Bullish?

[brewer12345]

The last thing I want to do is let a bunch of licensed Wall Street guys shoot for the big bucks...

This is a colleague here in the heartland who grew up (among other things) detassling corn and hunting pheasants in cornfields. The Wall St. guys are generally far too busy working to hunt, fish or do much of anything else.

 

[GrayHare]

The Dow in real dollars is currently below its century-long trend midline, which has me bullish.
http://home.earthlink.net/~intelligentbear/com-dj-infl.htm

 

[haha]

The Dow in real dollars is currently below its century-long trend midline, which has me bullish.
Fred's Intelligent Bear Site - Inflation Adjusted DJIA

Excellent chart and commentary. Thanks for posting it.

But I am at a loss about how this could make you bullish. If anything, this is a bearish chart. It does show the power of government manipulation. That is pretty much the only missing link- how long can Li'l Dr Ben keep the balls in the air?

Ha

 

[Gone4Good]

But I am at a loss about how this could make you bullish. If anything, this is a bearish chart.

I read the top chart as saying that we can expect 1.9% real price appreciation, plus a 2% dividend yield with a 50/50 shot of doing better or doing worse.

The bottom chart I look at and say "interesting correlation, but how is today anything like the 1960's and 70's?"

 

[ziggy29]

I don't know about all that........

Yes, profits are up, but companies are sitting on a TON of cash because of restrictive regulatory environment......

Agreed on the hoarding of cash, but not entirely sure it's all due to "restrictive regulatory environment." I'm sure that's part of it, but also companies just don't have to give any increasing sales or profits to employees because the labor market is so weak. Additionally, the companies don't give a lot of it back to shareholders because of the double taxation of dividends (many investors don't want dividends for that reason, especially with "growth" companies).

Also, many companies now hoard cash as a growth strategy; in many larger companies M&A has mostly replaced R&D as a growth strategy -- most new product lines in large businesses are bought, not developed internally. And relying on M&A for growth requires regularly replenishing a mountain of cash for the next acquisition.

 

[audreyh1]

Companies were pretty terrorized by the 2008 sudden credit crisis that left some of them panicking to cover payroll when short-term revolving credit dried up. This is one big reason why companies are hoarding cash now - to stay independent of the short-term credit/finance markets. They self-finance now for short-term stuff.

 

[GrayHare]

Excellent chart and commentary. Thanks for posting it.

But I am at a loss about how this could make you bullish. If anything, this is a bearish chart. It does show the power of government manipulation. That is pretty much the only missing link- how long can Li'l Dr Ben keep the balls in the air?

Ha

Ha - since in real dollars the DJIA is currently below its century+ trend midline, that signals it's underpriced, thus I'm bullish. The charts at that site plot only to January, so probably have bumped up a bit with this year's run up, so likely are now not quite as bullish as at year start.

 

[haha]

Ha - since in real dollars the DJIA is currently below its century+ trend midline, that signals it's underpriced, thus I'm bullish. The charts at that site plot only to January, so probably have bumped up a bit with this year's run up, so likely are now not quite as bullish as at year start.

Thank you for explaining your thinking. I look at the same thing and think-2% real return on average - "I'm going home till things get foolish on the downside." Selling program for me today, though I have to be careful in my taxable accout as I did a Roth conversion in 2010 which is being taxed last year and 2012.

Ha

 

[Gone4Good]

I look at the same thing and think-2% real return on average - "I'm going home till things get foolish on the downside." Selling program for me today, though I have to be careful in my taxable accout as I did a Roth conversion in 2010 which is being taxed last year and 2012.

Ha

Plus dividend. So it's more like 4% real.

 

[haha]

Plus dividend. So it's more like 4% real.

Yes; I don't dispute that. I just am not attracted by it. Stocks have very very long duration. Unless one is a skilled trader, IMO best to wait for set-ups. They never fail to arrive sooner or later.

Ha

 

[GrayHare]

Thank you for explaining your thinking. I look at the same thing and think-2% real return on average - "I'm going home till things get foolish on the downside." Selling program for me today, though I have to be careful in my taxable accout as I did a Roth conversion in 2010 which is being taxed last year and 2012.

Ha

The Dow/Gold ratio graph, recently down near its bottom trend line, is IMO also bullish for stocks
http://home.earthlink.net/~intelligentbear/com-dow-au.htm

 

[haha]

The Dow/Gold ratio graph, recently down near its bottom trend line, is IMO also bullish for stocks
Fred's Intelligent Bear Site - Dow-Gold Ratio

Basically, if you are happy, I am happy.

 

[Dawg52]

Basically, if you are happy, I am happy.

And I'm happy that you are happy. Of course, med's make me happy.

 

[W2R]

And I'm happy that you are happy. Of course, med's make me happy.

ER is my version of meds! Don't need 'em when I awaken every morning thrilled that I never have to w*rk ever again. I'm happy that you are happy that Ha's happy that GrayHare's happy.

 

[Nords]

This is one big reason why companies are hoarding cash now - to stay independent of the short-term credit/finance markets. They self-finance now for short-term stuff.

What a concept!

Imagine if most businesses ran that way...

 

[audreyh1]

What a concept!

Imagine if most businesses ran that way...

Well they DO now! 2008 was a rude wake-up call.