Calling the bottom!

[al_bundy]

i was very close to going long around 3pm yesterday but didn't. read my newsletters today, looked at charts and i'll probably go short on monday. i think there is another 10% downside from here. plus or minus 2 points

of course this can change at any time during the day depending on how the market works itself out. wouldn't be surprised if we pop to 910 - 920 SP500 first thing Monday and down from there

 

[2B]

of course this can change at any time during the day depending on how the market works itself out. wouldn't be surprised if we pop to 910 - 920 SP500 first thing Monday and down from there

I don't think the market can do anything that would really surprise me anymore. It could go limit down and close for the day or go up 20%. This thing has no logical force driving it at this time. It's overwhelmed with panic and emotion.

On the plus side the basic "cause" of the mess, the credit crunch, is getting taken care of with what appears to be an endless supply of money from governments. They will recapitalize the banks come hell or high water. Whether the banks loan to anyone remains to be seen. I expect a round of interest rate cuts by various central banks that will be greeted with a giant yawn by the markets.

The impact of lower oil and other commodities remains to be seen. Two months ago the price of commodities was "threatening" the market and economy. Now, it's the other way around. All this and we haven't even officially been declared to be in a recession.

 

[capjak]

Still do not believe it is time to get into stocks. there is no positive driving force right now.

Media keeps talking of a potential "Depression" which sends us hoarding money and not buying consumer goods, Election is coming up and the impact of a Dem majority is not understood, IRAQ/IRAN/Afgan etc..

Just see more chance for it to go down than up..... I thought 9000 was the bottom a month ago now who knows...3000?

Oh and happy Holidays!

 

[volga]

The bottom is most likely going to be the range we are in now, give or take 5%. The US has bought into or otherwise made all the main banks quasi-federal financial agncies. IMHO we should not expect to be able to benchmark the bottom. If you bail out now you have zero chance of recovering the losses from this down spiral on your mutual funds when the market goes back to its upper mean line, which it will eventually do. (If it does not then we are back to living in caves!)

My real concern is that this federal intervention has the potential for unintended consequences, such as undue creation of new money supply (from the open FED money window and the so called bail out funding) resulting in massive dollar devaluation and inflation. There are real bargains in this market, so long as one can last as long as a decade it will take for this market to unwind and for the new market to form a rational basis for trade and value. That will take at 20-40 months to mature, in my opinion.

The ironic side of this is that there will be so much new regulatory intervention in this new market risk/reward ratios will narrow and the better investments will likely be private investments in specific projects or ventures, which have much more unregulated risk, more outright fraud, as well as potential upside if one gets into the right deal. If you regulate the downside of risk, you also cut off much of the upside.

 

[Dawg52]

Just see more chance for it to go down than up..... I thought 9000 was the bottom a month ago now who knows...3000?

Oh and happy Holidays!

Let's just take all the suspense out of it and call for a -0- DOW. Can't go any lower than that, can it?

 

[kumquat]

Can't go any lower than that, can it?

be caerful of what you ask for.

 

[clifp]

Dow -1,000. There going to after anybody wealth enough to stocks to bail out the folks with mortgages, so owning stocks will be worth less than zero.

 

[Grep]

And when your stocks finally go to zero, perhaps you will still be stuck with a tax bill for "capital gains" that resulted during the sell-off.

 

[Geoffrey]

I don't believe anyone can call the bottom -- there is too much human psychology and too many imponderables involved. For me, a more interesting and relevent question is what is fair market value? Many have opined that the market is now undervalued. Is it? I don't really know. Certainly there are commentators who believe so . . . but, on the other hand, there are commentators who would argue that by historical standards the market is still richly priced. http://www.marketwatch.com/news/story/valuations-low-only-if-you/story.aspx?guid={6071ABC4-8568-4529-8A87-E182268CE13E}

As for myself, I don't really have an informed opinion. So, until I have a better handle on whether the market is indeed underpriced, overpriced, or somewhere in-between, I will be very hesitant to jump back in. I take little comfort buying "at the bottom" if the underlying value still isn't there. As I understand it, how much any given stock is worth depends on how much income the stock is capable of generating going forward. What I am concerned about is that the income generating capability of many companies was artifically "juiced" for many years by the housing bubble, over-leveraging, etc. Now that the "juice" is gone, what kind of returns is the market capable of generating? When we know the answer to that question, we'll know whether it is smart to buy.

 

[Dawg52]

I don't know how low it will go, all I know is I'm not buying anymore stocks. If that is capitulation, then I have capitulated. But if it's based on one having to sell all their stocks, then we will never have capitulation because there are many like me that plan to hold, no matter what. So, maybe we will have a slow death to zero.

 

[2B]

Let's just take all the suspense out of it and call for a -0- DOW. Can't go any lower than that, can it?

Maybe they'll do away with limited liability and make us all mail in cash for losses of our failed companies. That would do away with about 500 years of economic progress. We could build debtor prisons. I could go on but the doomsdayers would get to much fun out of it.

 

[2B]

I don't know how low it will go, all I know is I'm not buying anymore stocks. If that is capitulation, then I have capitulated. But if it's based on one having to sell all their stocks, then we will never have capitulation because there are many like me that plan to hold, no matter what. So, maybe we will have a slow death to zero.

I already called the bottom. The interday low was 10/10 for the S&P. It's all upside from now on -- maybe.

I'm still putting money into stocks every two weeks in my 401k and SEPP plans. My asset allocation has been frozen and I've made the decision not to move money (ever again) from my fixed/cash pile to equities. I'll be going into withdrawl mode within a reasonable period of time which will always involve rebalancing out of equities every year to replenish my cash pile.

I'm like you at the moment. I'm holding pat but I might do a tax swap to capture enough losses for the next decade. Unfortunately, at my retirement withdrawl rate the deduction won't be worth very much.

 

[haha]

i was very close to going long around 3pm yesterday but didn't. read my newsletters today, looked at charts and i'll probably go short on monday. i think there is another 10% downside from here. plus or minus 2 points

of course this can change at any time during the day depending on how the market works itself out. wouldn't be surprised if we pop to 910 - 920 SP500 first thing Monday and down from there

Attaboy Al. Knock 'em dead!

 

[Nords]

I already called the bottom. The interday low was 10/10 for the S&P. It's all upside from now on -- maybe.

We'll know that capitulation is truly at hand when you start a thread on finding a trustworthy annuity advisor who could help you convert your ER portfolio to an actively-managed EIA...

I know that capitulation isn't at hand because spouse hasn't asked me about buying bonds yet. In fact the other day she wondered if Berkshire wasn't possibly a bit underpriced.

 

[2B]

We'll know that capitulation is truly at hand when you start a thread on finding a trustworthy annuity advisor who could help you convert your ER portfolio to an actively-managed EIA...

I've seen several bears since 1974. The one truth is that the end in total boredom. The gut wrenching decline is over and the market just sits there. Volume drops off. The prices move just a little up and down. The news media says things like "equities are dead." Then one day the volume comes rolling back and its up 50% in a couple of months.

I wouldn't be surprised to see this quiet down in the next couple of weeks and just lay there for a month or two. Also, it could just turn on a dime and go up without the dead zone. This fall has been so brutal you don't know how it will end. Right now I'm willing to bet there are shorts galore. Clipping the shorts is usually a big part of the return of the bull.

All I can say is that when the bull returns I want everyone that rides it to be wearing spurs.

 

[al_bundy]

i'm reading Bob Prechter's book and he says the exact same thing. in his words when the market is in the final wave down volume goes down and it just falls.

same thing now, the average volume is way down since early October. XLK and a few other spdr's have already gone below the October 10th low, and a few others are close. once they do then it's off to the races again

 

[NW-Bound]

Doesn't the market need to hear all the possible bad news first?

Does anyone remember what Buffet said late last year when a reporter asked him about whether the most recent revelation about the implosion of a financial company (don't remember which) was the last shoe to drop?

Buffet said "No, no. When people talk about dropping shoes, you don't know whether it is a one-legged man, or a centipede".

I always like Buffet's wisecracks. And remember that this was very early, after the two Bear Stearns hedge funds were going under, not Bear Stearns itself. And way before FannieMay, FreddieMac fiasco, nor AIG's. And just today, we learned of the Arab banks imploding. They obviously were stronger than the European banks, so succumbed later.

So, Buffet's centiped turned out to be a milliped!!!

I am going to sit back and watch. Not selling, nor buying for a while. There may be more lay-offs. The impact on the Xmas season is still unclear...

PS. I know about Buffet's recent op-ed. Still, being no longer an accumulator, I've got to be verry careful here. "Come on in, the water is fine!". I want to see plenty of other swimmers in there first.

 

[Jamesv2]

Hello everyone,

I'd just like to say I appreciate the extent of knowledge and opinions on this bulletin board. I have been lurking for about a week (as well as on other financially inclined forums and sites) to get others' insight into recent events.

Anyhow, I'm relatively new to investments as a whole, although I do understand the jist of the basics. I don't have much of a nest egg for myself to invest as I'm just starting to save money, however my father who is a hard working in a blue collar industry, has a 401k and I wanted to get insight for him. He obviously has lost a good amount from his retirement account in the past year, before hand however his small sized employer used to rely on some sort of profit sharing program and totally managed his portfolio/savings along with the other employees in the past. However about late last year they switched to a retirement account/401k system with a financial institution (Principal) I assume to save costs - these accounts are your typical style, giving a selection of different funds in the fixed income, value and growth equites etc, as well as those Life cycle style funds that allocate for you. Anyhow, my father picked one of the life cycle funds late last year (2020 fund - he's in his mid 50s) , he didn't know really what to do and no one really gave advice, but he heard others saying since it's in the middle of the road of the funds providing it should be alright since its supposedly diversified (the employees had to decide in a quick meeting with the Principal rep at their work-sight). He doesn't know much about investments strategies and the representative from Principal was very rude to the employees and was on a time schedule apparently and was passive on where the workers' allocated their money too.

Anyhow long story short, he has lost about ~30% with this downturn as others had, in a panic one of this fellow coworkers told him to move it to the Money Market fund which he did on Oct 10 unfortunately. So I told him he would probably have been best served to not have moved it as that was most likely the bottom. However, now I'm not sure what he should do, I would like to give him some isight myself, but I know picking bottoms can be rough and people do brash things when they see their hard earned savings take a hit.

In his case, would it be better to get back in now? Or might as well wait until the market stabilizes since he's already pulled out? I know he can move his account online back to the funds whenever he wishes.

Any insight would be appreciated on this.

regards,
James

 

[2B]

I am going to sit back and watch. Not selling, nor buying for a while. There may be more lay-offs. The impact on the Xmas season is still unclear...

The only thing that will be selling this year is wind up Obama dolls.

I'm actually counting on a euphoria factor in the media when the dems sweep everything. They will be performing personal sex acts on national TV in celebration. Everything will be exciting and really good news. As of now, everything, even if it appears good, is really just a head fake for the terrible news around the corner.

 

[unclemick]

Saint's won! - in London yet. Soooo - what's that got to do with dropping shoes and falling knives? - got to stop watching 4th quarters and let those Vanguard computers rebalance without my yelling and screaming and jumping up and down. Whew.

Gonna buy 'good busineses' at a fair price and ignore Mr Market - with mad money only and quell those hormones.

Bullcrap - great theory - so what do I chase? Monty Python's holy grail aka growth or the Norwegian widow's dividends. Fastenal or Eagle Shipping, Nuccor or Stonmore Partners - or Ben Graham's middle way - Kraft, JNJ, Union Pacific, etc.

Maybe take it all off the table this year - do some Club Med's in Jimmy Buffett land when the first snowflake hits this year.

There is a hot rumor you can't take it with you.

heh heh heh - or so I've heard. Ahem, Saint's won.. And the Pat's have a good football team.

 

[NW-Bound]

Gonna buy 'good busineses' at a fair price and ignore Mr Market - with mad money only and quell those hormones.

The only "mad money" I have now is the money that, if lost, would drive me insane! Well, it would drive my wife insane first, and she might kill me before I lose my mind.

I can't take it no more! I'd rather miss the bottom, and give up some gain. I can always join in later, buying stocks that lag behind in the economic cycle.

 

[clifp]

Hello everyone,



In his case, would it be better to get back in now? Or might as well wait until the market stabilizes since he's already pulled out? I know he can move his account online back to the funds whenever he wishes.

Any insight would be appreciated on this.

regards,
James

James the only thing I can predict with confidence is that market will not be stable for quite sometime certainly for the next six months we will see huge daily swings as stocks go up and down by several percent. The stock market is trying to predict the future economy and as we all know, not only have all the crystal balls stop working, but the lights are off, and we ran out of candles a couple of months ago. A few people are yelling fire and people are starting to panic, the smart people realize the red people see isn't a fire but the emergency lighting system coming back.

Personally, I'd tell him to stick all the money back in the 2020 fund. Imagine a rich friend of his gave him an absurdly expensive bottle of wine, and total him do not open until 2020. Once a year he is allowed to look at the wine perhaps rotate it, but he can't open it.

When the market stops going down and starts going up it is not going to up at a nice steady pace. Rather it is most likely to go in the same crazy fashion it has gone down. But this time instead of big 4 down days and 1 big up day. We are likely to see 3 up days , 1 big down day, and 1 big down day each week. By the time your dad or frankly any of us realize the bear market is finished, we will be up 30-40%. I know this is coming I am just not sure which year.

If the thought of sticking him money back in balanced retirement fund scares him to death,than a reasonable approach would be to take 20% of the money and added back to the 2020 fund each month.

 

[deserat]

Hmmm - I'll bring the thread back to calling the bottom - I was having dinner in SF the other evening with a now former colleague - he had had former employment stints with Sumitomo Bank and Charles Schwab - he said that based on the automatic trading schemas, the next best time to buy or the next bottom would be 7500 - that the 9000 was a merely a burp - he then showed me a bunch of graphs with squiggles and tried to convince me that they signified something. I do have quite a bit of math on board due to being an engineer (side note, Gummy's stuff make my eyes water, however), but those graphs looked pretty random to me.....however, I figured I'd jump in with some info from a supposed 'expert.'

 

[al_bundy]

Hello everyone,

I'd just like to say I appreciate the extent of knowledge and opinions on this bulletin board. I have been lurking for about a week (as well as on other financially inclined forums and sites) to get others' insight into recent events.

Anyhow, I'm relatively new to investments as a whole, although I do understand the jist of the basics. I don't have much of a nest egg for myself to invest as I'm just starting to save money, however my father who is a hard working in a blue collar industry, has a 401k and I wanted to get insight for him. He obviously has lost a good amount from his retirement account in the past year, before hand however his small sized employer used to rely on some sort of profit sharing program and totally managed his portfolio/savings along with the other employees in the past. However about late last year they switched to a retirement account/401k system with a financial institution (Principal) I assume to save costs - these accounts are your typical style, giving a selection of different funds in the fixed income, value and growth equites etc, as well as those Life cycle style funds that allocate for you. Anyhow, my father picked one of the life cycle funds late last year (2020 fund - he's in his mid 50s) , he didn't know really what to do and no one really gave advice, but he heard others saying since it's in the middle of the road of the funds providing it should be alright since its supposedly diversified (the employees had to decide in a quick meeting with the Principal rep at their work-sight). He doesn't know much about investments strategies and the representative from Principal was very rude to the employees and was on a time schedule apparently and was passive on where the workers' allocated their money too.

Anyhow long story short, he has lost about ~30% with this downturn as others had, in a panic one of this fellow coworkers told him to move it to the Money Market fund which he did on Oct 10 unfortunately. So I told him he would probably have been best served to not have moved it as that was most likely the bottom. However, now I'm not sure what he should do, I would like to give him some isight myself, but I know picking bottoms can be rough and people do brash things when they see their hard earned savings take a hit.

In his case, would it be better to get back in now? Or might as well wait until the market stabilizes since he's already pulled out? I know he can move his account online back to the funds whenever he wishes.

Any insight would be appreciated on this.

regards,
James

bottom will probably be around a few % less than the October 10th lows unless something catastrophic happens in the next few weeks like another 9/11

 

[2B]

S&P Futures are down about 4% early on. Asia got slapped around and Europe is getting spanked. Looks like my 10/10 bottom for the S&P will be tested today.

Technical analysis is garbage. It predicts nothing but explains what happened (and what you should have done) very well.

We'll probably see a wave of central banks cutting discount rates this week. Oil and most other commodities will continue to fall. I doubt a rebound will take place this week.