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Are we in a classic October Massacre?

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October 23, 2012 – Comments (10)

They don't usually occur in Presidential election years, but right now things look grim.

10 Comments – Post Your Own

#1) On October 23, 2012 at 12:11 PM, L0RDZ (84.26) wrote:

It's  not looking  good,   hope is not a  strategy,  the skies look like they are darkening ?  is  this  the beginning  of  a major sell of ?

Or  is it just a very terrible looking earnings quarter ?

Where is the money going to go ???  the market rally has been based upon bs...   so  when  the  hang-over starts to kick in  where will they get their  fix ???  when the drugs no longer work  as  effectively  and the  real pain sets  in.

Is  a  change  in  monetary philosophy  ( or its potential )  really to blame ?  do  we  really think  we  can manipulate  things  to simply  go up all the time. 

The  sky  isn't  exactly falling,  but it feels like  the vast enemy archers  are looking to bloat  out the sun with  arrows.

Duck and cover,  we  fight in the shade today.

 

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#2) On October 23, 2012 at 12:39 PM, edwjm (99.87) wrote:

L0RDZ:

We don't often agree.  Now I am really worried ....

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#3) On October 23, 2012 at 1:18 PM, L0RDZ (84.26) wrote:

The  fast money  has  already  decided to duck, cover, even run away to live to fight  another day.  We'll probably see a sector  rotation  into safer more defensive stocks that may still continue to fall but  may not fall as quickly  as  the energy and materials sectors.

The gov-ment  is  able to sell  2 year notes  for the low of  .295%   to  most  bond-traders  classified  as  an  A+  good auction.

It's  the  slower money  who  is  being told and seeing  the price  of  oil  get taken down further  and the irony is  that the price of  oil  still is  over-priced,  but  it's  the overpricing and over charging  for  the cost of oil  that is helping prop up  the markets.

So  if  you are what they call us  slow money ?  do you follow suit  and  now sell  lower or do you try to wait it out hoping that eventually  the market will recover and pray  you don't get stuck  with  investments  that somehow never really recover.

Anyone old enough to remember  when  we  had real growth ?  when  mortgages  we're  at  7%  and  that was a good rate considering  we  once  offered  5%  for  three year notes    loaning back money to the government.

I remember  not too long ago earning  5% interest on my money  in  a simple but larger  savings  account  that allowed me access to my money  at any time.

Are we to really believe  that  interest rates  on  30 year  loans  from the government  is  below 3% ??

WHats going to happen  when  they try to manipulate it down to say  2%  or  as low as  1%  over  a  thirty year span ?

How  are you going to retire or grow  your retirement  when it seems  like  we are heading towards a death spirral...

 

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#4) On October 23, 2012 at 2:37 PM, edwjm (99.87) wrote:

Flooding the system with money scares investors.  It causes inflation, which distorts the value of assets, profits, and dividends, thus acting as a hidden tax.  I have long thought that sellers of  long held capital assets should be allowed to adjust the cost basis for inflation, but there is no hope for getting that through congress.

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#5) On October 23, 2012 at 3:07 PM, L0RDZ (84.26) wrote:

Uncle Ben  has  already  said  that  it's unlikely  he will accept a  third  term  and  why  should he  when  he  can  go back to the  fairy tale  land  of  education  with a fully well funded  gov-ment pension  and  much like that other fool who kept  interest rates too low  too long ???  Greenspan  I believe  was his name.

He can  become  a well paid  critic  and  laugh off anyone who may dare  to say  that  while  everyone  was forced into buying into the bs  his  kind  was  forcing upon us,  when  the bill  comes  a  due  and  someone is  left   holding  the big bill,  it  won't  be  Ben,  he'll  be   written in  the history books  as  the savior  when the other adults couldn't or wouldn't do what they should have done and instead allowed  Ben  to do what exactly it is that he does ?   manipulate  the  free market into accepting  government dictated  rates.

ED...  personally  I believe  that  sellers  of  long held  capital assets  should not be forced  to pay  any taxes  on any so called  capital gain on  bogusly  inflated dollars.

The hidden tax is bad enough,  but than having to  lose additional  dollars back to the government  so that they can redistribute and  waste them on more failed policies  is  akin to having to pay someone  who raped you the cost of  impregnation  and  stud  fees,  when all along you never wanted it in the first place.

The bad part of such an argument is exactly  how would  or who would calculate  the alleged  inflation ?  and or  what if  my chance  de-flation actually happened ?  heaven forbid something actually  deflates  instead of inflates.

The very thought of de-flation scares  the  be jesus out of fools who  somehow  believe  that  economic  cycles can be entirely  avoided or  manipulated away.

Anyways,  some would also say its the gov-ment's fault in the first place that they allowed anyone the ability  to actually save up enough money in the first place so as to actually being able to invest it in  any capital assets in the first place.

Sir  you didn't invest in those  assets,  we the government by allowing you to actually keep some of your money did  and you had better pay us or else.

 

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#6) On October 24, 2012 at 3:20 AM, valuemoney (99.99) wrote:

When we NEWLY elect a Republican markets have especially high hopes....stocks averaged 18.8% in those years. Years we have RE-ELECTED Democrats, stocks historically averaged 14.5%. Also S&P earnings will be at HISTORIC HIGHS at the end of this year. Earnings are the basis of price paid for a stock. Record earnings should correlate to record prices all things being equal. I still like the market here if the 10 year treasury is yielding less than 2 %.

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#7) On October 24, 2012 at 3:27 AM, valuemoney (99.99) wrote:

Year Earnings Yield Dividend Yield S&P 500 Earnings Dividends
1960       5.34%          3.41%     58.11    3.10     1.98
1961       4.71%          2.85%     71.55    3.37     2.04
1962       5.81%          3.40%     63.1     3.67     2.15
1963       5.51%          3.13%     75.02    4.13     2.35
1964       5.62%          3.05%     84.75    4.76     2.58
1965       5.73%          3.06%     92.43    5.30     2.83
1966       6.74%          3.59%     80.33    5.41     2.88
1967       5.66%          3.09%     96.47    5.46     2.98
1968       5.51%          2.93%    103.86    5.72     3.04
1969       6.63%          3.52%     92.06    6.10     3.24
1970       5.98%          3.46%     92.15    5.51     3.19
1971       5.46%          3.10%    102.09    5.57     3.16
1972       5.23%          2.70%    118.05    6.17     3.19
1973       8.16%          3.70%     97.55    7.96     3.61
1974      13.64%          5.43%     68.56    9.35     3.72
1975       8.55%          4.14%     90.19    7.71     3.73
1976       9.07%          3.93%    107.46    9.75     4.22
1977      11.43%          5.11%     95.1    10.87     4.86
1978      12.11%          5.39%     96.11   11.64     5.18
1979      13.48%          5.53%    107.94   14.55     5.97
1980      11.04%          4.74%    135.76   14.99     6.44
1981      12.39%          5.57%    122.55   15.18     6.83
1982       9.83%          4.93%    140.64   13.82     6.93
1983       8.06%          4.32%    164.93   13.29     7.12
1984      10.07%          4.68%    167.24   16.84     7.83
1985       7.42%          3.88%    211.28   15.68     8.20
1986       5.96%          3.38%    242.17   14.43     8.19
1987       6.49%          3.71%    247.08   16.04     9.17
1988       8.69%          3.68%    277.72   24.12    10.22
1989       6.88%          3.32%    353.4    24.32    11.73
1990       6.86%          3.74%    330.22   22.65    12.35
1991       4.63%          3.11%    417.09   19.30    12.97
1992       4.79%          2.90%    435.71   20.87    12.64
1993       5.77%          2.72%    466.45   26.90    12.69
1994       6.91%          2.91%    459.27   31.75    13.36
1995       6.12%          2.30%    615.93   37.70    14.17
1996       5.49%          2.01%    740.74   40.63    14.89
1997       4.54%          1.60%    970.43   44.09    15.52
1998       3.60%          1.32%   1229.23   44.27    16.20
1999       3.52%          1.14%   1469.25   51.68    16.71
2000       4.25%          1.23%   1320.28   56.13    16.27
2001       3.38%          1.37%   1148.09   38.85    15.74
2002       5.23%          1.83%    879.82   46.04    16.08
2003       4.92%          1.61%   1111.91   54.69    17.88
2004       5.58%          1.60%   1211.92   67.68    19.407
2005       6.12%          1.79%   1248.29   76.45    22.38
2006       6.18%          1.77%   1418.3    87.72    25.05
2007       5.62%          1.89%   1468.36   82.54    27.73
2008       7.24%          3.11%    903.25   65.39    28.05
2009       5.45%          2.00%   1115.1    60.8     22.31
2010       6.65%          1.84%   1257.64   83.66    23.12
2011       7.72%          2.07%   1257.60   97.05    26.02

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#8) On October 24, 2012 at 3:57 AM, valuemoney (99.99) wrote:

When I say all things equal I cut everything out and just use a 15 multiple. On 106 earnings (I think that is BLOOMBERG"S current estimate) put a 15 multiple on it and you get 1590 on the S&P. I would also add using a 15 multiple which equals a 6.66% yield on earnings is quite attractive compared to a 1.76% yield on 10 year treasuries. Or you can sit in cash and watch your money erode. Because as you stated and you are correct the system is being flooded with money.... NOT JUST HERE BUT THROUGHOUT THE WORLD.

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#9) On October 24, 2012 at 4:05 AM, valuemoney (99.99) wrote:

If one is playing the CAPS game like I.....1387 is my re-entry point. Just like your sell in MAY post 1280 was my re-entry point on CAPS. In RL I stayed long BRK.B and never sold in May and just the other day it hit 90 and change. Sure it may go down these next couple weeks but is cheap even @ 90 a share. 

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#10) On October 24, 2012 at 8:40 AM, Valyooo (99.63) wrote:

Everything looks bearish right now, including al the charts.  I think we are in for a nasty correction, probably not a new bear market just yet.  Over next few months we fall 15%.  I think we hit 1590 within next few years before major meltdown

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