.76) wrote:

Pretty much total agreement regarding both the likelihood, percentage, and time frame.

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#8) On October 26, 2012 at 2:12 PM, Jbay76 (< 20) wrote:

why not invest in FAZ if you beleive the market is boudn for a correction?  At lest that way you'll gain from the cycle.

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#9) On October 26, 2012 at 2:18 PM, Mega (99.96) wrote:

Because FAZ is not a legitimate investment. It is a dangerous tool for speculation only.

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#10) On October 26, 2012 at 4:30 PM, awallejr (76.63) wrote:

The market is already correcting.  I predicted about a 5% pullback, but that is operating under the assumption Obama wins. 

If Romney wins I see a sharper decline since I think he would be bearish for the market.  Should Omama win I see the market still going up.

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#11) On October 26, 2012 at 5:01 PM, awallejr (76.63) wrote:

doh, Omama=Obama.

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#12) On October 26, 2012 at 5:51 PM, L0RDZ (78.43) wrote:

Monday  the  question was asked by a  fellow fool if  we are in a classic October  massacre..   http://caps.fool.com/Blogs/are-we-in-a-classic-october/769454

Gosh  darn it  I  thought   we  were done  going  down  for the month as  I   forgot  that  we still  had   a   few  trading  days  left  in  the month next week.

I  wish  wall  e jr  would stop  typoing  bad stuff  about  the POTUS.  

  I   just  thought  of  something funny ?

What  ???

your mom...

omg...

omama.... 

Eventually  fundamentals  will matter,  hopefully  price  action will not  be  dictated  by  meth  crack  addicted  high  speed  trading  mathematic AL GORE  rithmic  ( Algorithmic )   

But  it  seems that  we  have  enabled   such  a  problem  with  too big  to fail  banks  enabling  free money addicted  mathematicians  to  free willy  buy  and  sell  the  same  securities  over and over and over again  making  micro pennies  turn  into large  stacks  of  benjamins  and  if  something  should  go  hay-wire   the  tax  payers  will  be none  the wiser  as  it will be swept under yet  another rug.

 

 

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#13) On October 26, 2012 at 6:25 PM, awallejr (76.63) wrote:

And that typo of mine was without the benefit of scotch.

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#14) On October 26, 2012 at 9:55 PM, ChrisGraley (29.74) wrote:

Yes, a huge market correction is coming.

If Obama wins, I think that it's a 30% correction now.

If Romney wins, I think it's a 5% correction now and a 25% correction later. 

If Obama wins it will get worse.

If Romney wins, it will get better and then it will get worse. 

Romney will stop printing money for a short time and really try to fix things and thenhe'll follow suit and print money as well.

The people that invest will initially think that Romney has to be better than Obama and then they'll figure out that he is almost as clueless as Obama is.

If Obama wins the election, we are on the path of being Greece, if it's Romney we might do well enough to be Portugal.

 

 

 

 

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#15) On October 26, 2012 at 10:19 PM, outoffocus (23.48) wrote:

awallejr

You should grab the scotch. You can have more fun with that typo.  I can see crackwise jokes coming from that typo. 

"omama so fat..."

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#16) On October 26, 2012 at 11:00 PM, awallejr (76.63) wrote:

Yeah outoffocus I so expected Lordz to pick up on that typo  heheh.  But I have to say I am kind of glad about the bearishness since that can be considered a good sign, but it really does depend on who wins the election.

Right now there still are a bunch of companies selling on the cheap or below reasonable values.  I look at XRX and scratch my head about that one.  I keep buying it because I really see that doubling over the years as they continue to retire shares with their massive free cash flow (almost $2billion).  In addition you get more from a dividend than you would from a bank.

There are still a bunch of MLPs, BDCs and Reits that pay anywhere from 8-14% yields.

A 20-30 % drop would be tantamount to the crash of '08-'09.  You would have companies selling at ridiculously low valuations. I don't see it, except if Romney throws us into recession which I submit his policies will but even then not to that extent.  We simply don't have the liquidity issue we did as back then.

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#17) On October 27, 2012 at 12:40 PM, outoffocus (23.48) wrote:

But see awallejr, thats just it.  I think the overall financial markets have been disjointed from fundamentals for quite some time.  And i think they will continue to be that way until all these macroeconomic events fully play out.  Until then there are going to be mass overvaluations and mass undervaluations.  Plenty of money to be made I guess if you have alot of dry powder.

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#18) On October 27, 2012 at 4:15 PM, awallejr (76.63) wrote:

I just don't really see it though.  The only concerns I have is Iran getting a nuclear weapon and Romney winning.

The fiscal cliff was and is a conivance created by the Republican Norquistites.  I call them that because not all Republicans have sold their votes to Grover Norquist.  Unfortunately enough did (including Romney).  They do not want Obama to ever get a 2nd term.  Economically things actually were improving then they decided to make the ceiling debt an issue.

We were on the brink caused by them and they agreed to create a "budget" committee to come up with a deal or automatic cuts will occur each year.  6 Democrats and 6 Republicans like there was ever a shot at them agreeing.

There is also a bill before them that would extend the tax breaks for about 97% of the people.  Norquistites won't pass it unless their millionaire friends are included.

So there you have it they create this spending cut cliff and they created this potential massive tax increase so now they can point at the President and say "there he did it."

It has always been a con job.  It was engineered.  It was purposeful.  And the Average Joe ultimately suffers and pays for it.

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#19) On October 30, 2012 at 10:58 PM, APJ4RealHoldings (36.07) wrote:

awallejr,

look at XRX's balance sheet.  what if you determined the true value of their non-current assets excluding real stuff like property, was zero or 25% of what's stated there, or half of what's stated there? 

may not be that unreasonable to evaluate most companies in the market in this manner.  

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#20) On October 31, 2012 at 1:58 AM, awallejr (76.63) wrote:

Well AP that is one way to look at it I suppose, but I suspect people are discounting the stock because of the Europe connection and the copy connection.  Yet the sucker is generating almost $2 billion in free cash flow.  And they are throwing half of that to buy back shares. 

So yeah they are growing eps through share liquidation, nevertheless your share is owning more of the company. And their IT division is really their growth driver.  This company is not going bankrupt though you would think the current share price indicates otherwise.  They are projecting over $1 a share eps so we are looking at a PE of 6 1/2, which is double bearish.

I think there is serious value here for the patient investor.  And as I said you are getting paid more in dividends than you would from a bank account.

 

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#21) On October 31, 2012 at 10:06 AM, APJ4RealHoldings (36.07) wrote:

awallejr,

I'm sold on the value opportunities in the industry - and ended up going in on CAJ this morning. I don't see the scary potential of big writedowns on assets for CAJ as may happen with XRX. Also the combination of high dividend yield, better ratio of market cap to current assets less current liabilities, healthy amount of shorts, a tiny institutional ownership %, all together compelled me to make a play. 

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#22) On October 31, 2012 at 10:14 AM, APJ4RealHoldings (36.07) wrote:

IMO, LXK could be the best value opportunity in the industry however

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