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goldminingXpert (29.55)

The Market Is About To Plunge (Day 7, Vol. 5)

Recs

33

May 06, 2009 – Comments (27)

Very brief today.

Ask yourself the following?

Is nearly half a million new unemployed people good?

Is GM wiping out 99% of your common shareholder stake good?

Is it good that shareholders are too stupid to sell their shares today as they don't understand the news?

Is it bad that BAC is insolvent to the tune of $30 billion dollars?

Is it bad that the stock of this walking zombie is rising?

---

The market is simply climbing a wall of worry. At some point, people will realize that stocks can't keep climbing while the economy worsens. I hope you're not long the shares of insolvent firms like ACAS (-22% today) when the sheep that trade this market figure out that we're still in a deepening economic crisis.

---

By the way, to all the people leaving nasty comments on these blogs: I'm keeping an archive. I can and will use them to humiliate you when the market goes plunging again. Of course, most of you will leave (or shamelessly change your screen names) when the market crashes again just like last fall. It was too bad all my critics left then. Luckily, a new bear market rally makes new suckers.

27 Comments – Post Your Own

#1) On May 06, 2009 at 11:30 AM, JLMEMT (72.86) wrote:

I have been feeling similarly, but I am getting to the point that I wonder if people really have become this stupid?  It really should have dropped at least once before now.  I do worry that when it happens it will be a BIG one.

I am having a hard time with B of A going up right now! ???

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#2) On May 06, 2009 at 12:10 PM, leohaas (31.71) wrote:

"The market is simply climbing a wall of worry. At some point, people will realize that stocks can't keep climbing while the economy worsens"

The million dollar question is: at what point. Right now, it looks like my bearish bets ain't goin' nowhere, just like last month...

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#3) On May 06, 2009 at 12:43 PM, StevesStox (62.36) wrote:

Ask yourself the following:

Did the market plunge 60% from its peak? Yes.

Is American business worth 60% less than it was in 2007? No. 

Have 68% of companies beat 1Q Earnings Estimates? Yes.

Did unemployment numbers come out better than expected today? Yes.

Has housing data slowly started to improve? Yes.

Was GM a dying company for quite some time? Yes.

Does Capitalism work, and will it restructure, or will another company take its place eventually? Yes.

GMX not to offend you but your biggest hinderance is your age. I have been investing for decades and if I have learned one lesson over this time it is invest in the market you are in, not the one you want to be in; you will make more money that way.

WWI/II, Vietnam, Cold War, 9/11, huge inflation, 12% unemployment. I have seen it all, and over that time period the overall trend of the market always has been up.

 

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#4) On May 06, 2009 at 12:52 PM, finabuddy (94.68) wrote:

GMX - what are you studying and looking to do post grad school (undergrad?)? just curious I saw your last post you were studying for final exams.

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#5) On May 06, 2009 at 12:58 PM, automaticaev (< 20) wrote:

anyone who wouldve bought stock in a company that makes chevy and cadillacs should have known it wouldnt last forever.

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#6) On May 06, 2009 at 12:59 PM, automaticaev (< 20) wrote:

i wouldve been off that trend in the 80s i would think.

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#7) On May 06, 2009 at 1:11 PM, ocsurf (< 20) wrote:

"when the sheep that trade this market figure out that we're still in a deepening economic crisis."

I guess I'm a sheep that made a KILLING on SIRI and have now made my money back that I lost last year. Now, I'm back to my reliable companies.

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#8) On May 06, 2009 at 1:13 PM, binve (< 20) wrote:

Still aligned. Watching and waiting for the "high" to wear off.

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#9) On May 06, 2009 at 1:47 PM, awallejr (79.40) wrote:

It will only prove to be a bull market rally if future GDP keeps declining.  If GDP shows less of a loss next quarter than last, and if subsequent Qs show continued improvement, the bear market is over.  It really is as simple as that.  Back test if you want.  We may not turn into a roaring Bull market but just stay in a trading range for years instead.

 

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#10) On May 06, 2009 at 1:56 PM, JibJabs (88.80) wrote:

GMX- I would love to see you eat some humble pie. A big fat slice of it. 

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#11) On May 06, 2009 at 2:03 PM, ttboydxb (28.85) wrote:

How does a Bank that needs $34 Billion have it's shares jump over 10% when that info is released???   I obviously skipped that day in accounting class that taught everyone else that -$34,000,000,000 is a good number to have in my account.  Unbelievable....

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#12) On May 06, 2009 at 2:07 PM, kdakota630 (29.66) wrote:

WFC jumped when it was annouced that they needed a cash infusion as well.

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#13) On May 06, 2009 at 2:35 PM, soycapital (< 20) wrote:

XLF UP OVER 8%

2:30 PM May 06, day before "stress test results"

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#14) On May 06, 2009 at 2:46 PM, FreundInvesting (29.50) wrote:

None of this makes any sense as far as I'm concerned. If it wasn't for the decay of FAZ and SRS, I'd be all in them. I know we're in for a major correction, I just don't know when.

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#15) On May 06, 2009 at 3:01 PM, BearTrend (96.17) wrote:

the reason why all financial are going up is because investor saw that fed/chairman Bern comment "We will not let any of those 19 banks to failed"

 Investor dont care that BAC need 40 billion dollars to raise capital, because IN THE END, uncle sam will pay for it or come up with the difference!

 

Yes, i'm in short position of BAC, Long position on FAZ/SRS

 God americans are stupid!

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#16) On May 06, 2009 at 3:07 PM, ttboydxb (28.85) wrote:

Same here, long Faz, just waiting/bleeding patiently until the floor drops on this absolute insanity...  Hurting tho...

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#17) On May 06, 2009 at 3:19 PM, SARG0N (27.51) wrote:

This whole thing is just bizarre. Especially BAC who went up over 15% after we just found out they needed 34 billion! Last night all the BAC holders thought they were screwed and it seemed assured that the markets would fall especially BAC. It is as if the market is in some sort of upside down world or something.

There has been talk about manipulation going on and after today there does not seem like there can be any doubt about that. The fundamentals don't support this nonsense but it is a matter of how long they can or want to hold it up. 

 

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#18) On May 06, 2009 at 3:46 PM, rofgile (99.44) wrote:

It's one thing to be a company that needs billions and doesn't have the possibility of getting those through earnings or though loans with good terms.

It's another thing to be a company that is told that it hypothetically needs XX billion dollars and that the government will pledge to give those XX billion as a loan with good terms.  Further, the business is banking and XX billion in additional loans is going to result in huge future profits (much like GS had this last quarter from all the money thown at it).

Further GM's plan isn't the destruction of GM - its possibly the destruction of GM's shareholders (see my downthumb of GM right now).  So - what are the implications to the overall economy?  We were previously at an unknown point where GM and Chrysler could be utterly destroyed and broken apart.  Now GM will continue, and Chrysler will continue and most of the jobs at these companies will continue.  I see that as a positive for the overall economy - while a negative for those who were investors in those companies.

Manufacturing has been coming back, stimulus spending has even really started yet, banking no longer seems to be in nowhere-land.  These are positives - these are stability which is what has been missing in 2008-2009.  Even consumer sentiment has been rising, and consumer spending hasn't fallen as much as it should.  

Do you still think there is no substance behind the market rise?  I think it depends a lot on perspective, and my perspective is definitely of the positive sort.  

 -Rof 

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#19) On May 06, 2009 at 4:34 PM, DeerHunter73 (73.21) wrote:

#3) On May 06, 2009 at 12:43 PM, StevesStox (91.58) wrote:

Ask yourself the following:

Did the market plunge 60% from its peak? Yes.

Is American business worth 60% less than it was in 2007? No. 

Have 68% of companies beat 1Q Earnings Estimates? Yes.

Did unemployment numbers come out better than expected today? Yes.

Has housing data slowly started to improve? Yes.

Was GM a dying company for quite some time? Yes.

Does Capitalism work, and will it restructure, or will another company take its place eventually? Yes.

GMX not to offend you but your biggest hinderance is your age. I have been investing for decades and if I have learned one lesson over this time it is invest in the market you are in, not the one you want to be in; you will make more money that way.

WWI/II, Vietnam, Cold War, 9/11, huge inflation, 12% unemployment. I have seen it all, and over that time period the overall trend of the market always has been up

VERY VERY WELL SAID

I still say the S&P is going to 950 and will hold it. Once this thing with gm is over, it might go up to 1000. Either way ive said many times over March lows are gone wont be touched again. FED/GOV wont let that happen BAC perfect example of not letting it happen!

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#20) On May 06, 2009 at 4:41 PM, DeerHunter73 (73.21) wrote:

By the way, to all the people leaving nasty comments on these blogs: I'm keeping an archive. I can and will use them to humiliate you when the market goes plunging again. Of course, most of you will leave (or shamelessly change your screen names) when the market crashes again just like last fall. It was too bad all my critics left then. Luckily, a new bear market rally makes new suckers.

 

That does show your age. People make mistakes all the time we live an learn by them. Your just stubborn i guess and not wanting to admit for the last 2 months you were wrong. Alot of people might not be so harsh with words sorta say if you left this 500 S&P alone. You made a comment a few days ago about the P/E should be 14, According to EVERY anaylists and news reporter on every news channel, The current P/E is 14.5. THATS WHAT YOU SAID WE SHOULD BE AT! so if thats the correct number according to you then the S&P AT 900 is the right number 14.....

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#21) On May 06, 2009 at 4:45 PM, amassafortune (29.58) wrote:

Retailers like WMT, TGT, and KSS did not participate today. Consumer spending drives the U.S. market. If this were a sustainable bull market, the largest retail companies would be leading at new-high levels. Oil and gold were leaders today. We are 38% above the 666 bottom. The largest depression-era bear rally was +45%. 965.7 will get us there if the psychology can last that long.

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#22) On May 06, 2009 at 6:00 PM, floridabuilder2 (99.30) wrote:

GMX should I keep an archive on negative blogs against me that you have written?  Just curious.  Most people know the market will pull back so your prediction of a market pullback is equivalent of me saying I will be hungry tomorrow morning.

You still think MTH sucks?

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#23) On May 06, 2009 at 6:10 PM, FastTradinOutlaw (< 20) wrote:

ya you will be too hungry tommorrow. 

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#24) On May 07, 2009 at 1:47 AM, peachberrytea (62.32) wrote:

hmm you don't seem to like ACAS much

as far as i can tell it's a black box (and black boxes are punished in this kinda market) and it's not clear whether it'll be insolvent.. tho that being said i haven't looked at how much debt they have due in the short run and whether their cash/NOI can reasonably cover that, or whether they can refinance

if you have done that kinda liquidity analysis and that's why u think ACAS' going bankrupt, i'd love to hear your analysis

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#25) On May 07, 2009 at 2:04 AM, awallejr (79.40) wrote:

Well listen to the CC.  If they can sell their european arm they should be OK, assuming no further deterioration in the economy.  If we really are at a bottom, and personally I think we are, then the company can survive and shares do have nice recovery potential.  As for why GMX hates the company I do not know.,  Personally I am pissed off at them, but because I invested in it in the past, I had to jump in hard when it tanked under $1.  Finally recouped my losses and am just riding out the storm with profits.

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#26) On May 07, 2009 at 4:15 AM, peachberrytea (62.32) wrote:

hmm yeah just glossed over CC... really haven't been following them and i shouldn't have commented.. ACAS is in default.. i guess cuz they breached some covenant? they mentioned they should have enough liquidity to cover debt that comes due this yr.. $230M?

i guess you could hate them for what they did last yr.. confirming their dividend and then cutting it a month later

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#27) On May 07, 2009 at 10:04 AM, OleDrippy (36.42) wrote:

#26) "I guess you could hate them for what they did last yr.. confirming their dividend and then cutting it a month later"EXACTLY.. Why would anybody waste their time listening to a CC by these guys? How can we believe a word they say? Cheerleading executives is NOT what we need. We need honesty and competency, which they certainly don't have the former and I'm beginning to believe they are deficient in the latter.  

 

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