The case for a quick recovery

To paraphrase: "No one can know what's going to happen. When the Dow hits 10,000, we will know what's going to happen."

That's how I read it too, T-AL. Seems to me the only thing we will know is that anyone in the DOW now will be up 21.7% (plus divs) at that point.

Where will it go from there? I have a prediction:

Someone will post that we won't know what the DOW might do, until it reaches 12,000.

Sorry, I don't get the "horns of the Bull" thing.

When the DOW reaches 10,000 we know the Dow will go up, we also know it will go down. We just don't know how far it will go in either directions.

Just think, a long time ago, the first time through, people would say the same thing about 8,000. Asset allocation and hope for the best!
I agree! All this Gloom and Doom garbage is so Misleading...
1. So what if it cost someone an extra $1-$2k yr in more taxes , IF?
A. It keeps their Overpaying Jobs ( ave making $50k yr each and Households making $75k ave )
B. It Allows "InWestors" to get back their Losses...
C. And so what if alot of scumbags get alot more than they deserve in Salaries and Bonus's for doing a lousy job.. ( Congressmen and CEO's )
Who In here wouldn't pay an extra $1-$2k in their taxes to get the above?

Just ask the Average Senior who lost -$10,000 per $100k invested last yr.. Would you be willing to pay $1,000 more in your taxes to get that other $10k+ back?
In a Heart Beat !

If all this Bail Out $ is Such a Loss $ down a Hole? Then how come we're going to get from 8-10% Interest on it? And How come Since we're Guaranteeing they will stay in business? What's the Down Side?

Didn't we do the same thing In the Bank S&L Bail out in the 80's and Didn't we Make $ on that deal too?

Bailing out States? Blame your State Polititians, not the Fed for bailing them out..If they don't bail them out? Last person Leaving the state , Please turn out the lights..
You want all those Californians ( 4 Million Illegals by lastes guess) Immigrating into your Town? and living off you?
Do you want Not to have TV or Movies anymore? No More Hollywood...
and the whole State goes back to what it was .. a DESERT...
Oh, they're going to Run out of Water again in the spring...? Gee what's new! but hard to beleive since they only Drink and Use Bottled Water..from the Midwest..

Tell them to use their Bottled their toilets now..

Cal. Debt now at -$41 billion in the hole..
about $2,050 per Resident but over $22,000 per every TAXPAYING Legal Resident.!
Re: Good Luck Trying to market time?
FYI- Even those Conservative Indexers 'market time" but they don't either know it or want to accept it..
Why? When they Allocate a Different % into a Fund than the others? They're Guessing that Sector Fund will either out or under Perform the the following yr., R they not?

and seeing as Amature Investors are Wrong 91.4% of the time per Kiplinger? Seems to me just investing Equally into every fund you own or you Buy a Balanced Fund (or 2) and let them do the job for you.. ( The top 10% ranked , have been right the ave of 61% of the time)

For retiree's? Add enough extra Treas/TIPS/Corp. Bonds to have a 35/65 Mix..and your good to go..
During 03', if you waited until the end of the 2nd qtr? You missed out on 40% of the recovery rtns. for that yr..
'There is over $7 Trillion $ sitting on the sidelines, just waiting to Pounce into the market.. The Market may have to be Shut down due to Over Buying and too may buy orders a few times.., while the S&P and DOW goes up in 10%+ per day Increases... Only thos who are Already Invested will benefit the most.. "Money Makes Money"

"He Who Hesitates, Looses"
The logic is fairly simple. Right now we know that virtually ever sector of the market is at historically low valuations (based on P/E ratio) - so stocks will go up sometime. But when? From an investor psychological point of view, something needs to happen that shows us some good news - and then people will start to think. Maybe not act, but start to think more positively.

My father was a stock technician from the early days of chart reading - he died a pauper. However, most people can see a downward trend. The sign of continued weakness is when you see a downward trend recover half its value on weak volume - meaning no real support for a real upward move, and plenty of room for further fall. We've been through that stage.

Now we are in a sidewards moving market that is called a trading range market. It is jumping up and down, testing old highs and new lows - but never seems to make any new trends. Right now we are between Dow 7 -9,000 trading range. Some people will call this the accumulation stage when people have fair confidence we have seen the bottom and are now buying stock at a low price. But now, the volume is low, so this is probably a drifting market with no sentiment except despair.

When we see some larger volume on the upside and lower volume on the downside, that is a true accumulation stage - in theory. I remind you all this is chart reading, or technical analysis which has a timeless link to people's psychology of when they will buy and when they will sell. But real time events need to be considered as well, ie, what is happening in the real world - not just in the charts.

Something like the 10,000 mark is a powerful point of resistance. When the market breaks through this point of resistance - with plenty of buying volume, and plenty of good economic news to support the uptrend, then you are seeing the horns of a bull market - but we certainly have not seen the head or the body yet.

But these are all positive signs and by all rights it should be a good time to dollar cost average into the market for the next 12 months. That is both a technicians and a value traders analysis of what should be happening. In other words, our team is marching down the team with the ball. Of course, plenty could happen to stop the bull market - which is why we dollar cost average.

Double dip recession, record inflation, or a number of things could kill the beast. But one thing is for sure... we will have flushed out all of the MAJOR issues, such as sub-prime lending with Wall Street and the government's complicity. We should have both the liquidity market, the credit market and the housing market back on stable ground.

We should have slain the big dragons when the Dow passes 10,000, and just like Black Jack if you've been counting the cards, their comes a time to increase your stakes in the game because the odds are the you will come up a winner. No guarantees, still a gamble - and I ain't got a crystal ball. But that is logic that makes more sense to me than a talking head just winging it on TV.
What you say *may* come to pass. But what is *guaranteed* is that you would miss 2000 points of recovery.

And, if you are wrong, you might get in at 10,000 and see it drop right back to the "7 -9,000 trading range.".

I may be wrong also, but I think the time to get in is when valuations look better than they have in the past.

But that is logic that makes more sense to me than a talking head just winging it on TV.
I'm sure you believe in what you wrote, but to those of us who are nonbelievers in the faith-based art known as "technical analysis", your explanation does appear to be "winging it."

Trends, bounces, share price support levels, etc are all concepts that are clear only in hindsight. Staring at the charts and reading into the magic lines some hint as to what will happen next is more akin to numerology than reason-based analysis. It doesn't work. The record of the chartists is a sad one.
Trends, bounces, share price support levels, etc are all concepts that are clear only in hindsight. Staring at the charts and reading into the magic lines some hint as to what will happen next is more akin to numerology than reason-based analysis.
I prefer the Magic 8 Ball, thank you.
Here are two things that, were I a timer, would make me bet on a strong recovery:

1. The government is throwing everything it has at the problem. I have little faith in the government, but with this shotgun approach, perhaps something will hit the target. And with this panic mode attack, there's a reasonable chance that the government will overdue it, resulting in lots of recovery. I realize that I don't have much basis for this idea.

2. In a few days an intelligent person is going to take over the leadership of this country. A recent NBC poll showed that even those who do not support his policies have a positive view of Obama (66%). Most Americans support Obama's plan. If people believe that his plan will fix things, it will be a self-fulfilling prophecy, since the economy depends so much on consumer sentiment.

Anyway, that's the basis of my gut feeling that things will recover rather quickly.
since the economy depends so much on consumer sentiment.

Exactly so. And that is what David Brooks in his Op-Ed piece in this morning's New York Times spoke to.

But an economy is a society of trust and faith. A recession is a mental event, and every recession has its own unique spirit. This recession was caused by deep imbalances and is propelled by a cascade of fundamental insecurities. You can pump hundreds of billions into the banks, but insecure bankers still won’t lend. You can run up gigantic deficits, hire road builders and reduce the unemployment rate from 8 percent to 7 percent, but insecure people will still not spend and invest.
Hobo? DITTO My Friend, Ditto...
Don't have more than a 50/50 port and Retired? not more than 40/60
If in doubt? DCA it over the next 12 -18 mos..

Don't like the kinds of APY's that will give you based upon past 10 yrs?
Tough.. Then you have to save more , now don't you and Live on less or go work more to save more..
All we have to fear.... is not getting a Trillion.... (or 2) from Congress.:rolleyes:
If things turned around today, it would take me about 5 years to recover to my previous position (assuming a reasonable rate of return).

From my eyeball view, I am guessing that it will take another 1 to 2 years for the economy to pull out of this nose dive. From what I can see, things have not stopped getting worse yet.

So, I expect to be restored in approximately 6 to 7 years if nothing changes in my situation.

However, I am more interested in dividends than capital gains. Dividends are said to be steadier than market fluctuations. I sure hope so. In that case, I am still OK. For now.
However, I am more interested in dividends than capital gains. Dividends are said to be steadier than market fluctuations. I sure hope so. In that case, I am still OK. For now.
Not if you own Bank of America.... :(
I really do not like Obama's stimulus plan.
>Infrastructure projects are long time coming, a one time shot, and do not grow businesses.
>Once time $1000 tax refund to the poor - does nothing to improve the economy. >Investing in alternative clean energy is very risky - new technology, new business sector, no proven track record.
>Repairing hospitals is might bring back the construction sector, but this is the first time I've heard we have a problem with hospital deterioration.

I would like to see money loaned to established entrepreneurs with a good balance sheet and a growing business. Money is the life's blood of newly established business - and they can't borrow money from banks. Thus they can not grow. This is where we need to put the money; to grow our economy.
Hospitals are "for profit" enterprises for the most part. I guess he means those fully subsidized "General Hospitals". The problem with some of the "infrastructure" "investment" (also a code word for "taxes") as I see it is that much of it gets destroyed/deteriorated by the users - put money into it and it will soon be back to the previous level of needing more money. You did not include schools, but they are in the plan too. We just had a levy approved here which results in a 25% increase in our RE taxes for schools - of course 89% of the increase does not go for physical plant but Teachers Salaries. So I guess we need more Plasma TV's in the lobbies.

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