A short view of where we are going

[dex]

"A brief rally is possible, but following that, I expect that the November lows will be challenged."
Decision Point®: Chart Spotlight 1/23/2009

Many advisers on Bloomberg TV have said the same thing.

I'm still holding onto a few cents to put into the market.

http://www.hussmanfunds.com/wmc/wmc090119.htm

 

[brewer12345]

"Imagine stalking elk past department store windows and stinking racks of beautiful rotting dresses and tuxedos on hangers; you'll wear leather clothes that will last you the rest of your life, and you'll climb the wrist-thick kudzu vines that wrap the Sears Tower. Jack and the beanstalk, you'll climb up through the dripping forest canopy and the air will be so clean you'll see tiny figures pounding corn and laying strips of venison to dry in the empty car pool lane of an abandoned superhighway stretching eight-lanes-wide and August-hot for a thousand miles."
- Fight Club By Chuck Palahniuk

 

[Hal3]

Geeez Brewer, you're starting to sound like me. What happened?

 

[FIREd]

Apparently there are still quite a few people calling for another 30-40% decline in the stock market for 2009 (2008 was 1931 and this is 1932 according to many of those people), with the S&P bottoming around 500. So I took a look at my portfolio to make sure I could handle such a drop without flinching. I think the answer is yes, and therefore I will press on with my plan and keep buying equities on the cheap, hoping that 2010 will be a repeat of 1933. Hopefully, things won't be as grim as predicted.

 

[harley]

Just picked up Harry Dent's new book - The Great Depression Ahead. Haven't read it yet, but he appears to be calling for a short recovery followed by a Dow of 3800-7200 by mid 2012.

I hope he's wrong, but I tend to have a little more faith in demographic predictions than in economic predictions. I'll check back after I've finished the book and let you know whether to start digging the bomb shelter or not.

 

[haha]

Just picked up Harry Dent's new book - The Great Depression Ahead. Haven't read it yet, but he appears to be calling for a short recovery followed by a Dow of 3800-7200 by mid 2012.

I hope he's wrong, but I tend to have a little more faith in demographic predictions than in economic predictions. I'll check back after I've finished the book and let you know whether to start digging the bomb shelter or not.

He sure has spent a lot of time being wrong over the past 10 years or so.

Certainly none of these extreme ideas is necessarily wrong, or impossible. Jeremy Grantham expects a bottom this year or 2010 around 600 or below on S&P. He keys this off of 1974, and his belief that bubbles always get back to or below the trendline.

But it is a market of stocks, not a stock market. When I see stocks at prices where I would like to own them long term, I tend to go ahead and buy. However, if it could be timed one would make much more money and endure less agony.

Ha

 

[brewer12345]

When I see stocks at prices where I would like to own them long term, I tend to go ahead and buy. Ha

Ditto. Bonds, too, especially as they eventually mature and pay off at par, assuming no default.

BTW, amid all this dire entrail-reading, it is worth noting that three new junk bond deals got done last week for well about $1 billion total. Its been at least 6 months since that has happened. Not a bad sign at all in my book.

 

[Gone4Good]

Apparently there are still quite a few people calling for another 30-40% decline in the stock market for 2009 (2008 was 1931 and this is 1932 according to many of those people), with the S&P bottoming around 500.

Yup, except this isn't the 1930's and you can't tell what's going to happen in 2009 by comparing 2008 to some prior year. Sure there are similarities to the 30's but the differences are bigger . . . for example, FDIC Insurance on deposits (when 9,000 banks went belly-up in the 30's depositors lost everything), letting 9,000 banks go down in the first place, the Fed tightening monetary policy, trying to balance the federal budget by raising taxes, worldwide competitive devaluations, worldwide tariff increases, a 3x increase in the Dow immediately before the stock market crash, no unemployment insurance, etc, etc, etc.

The stock market could very easily fall to 500. But if it does, it won't be because stocks fell 80% from their peak in the 1930s. If that's all they've got as evidence to support their hypothesis, they should find another line of work.

 

[FIREd]

Yup, except this isn't the 1930's and you can't tell what's going to happen in 2009 by comparing 2008 to some prior year. Sure there are similarities to the 30's but the differences are bigger . . . for example, FDIC Insurance on deposits (when 9,000 banks went belly-up in the 30's depositors lost everything), letting 9,000 banks go down in the first place, the Fed tightening monetary policy, trying to balance the federal budget by raising taxes, worldwide competitive devaluations, worldwide tariff increases, a 3x increase in the Dow immediately before the stock market crash, no unemployment insurance, etc, etc, etc.

The stock market could very easily fall to 500. But if it does, it won't be because stocks fell 80% from their peak in the 1930s. If that's all they've got as evidence to support their hypothesis, they should find another line of work.

I agree. There are many differences between 2009 and 1932. Yet, people always seem to get drawn to the past in order to predict the future. I don't know what evidence they have, but I wouldn't be surprised if it was based on statistical analysis and patterns. Since 2008 was the worse year ever for the stock market and that 1931 held that nefarious title until last year, I can see why the 2 periods have come to be compared.