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goldminingXpert (29.76)

The Mkt. Is About To Plunge (Day 4, Vol. 3)

Recs

52

May 03, 2009 – Comments (59) | RELATED TICKERS: EAR , N , ING

Are we enjoying the last weekend before reality returns to the stock market? Probably not. This bullish enthusiasm continues to surprise. However, the day when all the bullish lies are revealed to be empty and meaningless grows closer. For today's installment, let's discuss a fundamental--very fundamental--problem that bulls would prefer you don't discuss. Earnings. Or more correctly: WHAT EARNINGS? You really want me to believe that the S&P is going to rise when it is trading at a Forward P/E of 18? Are you trying to sell me land on Mars too?

The S&P500 as a group is projected to earn an average of ~$47 this year. The S&P is at 877. Thus 877/47 equals an elevated P/E. A historically normal P/E for the market is lower--in the nieghbourhood of 14. The bear market of 1932 bottomed at a P/E of 6! 6! Want to know where 6 takes us today? Actually, you don't, but I'll tell you anyway: 282. If we are to make a low equal to the great depression then stocks are due to drop 70% from where we are now. If stocks fall to a relatively moderate P/E such as, say, 10, then we get an S&P of 470.

However you run the numbers, there is no way to justify a valuation over about 600 as the market is already overpriced and expensive and earnings and dividend yields continue to fall without pause. If anything, the $47 estimate for the S&P earnings this year is too high, analysts have consistently slow in lowering expectations. All this said, I'd be shocked if the FINAL LOW of the S&P is above 600. 500 looks about right to me at this point, though obviously we'll have to see just how bad earnings and GDP shrinkage get before predicting an exact # of the bottom. However, no matter what the market is precisely worth, I can assure you without a doubt that the market is overpriced to a significant degree--something the CNBC crooners will never dare admit.

Look for the next part of this series tomorrow. As I mentioned earlier, I'll keep it going until it becomes clear to the (f)ools calling for a new bull market that this was just a long but irrelevant bear market rally.

59 Comments – Post Your Own

#1) On May 03, 2009 at 2:34 PM, awallejr (82.72) wrote:

I keep reading S&P PE at different rates.  And so far this past earnings season companies have been beating estimates more often than not. 

Value Line, for example, has their world of stocks PE currently at 13.4, 26 weeks ago was 11.7,  Market low on 10/9/02 at 14.1 and Market High on 7/13/07 at 19.7.

And while the market has rallied nicely so far, it is still 800 points below year's start.  And year's start was still 5000 points below '07 peak.

You can do all the mathematical permutations you want, it still is surmise.  Some are expecting S&P to earn average of $60 which would put you at your historical PE of 14.  You can challenge that all you want too, but ONLY time will tell.

But the one thing I am pleased about is how the market is starting to look at earnings instead of just reacting on fear.

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#2) On May 03, 2009 at 2:39 PM, drummnutt (< 20) wrote:

awallejar beat me to it, but I was going to say,

"Wouldn't it be nice if picking short term market movements was as easy as picking an earnings figure for 500 companies from ones ar$e and basing your predictions on that".

As I have said before, short this market at your peril.

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#3) On May 03, 2009 at 2:51 PM, checklist34 (99.73) wrote:

gold miner, you have to think about this a little deeper than skin deep.  So many factors are applicable here, so many factors, including

1.  factor out unrealized on-paper losses due to M2M accounting.  Across the banking, BDC, insurance and other industries M2M accounting is creatingn losses that don't actually exist.  For example, ACAS had good cash flow, easily paid its bills, but reported losses of billions due to the "market value" of some assets dropping.  At some point some amount of these losses will be marked back up, quite possibly for many companies or entire industires MOST of the mark downs will be put back up

2.  how did you calculate the p/e of the S&P 500?  weighted by market cap?  did you factor out unrealized losses? 

3.  a reasonable person would look over the situation of some given copmany and think "oh, ok, they had huge losses this year because they took a charge for ABC, but the earnings potential is great" and come up with what is a realistic fair price for the equity based on more than just staring at the p/e.  Should the market value of every company who is losing money this year be zero?  Would that be reasonable?  Multiples should expand at market bottoms during recessions and contract at market tops during boom times. 

4.  With the share prices of so many stocks hitting all time or 10 year or 5 year or 20 year lows, it seemsm like alot of companies have kind of thrown out the kitchen sink with respect to write downs.  A sort of "well, nothing left to lose now we might as well take every charge we can find"

5.  The losses in the auto industry alone probably raise the p/e on the S&P by a few points.  And while these are certainly real losses, they are kind of once in a lifetime losses with the epic drop on auto sales.  Someday the old cycle of bad-sales-years-creating-pent-up-demand will kick in and so on and so forth.

This argument that the p/e of the S&P is too high is more or less folly.   The arguments above and more apply.

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#4) On May 03, 2009 at 3:25 PM, goldminingXpert (29.76) wrote:

"Wouldn't it be nice if picking short term market movements was as easy as picking an earnings figure for 500 companies from ones ar$e and basing your predictions on that"

Um, I got that number from a bloomberg news consensus average of analysts from last week. Stupid comments like yours are the reason top bloggers quit blogging here.

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Now we get to the more serious comments:

One-time earnings exceptions and all the jazz? You guys act as if this is the first time we've seen 1-time gigantic losses. You don't think there were stunning losses factored into the historical AVERAGE P/E of the S&P 500 over the past century? We've had entire industries go bust before--say the railroads a few decades ago but that is already factored into the #s.

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factor out unrealized on-paper losses due to M2M accounting.  Across the banking, BDC, insurance and other industries M2M accounting is creatingn losses that don't actually exist.

They are real losses. The losses are in fact worse than so far reported. If you expect a mark back up on 2nd mortgages of houses that sold for 3x as much as they were worth in Cali, Zona or Florida, that money is long gone. The idea that all these toxic assets will suddenly turn back gold is some of the most offensive of the noxious blend of koolaid certain people have been chugging.

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#5) On May 03, 2009 at 4:06 PM, usmilitiadude (30.66) wrote:

I watch the S&P 500 earnings estimate report almost every week. 2009 as reported future earnings estimates have dropped several times since January to $28.51. P/E of 30.7? Not that they will be right, I watched fourth quarter 2008 go from earning $10 to losing $23.

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#6) On May 03, 2009 at 4:08 PM, amassafortune (29.67) wrote:

GMX is correct. FASB M2M rule changes are estimeted to have improved (overstated) reported bank earnings by up to 20%. I have no data to cite the effect of M2M on commercial real estate, or the total effect on S&P earnings, but GMX's forward P/E estimates understate his case. Q1's reported S&P earnings are like a cheap paint job done without scraping or a drop cloth. Today's market buyers are attracted to the improved curb appeal, but will soon be disappointed when they see the sloppy details up close.

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#7) On May 03, 2009 at 4:15 PM, Evlampius (24.04) wrote:

I agreee 100% with goldminer, that rally is surmised. Earningwise and accounting loopholes and economy in general.

If many companies beat their estimates it's only because they have been decimated so hard that their benchmark is set at the kindergarten level. So ofcourse they can beat the estimates all they need to do - is just lower their CEO salary by couple hundred of million bucks - Sha-Bang! you got your earnings est. beat!

and to checklist, ACAS is bankrupt. Their management, their business model and their assets all = "zero"! Sell while you can still get a kid's meal out of a share...

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#8) On May 03, 2009 at 4:28 PM, awallejr (82.72) wrote:

Gold, it is still surmise in the end.  If we all could predict the future then life would be boring.  You saw 2 big crashes, the fall of last year, and the winter of this year.  And both corrulating off the last 2 horrendous GDP numbers.  The question now is will those GDP numbers continue to decline or start to improve.  The market seems to be pricing in for improvements, but that could turn again down the road I suppose.  But we are getting into the period where the stimulus and FED/treasury policies should start kicking in.  And the treasury has yet to follow through on their toxic asset program, which could have a further positive impact IF implemented carefully.

Personally I am hoping we saw the market bottom back in March.  I still have concerns down the road.  But should there be another October crash this year then I will be all in at that point.

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#9) On May 03, 2009 at 4:34 PM, baybrowser (< 20) wrote:

It's always the unanticipated event that causes (at least temporarily) the most pain and grief because it surprises and frightens (and hurts) lots of folks. 

Consider, for example, the result when (not if) Israel goes after Iran's nuke sites.  Iran will at the same time be lobbing missiles at the Hormuz Strait (and elsewhere) and they're likely to succeed in really screwing up oil deliveries unless Israel makes that entire country glow in the dark.

Oil prices will soar overnight.  We'll be in hot competition with China and India and Europe for whatever is left. That in itself may lead to other serious consequenes, but the oil shortage by itself will send our economy south once again - with oil probably jumping way over $100 a barrel.

We are unfortunately living during "interesting times".

 

 

 

 

 

 

 

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#10) On May 03, 2009 at 4:42 PM, mistermiranga (98.04) wrote:

The numbers and the time frames can definitely be argued but I agree that calling a company "cheap" is pre-mature. We have zero visibility going forward and things declining at a slower pace and annualized stats that are subject to wild swings shouldn't be the basis for getting full-on bull.  

I happen to think that the rally has been extended by a healthy dose of short covering but maybe that is just sour grapes. Short covering is definitely fun when you are on the right side of it. :) 

 

 

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#11) On May 03, 2009 at 5:14 PM, starbucks4ever (98.98) wrote:

The market was overvalued in 1996, and it kept rising for the next 4 years...

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#12) On May 03, 2009 at 5:33 PM, kkotwani (99.63) wrote:

I completely disagree with GoldMiner....Interest were higher in 1930s...people didnt believe investing in markets...they believed in savings more. That explains smaller P/Es during those days.

Extending correlations to long back does not make sense...Atleast we can make sense out from last 10 years numbers....markets are trading at historically low P/Es ratios from that perspective. I see this as lifetime investment opportunity.

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#13) On May 03, 2009 at 5:59 PM, checklist34 (99.73) wrote:

GMX is correct. FASB M2M rule changes are estimeted to have improved (overstated) reported bank earnings by up to 20%.

that article referred to revisions to M2M rules, not to the historical impact of the rule. 

I think at this point alot of even bullish people almost hope we get some kind of a pullback to at least the low 800s.  Would let more people establish long positions at prices they feel good about, and ultimately strengthen the market.

I hope some of you bears bother to jump in.  Remember, bears will only be right until they are wrong, and I would guess the real money is made over the long haul by people with adaptive outlooks, and its w/o any doubt made by people who don't follow the crowd, not by people who wait for the media to say "buy, its cheap now".

ACAS is what it is.  I'm 4x my money on it in real life with a profit locked in and only some of the houses money left on the table.  I wouldn't be surprised if it goes 4x more from here, and I KNOW that you haven't sat down to delve into their situation, Evi, or your comment wouldn't be what it was.  They are in an interesting situation, but no person anywhere can say "they are bankrupt".  :)

 

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#14) On May 03, 2009 at 8:58 PM, Ecomike (< 20) wrote:

The recession was started by the housing bubble, but the market crash was driven by the bank crisis. The government has removed free market economics from the bank stock equation and also changed the housing forclosure driven crash situation while pumping new money into infrastructure and other government spending, thus stabilizing the markets, and possibly turning the world economy around.

Also the draw down of retirement funds, and hedge funds has reversed, and I think the hedge funds are buying and holding off on naked shorts for fear of instant uptick rule re-regulation. Much of the prior crashes were accelerated by huge margin calls, naked shorting, fear, changing of the guard in Washington uncertainty, Bank fears, etc, all of which seem to be behind us for now.

 No doubt there will be pull backs, someday, but as this market continues to refuse to correct, it looks more and more to me like we missed the lows for many stocks already, and some may be considered cheap at todays prices in a year or two. 

 I think the days of fundamental investing in stocks is slowly  returning to life.

 I am expecting a slow grueling steady market climb from here at least until really bad economic news trip some major fear breakers again, but I am not placing any bets on another crash at this point as the news has been too good lately to trigger another panic drop or big correction from here.  

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#15) On May 03, 2009 at 9:26 PM, ChrisGraley (30.25) wrote:

Interesting GME, I'm thinking of a downturn this week for entirely different reasons. I correctly picked the Bear Market rally, and even got the day right by blind luck. March 9th happened to be my birthday, so I figured I'd pick that as my rally day. I thought we were getting close and I knew I could be a month or so off, but figured that being even a month off wouldn't kill me unless there was some new "really bad news". I figured that the new creative accounting methods would make banks look a lot more profitable and the rally would last until around October when 3rd quarter earnings reports were starting to get leaked and Commercial real estate started to have an effect.

Well Just last week, I revised that estimate to June, given the possible effects of Swine Flu histeria, on what is already going to be a poor vaction season, then Friday I decided that the rally has moved upward too fast, and there are way too many news items to be reported this week that can hurt the market. I've been about 97% green thumbs until Friday and I've already started closing them. I'm think that I'll be at about 50% Green thumbs before the stress test results are released by Thursday.

I just find it wierd that you picked the exact same week to be negative on the market, for a totally different reason.

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#16) On May 03, 2009 at 9:41 PM, russiangambit (29.49) wrote:

>  I think the days of fundamental investing in stocks is slowly  returning to life.

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Gee. It is one of the most manipulated markets I've seen and people are talking about returning to fundamental investing. What is the saying? It is better to be ignorant and happy than know the sad truth.

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#17) On May 03, 2009 at 9:41 PM, russiangambit (29.49) wrote:

>  I think the days of fundamental investing in stocks is slowly  returning to life.

------------------------------------------------------------

Gee. It is one of the most manipulated markets I've seen and people are talking about returning to fundamental investing. What is the saying? It is better to be ignorant and happy than know the sad truth.

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#18) On May 03, 2009 at 10:22 PM, ChrisGraley (30.25) wrote:

Gee. It is one of the most manipulated markets I've seen and people are talking about returning to fundamental investing. What is the saying? It is better to be ignorant and happy than know the sad truth.

 

Agreed Russian, this is making it up as you go along investing. The one thing i've learned in the past though, is that any time the market is being manipulated, it never ends well.

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#19) On May 03, 2009 at 11:42 PM, awallejr (82.72) wrote:

Stock market manipulation is now the reason behind this rally?  Couldn't possibly be because things don't just keep going down to zero?  Couldn't possibly be because maybe, just maybe the worse is behind us?

Only way you are going to see new lows is if the GDP keeps tanking at the rate it did these last 2 quarters. An approximate total of 12-14 pct decline for the last 2 quarters was nasty enough to justfiy the crash, but too many positives to think that rate will continue. I wouldn't start proclaiming the dawning of a new bull market yet, but I think the bear really is getting tired now.

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#20) On May 04, 2009 at 12:04 AM, russiangambit (29.49) wrote:

Stock market manipulation is now the reason behind this rally?  Couldn't possibly be because things don't just keep going down to zero?  Couldn't possibly be because maybe, just maybe the worse is behind us?

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There is no law of physics that says that things must get better after they got sufficiently bad, they might as well continue getting worse unless something changes in the equation. Currently things continue getting worse. Of course, majority of the US population has seen only goot times, so it is hard for you to accept what you see, you simply ignore something you are not ready to accept. It is like trying to explain what pineapple tastes like to someone who never tried one. Until you experience a crisis it is impossible to explain what it is like. 

As for the market, it was forced both up and down. There is no way a normal market can move 1-2% on no news in 15 min. It is a regular occurence these days.

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#21) On May 04, 2009 at 1:07 AM, StevesStox (68.14) wrote:

GoldMiningExpert, you come across as very arrogant. Unfortunately, this is much to do with your high CAPS score and the fact that you are only a college boy. This rally will last through the summer, so you had better be prepared to frequently write these posts of yours.

 

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#22) On May 04, 2009 at 1:55 AM, awallejr (82.72) wrote:

But that's the point, russian, the equation is changing because of positives beginning to take hold.  Currently things aren't necessarily continuing to get worse. I am 54, trust me I have experienced plenty crisis.  And there are plenty Americans who were around during the last recession. 

 

Yet  the whole "manipulation" claim is still not explained..

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#23) On May 04, 2009 at 2:19 AM, starbucks4ever (98.98) wrote:

russiangambit, is there a reason you expect things to get worse? Of course I also know some Physics, and I realize full well that if you call off Bernanke and his PPT, shut down the printing presses, cut off the flow of funds to Obama, and educate the Chinese about the folly of lending money to a subprime government, then gravity will instantly take S&P to its equlibrium level of 400-500. But is gravity the only force in the equation? I don't think so. We all know that the net force on a helicopter (for helicopter is what we've got in the person of Ben Bernanke) is the sum of the gravity and lifting forces. So my only conclusion from this would be that you shouldn't be using any leverage at price points above 500  - because the pilot might well decide to turn off the engine for a minute to see if he can throw you overboard. But that same helicopter could also take off any moment it pleases and never look back, so I'd rather remain onboard with a full, though not overweight position. And take off it will, trust me on that. There will be a time when GS will want to sell you its stock for $2000 a share, and then we'll have a repeat of 1998-2000, and everybody will be wondering how come it doesn't come crashing down. And then it will crash again, but not before James Glassman publishes a book titled "Dow 360,000". 

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#24) On May 04, 2009 at 3:14 AM, goldminingXpert (29.76) wrote:

GoldMiningExpert, you come across as very arrogant. Unfortunately, this is much to do with your high CAPS score and the fact that you are only a college boy. This rally will last through the summer, so you had better be prepared to frequently write these posts of yours.

This sir, is an equally arrogant, if not more arrogant statement that you made. Your claim that the rally will last is based entirely on your credibilty as you failed to provide a single shred of evidence in support of your claim. Projection is a funny thing. I do come off as arrogant because this is one of the areas of life in which I am an expert. I've been calling for a bear market since Feb. 2007 and until I quit being right, I'm going to keep assuming I am right. Confirmation bias is a funny thing. I also write a weekly column and am an editor of a newspaper, so I'm trained to be confident. Sorry if that sort of writing offends you.

Let's see if you like this better?

Assuming that my thesis works out as planned and that conditions do not deviate from the variables I am projecting, I think it is fair to assume that their is the possibility that I may be correct in saying that this bullish move upward in the market may reverse if in fact conditions warrant a reversal based on a variety of factors which may or may not include a number of things on which I have previously dialogued.

Less arrogant? Yes. Useful? Um, no.

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#25) On May 04, 2009 at 3:51 AM, Buckaneer (< 20) wrote:

"GoldMiningExpert, you come across as very arrogant. Unfortunately, this is much to do with your high CAPS score and the fact that you are only a college boy."

 I know some self-made non-college folk that seem to have this sort of odd inferiority complex that you are exhibiting. To be honest, I think non-college - self-made people are sometimes more street smart - I admire them - UNTIL they begin to show arrognace as a sign of some inferiority complex from not having attended college. So, relax, lay off of the "college boy" stuff, and realize, YOU ARE ENOUGH. Forget college, it's NOT the be-all. But, you'd also be wise to respect that college can teach you a thing or two - not street smarts - but yet some good critical thinking skills. Take Care.

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#26) On May 04, 2009 at 3:58 AM, Buckaneer (< 20) wrote:

BTW: This market easily get to 950 on the S&P - but lots of resistance at 1000. Many people are waiting to get out at that level.

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#27) On May 04, 2009 at 4:24 AM, maxhoffa (< 20) wrote:

ACAS bankrupt?

ha!  not even on paper, let alone in the real world.

people crack me up, insisting the paper GAINS we had in recent years, and again in the past few months, should simply be disregarded as accounting artifacts . . . yet paper LOSSES are sacrosanct!?!

talk about having it both ways.  sheesh.

 

 

 

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#28) On May 04, 2009 at 7:02 AM, drummnutt (< 20) wrote:

LOL

How are all the "top of the rally" callers going? Too bad you're all missing out on profits of this nice little rebound while looking in the rearvision mirror!

Although you all feel hungover from our huge worldide booze-up, the rest of the world isn't still drunk. We are starting to sober up (yes it takes time).

Worse than missing out on these profits will be the shorters who will lose money. Just don't say that I and others didn't warn you.

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#29) On May 04, 2009 at 7:05 AM, IIcx (< 20) wrote:

Thanks, interesting article GMX and I have to agree -- the P/Es are overpriced at this point due to the swift run up.

We're due for several weeks of adjustment but I'll be very surprised if we retrace more then 50% of the rally.

"Plunge" is likely to be an overstatement as it will take at least a week if not several but only time will tell.

Regards, IIcx 

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#30) On May 04, 2009 at 7:10 AM, Evlampius (24.04) wrote:

ok come back to me when they file for chapter 11.

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#31) On May 04, 2009 at 7:58 AM, automaticaev (58.65) wrote:

so what is good to short now nothing?  Pick up natural gas this week?

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#32) On May 04, 2009 at 8:15 AM, awallejr (82.72) wrote:

Well one of the most impressive CAPS players has been Andreylikesmtl.  Talk about perfect timing,  His portfolio went up more points in a month than someone like Alstry made since he first started.

And as for ACAS, hell I am on gravy city with that stock now, having bought most of my holdings on it for .70 and sold off my initial investment at 3.75.  Still am expecting its approximate $1.40 dividend come mid June.  Just not sure if it is cash or cash and stock.  And no it is not going bankrupt.  It is in the process of selling off its European arm for $2 billion (with a B).

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#33) On May 04, 2009 at 8:15 AM, automaticaev (58.65) wrote:

what about faz this week?

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#34) On May 04, 2009 at 8:51 AM, russiangambit (29.49) wrote:

> But that's the point, russian, the equation is changing because of positives beginning to take hold.  

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I more on the same page with zloj about that, - the market is defying gravity due to all the money printing. However, I also expect the rule of diminished return work. It will take more and more money to push the market higher, until we end up in inflation. The pertinent question here is, though,  - will we crash before it takes hold or will stocks will inflate to keep up with inflation without rashing? Clearly, the second option it the preferred by other government since it helps to hide/ obscure the truth.

> Yet  the whole "manipulation" claim is still not explained..

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Call me suspicious, but I bet there are plenty of it going on that we don't know and will never know, but the things that leak - like WH brow-beating Chrysler bondholders, Treasurey strongarming BOA. What do you think are those?

As for the ones we know - did you notice propensity to announced new programs/ rules, out of the blue on Thursday prior to options expirations ( prohibiting short selling, announcing new uptick rules, various T* programs)? In the last 9 months it happens more often than not. This is open market manipulation. And what is going on in the world of derivatives and futures is probably even shadier. But I am no expert. I bet, the major brokers ( read GS and co) figured that if you can't beat them ( i.e. the government), join them, so they are pushing the market higher now. And now everybody who has been on the long side of crappy stocks that wnet up 200-300% feel like geniuses. What could be better? Everyone is starting piling in on the long side.

But because of all these games, there is no trust in the market ( it is super volatile), and it is becoming unhinged from reality. It will not end well. And when it does, there are going to be no winners. The two requirements for healthy market are transparency and keeping the rules of the game known. Currently, we have neither.

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#35) On May 04, 2009 at 9:11 AM, Xciteddon (68.65) wrote:

well I am by now means an expert but I do have common sense on my side. Having been involved with doing bookkeeping for small businesses and looking at what I am seeing with the bookkeeping shinanigans going on now, and the fact the banks don't want to appear to be in trouble I would say GME has hit the nail on the head. This is not by any means over. There are still more losses to be felt by the banks and financial sector out there. There will be more people defaulting on loans and mortgages. There will be more unemployment. This is not the end. Maybe the middle. If we are lucky. I like many would like the end to be near but I don't think government interference has done much but stall off the inevidable. I think bankruptcys still loom in the future. I think that the unstable banks will fallow Chrystler and GM. I don't think we can afford any more bailouts. But  we will see. I hope I and all of you, can make enough now that when it falls we can still hold our own. Have a great day everyone! Good Trading!

D

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#36) On May 04, 2009 at 10:13 AM, jddubya (61.66) wrote:

Assuming that my thesis works out as planned and that conditions do not deviate from the variables I am projecting, I think it is fair to assume that their is the possibility that I may be correct in saying that this bullish move upward in the market may reverse if in fact conditions warrant a reversal based on a variety of factors which may or may not include a number of things on which I have previously dialogued.

 

Ha Ha!  Thanks for this bit of humor!  It made me think of an imaginary Alstry posting where he chose not to be caustic and continues to not be helpful.

 

"The market is about to plunge..."

I agree with most everything you've written in this series.  Keep it going! 

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#37) On May 04, 2009 at 2:09 PM, anticitradeshort (29.59) wrote:

I enjoy and appreciate your extreme stance on this topic.  However, I think you have set yourself up for dissapointment.  While I agree that their are plenty of overvalued stocks in the market, there are a lot of stocks that have consistantly reported strong earnings and are still undervalued.  (The projected earnings are very pessimistic as a rule).

Also if one was going to bet on the long term direction of the market, you would have to ignore a lot of history to believe that the market is not going up (in the long term).  Bear markets are not the rule, but the exception.   

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#38) On May 04, 2009 at 4:30 PM, DeerHunter73 (72.47) wrote:

I said back in March S&P WAS GOING TO 950  and it would hold that number. Not to mention if it did hold it for the remainder of the year it would only be about 6% gain for the year. THATS not alot of gains. IT finally made back all its losses this year but it took 2 months to do this. Even if the stress test shows bad results the sell off will last a few days. We would gain back those looses over the following week. Bulls or bears doesnt matter at this point. ALL OF YOU WHO HAVE SAID FOR THE LAST 6 WEEKS THE S&P WAS FALLING WEEK AFTER WEEK WAS WRONG. The march lows WILL NOT be tested  again. That was the bottom. Sure some selling will occur. ill say 60 points from todays close is due, But that will all be gained back with more once people stop taking profit and reinvest it.

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#39) On May 04, 2009 at 4:46 PM, minimidgy (98.41) wrote:

How are you figuring out the P/E for the S&P?

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#40) On May 04, 2009 at 5:34 PM, tgarci2 (80.21) wrote:

Um, I got that number from a bloomberg news consensus average of analysts from last week. Stupid comments like yours are the reason top bloggers quit blogging here.

 

This sir, is an equally arrogant, if not more arrogant statement that you made. Your claim that the rally will last is based entirely on your credibilty as you failed to provide a single shred of evidence in support of your claim. Projection is a funny thing. I do come off as arrogant because this is one of the areas of life in which I am an expert. I've been calling for a bear market since Feb. 2007 and until I quit being right, I'm going to keep assuming I am right. Confirmation bias is a funny thing. I also write a weekly column and am an editor of a newspaper, so I'm trained to be confident. Sorry if that sort of writing offends you.

Checklist never made any stupid comment, unless his informed opinion is a stupid comment.  In which case, everything you write is a stupid comment since it falls in the "informed opinion" category.  I think you know what you are talking about more often then not but you are walking straight toward a hole while your nose is in the air.  So what if you're a columnist for a school newspaper, anybody with a decent education and some knowledge on whatever topic they wish to speak on can "write".  It takse alot more skill to not be a jackass while conveying those thoughts, something I suggest you work on

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#41) On May 04, 2009 at 6:11 PM, SuperPicks (29.31) wrote:

I think the strongest statement here is zloj's comment way above:

"The market was overvalued in 1996, and it kept rising for the next 4 years..."

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#42) On May 04, 2009 at 10:13 PM, MGDG (36.49) wrote:

GMX--This is a strong Bear Market Rally. It might end up rivialing those in the 30's. It will end at some point and we should see new Market lows before the Bear has run it's course. Yes I'm still long and strong, but I have no illusions as to what lies ahead. There will continue to be two types of investors in this market, the Quick and the Dead.

    

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#43) On May 04, 2009 at 11:02 PM, chopchop0 (35.96) wrote:

These negative comments on ACAS are hilarious --- do people realize that they have a legitimate stake in a basket of businesses?

 
It's easily been a 4-5 bagger+ since it's 52-week low.   I averaged down my previous position nicely by buying it CHEAP

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#44) On May 04, 2009 at 11:37 PM, awallejr (82.72) wrote:

Not to derail this thread to a discussion on ACAS, but I am still pissed off at the CEO. I bought into it on its yield, only to watch it constantly fall making me average down.  Then the summer rally allowed me to sell for a profit.  Then I rolled those profits back into it on the CEO's basic assurance that the 2009 dividends were covered.   Then, wammo, they suspend dividends and my profits plunge.  The fall to .70 at least allowed me to buy a buttload to lower my basis way low to finally get my initial investment out.

No rush to sell it now since they still have to distribute the 300million come June15.  I do have a stop loss at $3 tho. 

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#45) On May 05, 2009 at 2:15 AM, Ecomike (< 20) wrote:

Looks to me like a lot of shorts lost their shorts, I mean shirts in the market yesterday, which just pushed the market higher and faster, just like margin calls and hedge fund/mutual fund withdrawals  helped make the crash an over reaction. At this point I just don't see an imminent MAJOR market correction until the news gets real bad again, or the market goes much higher and so far the day to day news has been way too upbeat to cause any serious corrections like the last few.

 Folks, it is time to go back to fundamentals and go long on some cheap stocks, those that are still cheap that is, while there are still some worth buying, unless you are a trader only.

 I don't see the SPX dropping back below about 850 unless some really bad unexpected news, and not just one, but a series or wave of bad news hits the market, said wave exceeding the continuous hints of a bottom that have been evident in numerous places the last 8 weeks.

 I actually bought 2 more stocks today, planning to stay long for the several years now.  I must admit I have looked at maybe a 1000 stocks in the last 8 months, and I have been very picky on those that I bought for the long haul. My trading days are over for the time being. I am buying to hold now, and have been for about 5 weeks.

 I won't be scared off into selling again like I did in the last crash.

 I see fundamental differences in this market versus the 1930's. One is the gold standard is gone, and the money pumps are at full flow, which in this day of internet speed in the economy (rate of change now versus 1930) I expect a much more rapid recovery.  

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#46) On May 05, 2009 at 2:36 AM, B0n3Z (< 20) wrote:

Thanks GoldminingXpert for your opinions.  I am by no means a market timer, but your analysis of global fundamentals appears strong. Mass psychology seems to play an important role in all this which shouldnt be underestimated, but your PE arguments appear valid and I agree that in the long term there is certainly a potential for quite a bit more downside before things thaw for another long market climb.  Thumbs up.

 

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#47) On May 05, 2009 at 8:44 AM, DeerHunter73 (72.47) wrote:

 The S&P500 as a group is projected to earn an average of ~$47 this year. The S&P is at 877. Thus 877/47 equals an elevated P/E. A historically normal P/E for the market is lower--in the nieghbourhood of 14.

Since you stated you got your info off of bloomberg, So did i this morning. According to bloomberg the S&P is trading at 14.5% earnings at its current level. Also 68% of reported companies have BEAT expected earnings. Thus causing the rise in the s&p. You have asked me several times in the past where i get my info? Direct Tv Bloomberg channel 353. Sometimes i have all 8 of them on lol. Never the less you made the comment we should be in there area of 14 and we are according to Bloomberg, and thats at the current closing price as of 05/04/09

 

 

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#48) On May 05, 2009 at 9:36 AM, awallejr (82.72) wrote:

Despite everyone's prognosticating it has always been and will continue to be how GDP does in the end.  If it rises, the market will rise, if it continues to tank worse than last 2 quarters, the market will tank.  Time will tell, but I am investing on the former long haul.

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#49) On May 05, 2009 at 4:07 PM, rickdoom (97.17) wrote:

    Um, I got that number from a bloomberg news consensus average of analysts from last week. Stupid comments like yours are the reason top bloggers quit blogging here.

    This sir, is an equally arrogant, if not more arrogant statement that you made. Your claim that the rally will last is based entirely on your credibilty as you failed to provide a single shred of evidence in support of your claim. Projection is a funny thing. I do come off as arrogant because this is one of the areas of life in which I am an expert. I've been calling for a bear market since Feb. 2007 and until I quit being right, I'm going to keep assuming I am right. Confirmation bias is a funny thing. I also write a weekly column and am an editor of a newspaper, so I'm trained to be confident. Sorry if that sort of writing offends you.

    Checklist never made any stupid comment, unless his informed opinion is a stupid comment.  In which case, everything you write is a stupid comment since it falls in the "informed opinion" category.  I think you know what you are talking about more often then not but you are walking straight toward a hole while your nose is in the air.  So what if you're a columnist for a school newspaper, anybody with a decent education and some knowledge on whatever topic they wish to speak on can "write".  It takse alot more skill to not be a jackass while conveying those thoughts, something I suggest you work on

 

tgarci2, just as an FYI, it should be noted that GMX's comments were actually directed toward drummnutt and StevesStox, respectively... NOT checklist.  If you're going to make constructive criticism, that's all fine and good... but one should not underestimate the importance of getting one's facts straight before posting a hasty reply.

As for GMX's take on the current state of the market, I tend to agree with him on this one.  Funny how ever since the market turned around, suddenly there's this plethora of bulls with their heads in the clouds shouting "yay, we're saved!"  But I just don't buy it.  Right now, all we really have is a market that has been artificially propped up by throwing endless amounts of money into a black hole.  I don't know about you, but that's certainly not the kind of economic recovery that makes me feel all "warm and fuzzy" inside.

Hence, I want nothing to do with this market at current levels.  In my real life portfolio, I started scaling out of my long positions toward the end of April, and have been 100% cash ever since May 1st.  Perhaps I was a tad early in making this call, but so be it.  Undoubtedly, all of the "easy money" has already been made on the long side.  At this juncture, to stubbornly stay long with the hope of squeezing out a few extra points of upside just isn't worth the risk, IMHO.

 

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#50) On May 05, 2009 at 5:23 PM, uclayoda87 (29.51) wrote:

Dow 5000? There's a Case for It - WSJ.com Mar 9, 2009 ... Despite Friday's small gain, the Dow Jones Industrial Average marked its ... his post on the trading floor of the New York Stock Exchange March 6. ... For Mr. Lee, the S&P at 500 "would imply that we are now in a period ...

 

The argument for a new low appears well supported.  So after acquiring some profits from this bear market rally, we can look forward to some buying opportunity when the S&P nears 600.  I'm feeling more optimistic already!

The possibility of reversing all of my losses from 2008 in one year, Amazing!

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#51) On May 05, 2009 at 11:31 PM, goldminingXpert (29.76) wrote:

Tgarci, I kindly and humbly ask you to f*** off. Thanks.

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#52) On May 06, 2009 at 11:03 AM, Evlampius (24.04) wrote:

him and Chopchop0 do the same!!!  ACAS

FINANCING UPDATE AND COVENANT BREACHES

The Company remains in default on $2.3 billion of unsecured credit arrangements outstanding as of March 31, 2009. The Company was able to reduce its outstanding debt by $51 million during the quarter ended March 31, 2009.

And to that the CEO gets paid 6.4 million!

If you think they can get that money from somewhere then you can waste your money on this useless crap. Personally I am going to buy me a Hamburger instead.

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#53) On May 06, 2009 at 11:13 AM, goldminingXpert (29.76) wrote:

ACAS -22% today. That's a shame.

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#54) On May 06, 2009 at 11:16 AM, chopchop0 (35.96) wrote:

Evlampius,

 you forgot to mention that they sold Piper aircraft for $31 million in profit during this rough environment.

 It's a bad time for ACAS, but i'm extremely long on the stock, particuarly at $1 a share ;)

 I still have 116 pts :D

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#55) On May 06, 2009 at 4:49 PM, Evlampius (24.04) wrote:

Great, you can use it for McDonallds value menu $1.

..another thing is this - when you buying a stock what are you buying in fact? There's no Earnings only losses. There's no growth there's no investments and theres' no availability to credit. The only way you are making money is speculating that other dum-dum's ("give me a gum-gum") buying the stock to increase it's price on volume.

What is the long term view on the company?

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#56) On May 11, 2009 at 2:49 PM, chopchop0 (35.96) wrote:

They have a huge portfolio of equity (ownership) in a number of companies.    It is completely foolish to say they have no investments or potential for growth.

 Go take a look for yourself: 

 http://www.americancapital.com/our_portfolio/our_portfolio.html

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#57) On March 27, 2010 at 1:17 PM, jaccuse6 (< 20) wrote:

It looks like goldminingxpert was right and all you fools were wrong!

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#58) On March 27, 2010 at 1:45 PM, nyntrouble (< 20) wrote:

I didn't read these posts but you need to read this one:

Public Sector is going to layoff massive amounts of workers.  All 50 states put their Public Pensions in the stockmarket and when it went down in 2008 they lost a decade of investment growth.  Now the Pension funds are forcing, by law, all state agencies to pay for their losses.  This is happening at the same time that state agencies are strapped with huge deficits.  Combining these two things with increased taxes and the bad news coming from corporations about healthcare costs will lead to extremely low spending on non-essential goods all this year.

Research how states pay for their public pensions and how they will have to make massive cuts to cover the loss.

Invest in companies that make things people NEED.  If it is a "want" it is about to tank....

good luck

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#59) On March 27, 2010 at 1:50 PM, nyntrouble (< 20) wrote:

I estimate public sector unemployment to skyrocket for the next couple years as all 50 states are forced to pay skyrocketing pension costs while also trying to balance their budgets (by making big cuts).

It is going to be a bad year for the stockmarket but good year for walmart :)

 Public sector money is being transferred from the current state workers to the retired workers so any company that makes money on old people will kill in the coming years.....

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