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Old 10-20-2007, 02:13 PM   #61
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Only if the Fed cuts interest rates again. If not, the fall could last a while.
Because?

Earnings are still quite robust for most companies. Aside from the actions of nervous boobs in the short term, earnings are what drives stock prices.
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Old 10-20-2007, 02:49 PM   #62
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Because?

Earnings are still quite robust for most companies. Aside from the actions of nervous boobs in the short term, earnings are what drives stock prices.
Like most times, for this quarter there are some companies reporting blowout earnings and some reporting weak earnings.

It's just that in an "optimistic" market, the bad earnings are ignored while the bulls ride the blowouts to new highs. In nervous Nellie markets, the blowouts are ignored and each bad earnings report is evidence that the sky is falling.
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Old 10-20-2007, 02:50 PM   #63
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Because?

Earnings are still quite robust for most companies. Aside from the actions of nervous boobs in the short term, earnings are what drives stock prices.
Have you been following the economy at all? Earnings are mediocre and don't have as big an impact as interest rates and FED policy anymore, the housing bust is becoming more and more relevant, the value of the dollar is heading for an all time low and energy prices seem to be heading to an all time high. The market is overvalued and a major adjustment is in the near future.
Earnings drove market prices in the past, but speculators drive the prices now adays.

The internet drove the economy of the 90's and government spending, low interest rates, refinancing, and the home building boom fueled the economy of the first half of this decade. I see nothing in the immediate future that will boost the economy like those factors.

CNNMoney.com Market Report - Oct. 19, 2007
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Old 10-20-2007, 06:08 PM   #64
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Okay took another 5% of cash and placed an order for some mid cap value. My move should place a floor for Monday and set up a nice rally.
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Old 10-20-2007, 09:26 PM   #65
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Have you been following the economy at all? Earnings are mediocre and don't have as big an impact as interest rates and FED policy anymore, the housing bust is becoming more and more relevant, the value of the dollar is heading for an all time low and energy prices seem to be heading to an all time high. The market is overvalued and a major adjustment is in the near future.
Earnings drove market prices in the past, but speculators drive the prices now adays.

The internet drove the economy of the 90's and government spending, low interest rates, refinancing, and the home building boom fueled the economy of the first half of this decade. I see nothing in the immediate future that will boost the economy like those factors.

CNNMoney.com Market Report - Oct. 19, 2007
I think its safe to say that I am a far more astute observer of the economy that most any journalist working for CNN, Fox "News", CNBC, etc. They are journalists trying to make sense of the economy. I am an economist studying what I was trained to study.

You been paying attention to what the BRIC(K) countries have been up to? The German banks may have been dumb enough to get wrapped up in US subprime paper, but the BRICK companies don't give a fig about all that. That is what has been driving the global economy in the last few years.
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Old 10-20-2007, 11:50 PM   #66
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Old 10-20-2007, 11:55 PM   #67
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I think its safe to say that I am a far more astute observer of the economy that most any journalist working for CNN, Fox "News", CNBC, etc. They are journalists trying to make sense of the economy. I am an economist studying what I was trained to study.

You been paying attention to what the BRIC(K) countries have been up to? The German banks may have been dumb enough to get wrapped up in US subprime paper, but the BRICK companies don't give a fig about all that. That is what has been driving the global economy in the last few years.
You're joking. Right?
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Old 10-20-2007, 11:59 PM   #68
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You're joking. Right?
Which part? He really is trained and paid to do this for a living.
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Old 10-21-2007, 12:01 AM   #69
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You're joking. Right?
Razor pay attention, he knows.
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Old 10-21-2007, 12:08 AM   #70
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Here's a puzzle for all the economists in the house. What does this graph tell us?
Attached Images
File Type: jpg YOY%2BChange%2BRI%2Bwhere.jpg (148.3 KB, 39 views)
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Old 10-21-2007, 12:10 AM   #71
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I think it's a bad cardiogram reading.
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Old 10-21-2007, 12:12 AM   #72
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I think it's a bad cardiogram reading.
I agree. I don't think the patient will make it.
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Old 10-21-2007, 01:21 AM   #73
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Here's a puzzle for all the economists in the house. What does this graph tell us?
I am not an economist and don't pretend to be one, but I find this graph interesting for several reasons:

1) If history is any guide, the chance of a recession are fairly high right now, though drops in YOY returns have not always been followed by a recession.
2) In the past 25 years the frequency and length/severity of recessions has decreased quite dramatically.
3) In the past 25 years, the volatily of YOY percent change has decreased notably.

Let's face it, my interpretation of this graph is as good as anyone's... But it looks like something happened in the past 25 years which makes it difficult to extrapolate from these historical data what's going to happen this time around...
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Old 10-21-2007, 01:32 AM   #74
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Not an economist. This chart seems to indicate that residential investment tends to be sporadic. Other factors, such as consumer spending and commercial real estate investments, will have to considered before making any prediction about where the economy is heading.
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Old 10-21-2007, 01:49 AM   #75
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Looks like only 1951 and 1967 showed a strong downward deflection in residential construction spending that did not come to a recesion. '67 of course was the eve of Mr. Johnson's ramp-up of the Viet-Nam war on top of the War On Poverty, the apogee of guns and butter. 1951 was coming out of the post WW2 recession, and was benefitted by enormous demand built up during the war years. So in each case there were very special circumstances and underlying strengths.

It is hard for us today to even imagine the sheer joy of consuming that people felt in the early fifties. The population was making good money, babies were everywhere, and families needed and had the means to pay for lots of things. Also, interest rates were quite low, and the economy was highly liquid.

From my vantage point, today we are running on hope and a prayer.

Ha
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Old 10-21-2007, 07:25 AM   #76
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The trend in residential investment will probably turn around in the next year.
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Old 10-21-2007, 07:31 AM   #77
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What gumby said.
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Old 10-21-2007, 01:56 PM   #78
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The trend in residential investment will probably turn around in the next year.
On what are you basing your projection?

The inventory of homes is still climbing. The sales of homes is still declining. Even if no new inventory came on the market and sales stayed at current levels, it would take almost a year to burn off the current inventory.

I think an RI turnaround in one year is optimistic. But even so, RI is a leading indicator. We still haven't seen the effects on consumption or commercial investment. If those get hit, it'll be safe to say economic growth is dead, earnings will be hit, and the stock market will be hating it.
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Old 10-21-2007, 02:03 PM   #79
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Is it over yet?
Still it could be worse. As of Friday, for the year, I am down 2.5% from my portfolio high and up 5.6% from the beginning of the year.
Am I glad I got my AA and 5 year 'money buckets' in place.
... sleeping like a babe.
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Old 10-21-2007, 03:34 PM   #80
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On what are you basing your projection?

The inventory of homes is still climbing. The sales of homes is still declining. Even if no new inventory came on the market and sales stayed at current levels, it would take almost a year to burn off the current inventory.

I think an RI turnaround in one year is optimistic. But even so, RI is a leading indicator. We still haven't seen the effects on consumption or commercial investment. If those get hit, it'll be safe to say economic growth is dead, earnings will be hit, and the stock market will be hating it.
I work for a multi billion dollar company in the housing industry. Last year our analysts predicted the recovery would begin in 2008. They have revised there predictions and and now expect housing to begin turning around late '09 into 2010. My company is taking appropriate actions to weather the storm which might last longer than expected.
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