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Corepuncher's Account Talk
- Thread starter Corepuncher
- Start date
, but do you have any insight on where we are headed short-term? Still down pretty big today...
Corepuncher
Well-known member
Ok...I have listened to all the pundits and cheerleaders and doom and gloomers, and have come up with a scenario that I think is solid. You may disagree, but facts are facts.
First of all, using what happened in past recessions/depressions as a basis for forecasting our economic future in today's environment is flimsy at best. Too many variables are different, and many of the key variable today are UNPRECEDENTED.
There is a large camp of people who think that printing all this money will inflate us out of this. They also think that this will in turn create an inflation problem. I don't disagree that it WOULD create inflation, but that problem is the VELOCITY of money.
The fundamental problem is that households have taken on way too much debt. I include myself in this category. The only way to get money moving is to lend it. You hear it from our own president during the state of the union..."we must get banks to lend again" blah blah blah!
There are two types of people...those who are credit worthy, and those who aren't. Those who ARE credit worthy, do not want to take on anymore debt, although they are qualified. Most of them have enough debt. Then, there are those who are risky to lend to. They may have credit cards that they will never pay off with high rates.
Banks only make money by lending money. True, they now have piles of money courtesy of the government, however, it will remain there, sitting, because the people banks WILL lend to do not want a loan, and the ones to want a loan, the banks will not lend to. The velocity of money is low.
Now, consider all the negative external forces on this economy. 1) Housing deflation 2) massive credit card crisis looming 3) Massive job losses 4) Commercial real estate crisis looming.
As jobs are lost, less money i spent in the economy and the consumer drives it.
Think of all the excessive commercial real estate and retail outlets that were built over the last 6 years on cheap money. Those same stores depend upon excessive sales, which were brought about by cheap money to all. That is going bye-bye. More retail stores closing means even more job loss, and even more spending, and even more credit defaults, etc.
More credit defaults = more bank write downs. hey, at least the banks will have enough capital courtesy of you and me to survive...but that doesn't mean they will actually be a profitable business!
Refinancing of lower mortgage rates is nice, but the problem is those houses that are underwater. If you are underwater, sure is hard to refinance.
Finally, everyone is concerned about inflation (as noted above), but there cannot be inflation without wage inflation, which will not occur because there too many people chasing too few jobs. What about the "weakening" dollar? Everyone seems to be on that bandwagon as well. Sounds fair, we print dollars, it gets devalued. Problem is...currencies are relative, and this is a world economy. Look, Japan HAS to devalue their currency, because we are their #1 importer! Same with the rest of the world! Therefore, we can try to devalue OUR dollar, even on purpose...but paradoxically, it could actually stay strong against everyone else!
So, given all those negative feedback mechanisms, I can only predict a lower stock market due to earnings...because that is the main thing that drives a stock's price.
I am now more confident than ever with an S&P target of 500 by 2010. Maybe we go down in waves, after each earnings cycle, with slight rebounds in between. That is, barring a collapse of our bond market or other catastrophic shock!
Cheers!
First of all, using what happened in past recessions/depressions as a basis for forecasting our economic future in today's environment is flimsy at best. Too many variables are different, and many of the key variable today are UNPRECEDENTED.
There is a large camp of people who think that printing all this money will inflate us out of this. They also think that this will in turn create an inflation problem. I don't disagree that it WOULD create inflation, but that problem is the VELOCITY of money.
The fundamental problem is that households have taken on way too much debt. I include myself in this category. The only way to get money moving is to lend it. You hear it from our own president during the state of the union..."we must get banks to lend again" blah blah blah!
There are two types of people...those who are credit worthy, and those who aren't. Those who ARE credit worthy, do not want to take on anymore debt, although they are qualified. Most of them have enough debt. Then, there are those who are risky to lend to. They may have credit cards that they will never pay off with high rates.
Banks only make money by lending money. True, they now have piles of money courtesy of the government, however, it will remain there, sitting, because the people banks WILL lend to do not want a loan, and the ones to want a loan, the banks will not lend to. The velocity of money is low.
Now, consider all the negative external forces on this economy. 1) Housing deflation 2) massive credit card crisis looming 3) Massive job losses 4) Commercial real estate crisis looming.
As jobs are lost, less money i spent in the economy and the consumer drives it.
Think of all the excessive commercial real estate and retail outlets that were built over the last 6 years on cheap money. Those same stores depend upon excessive sales, which were brought about by cheap money to all. That is going bye-bye. More retail stores closing means even more job loss, and even more spending, and even more credit defaults, etc.
More credit defaults = more bank write downs. hey, at least the banks will have enough capital courtesy of you and me to survive...but that doesn't mean they will actually be a profitable business!
Refinancing of lower mortgage rates is nice, but the problem is those houses that are underwater. If you are underwater, sure is hard to refinance.
Finally, everyone is concerned about inflation (as noted above), but there cannot be inflation without wage inflation, which will not occur because there too many people chasing too few jobs. What about the "weakening" dollar? Everyone seems to be on that bandwagon as well. Sounds fair, we print dollars, it gets devalued. Problem is...currencies are relative, and this is a world economy. Look, Japan HAS to devalue their currency, because we are their #1 importer! Same with the rest of the world! Therefore, we can try to devalue OUR dollar, even on purpose...but paradoxically, it could actually stay strong against everyone else!
So, given all those negative feedback mechanisms, I can only predict a lower stock market due to earnings...because that is the main thing that drives a stock's price.
I am now more confident than ever with an S&P target of 500 by 2010. Maybe we go down in waves, after each earnings cycle, with slight rebounds in between. That is, barring a collapse of our bond market or other catastrophic shock!
Cheers!
ATCJeff
Well-known member
If we rally Monday, I sell my remaining 20%. If were flat Monday, I sell my 20%. If were down Monday, I sell my 20%.
steveg
Member
Birch --
I WILL give you credit for ONE thing -- OPTIMISM! Blind optimism, maybe, but optimism nonetheless. There is something to be said for optimism! You probably are a great parent (if you have kids) -- with your positive outlook likely teaching them to see the world with a "glass half full" attitude. I think that's good.
However, as for the markets, I can't help but see your perspective as lacking objectivity, and somewhat "robotic" -- as if you have been programmed to see a huge, foot-stomping, ring-through-the-nose, steaming-mad, ready-to-charge bull behind every single piece of news or information, whether that news be good, bad, whatever. I swear, if a news report came out that said a huge asteroid is approaching and will hit the U.S. in one week, AFTER the incoming round of 100 ICBMs tipped with thermonuclear warheads, which NORAD has just detected, level 100 of our major cities, you would find a way to discuss why all of that signals the start of the next bull run.
Of course, what would it matter at that point...
Steve
I WILL give you credit for ONE thing -- OPTIMISM! Blind optimism, maybe, but optimism nonetheless. There is something to be said for optimism! You probably are a great parent (if you have kids) -- with your positive outlook likely teaching them to see the world with a "glass half full" attitude. I think that's good.
However, as for the markets, I can't help but see your perspective as lacking objectivity, and somewhat "robotic" -- as if you have been programmed to see a huge, foot-stomping, ring-through-the-nose, steaming-mad, ready-to-charge bull behind every single piece of news or information, whether that news be good, bad, whatever. I swear, if a news report came out that said a huge asteroid is approaching and will hit the U.S. in one week, AFTER the incoming round of 100 ICBMs tipped with thermonuclear warheads, which NORAD has just detected, level 100 of our major cities, you would find a way to discuss why all of that signals the start of the next bull run.
Of course, what would it matter at that point...
Steve
Last edited:
Birchtree
Well-known member
Birchtree
Well-known member
Steveg,
I did bribe my only daughter with an Acura 3.0 CL to join Army ROTC and now as a Captain she has never had any regrets - she even found love in the Army just like I told her would happen. If you've read any of my posts it's obvious that blind optimism does not exist but fate does. This market being omnipotent knows way more than I do, so I'm just along for the profitable ride. Next week may arrive hard and fast with a stupendous vengence on the bearish crowd. Be in to win.
I did bribe my only daughter with an Acura 3.0 CL to join Army ROTC and now as a Captain she has never had any regrets - she even found love in the Army just like I told her would happen. If you've read any of my posts it's obvious that blind optimism does not exist but fate does. This market being omnipotent knows way more than I do, so I'm just along for the profitable ride. Next week may arrive hard and fast with a stupendous vengence on the bearish crowd. Be in to win.
Handballer
Active member
If we rally Monday, I sell my remaining 20%. If were flat Monday, I sell my 20%. If were down Monday, I sell my 20%.
Come on Jeff. Don't be so wishy washy
steveg
Member
Birch --
Two things:
1. All these charts and graphs and analyses and comparisons only matter if the underlying environment is not fundamentally different (and I think the underlying environment right now IS FUNDAMENTALLY different than 2002);
2. I cannot take seriously any analysis that talks about moon phases and astrology.
Steve
P.S. I WAS right about you as a parent; though bribing my not be the best policy most times, your optimism regarding your daughter's career illustrates my point -- tell her I give her a big thanks for serving our country!
Two things:
1. All these charts and graphs and analyses and comparisons only matter if the underlying environment is not fundamentally different (and I think the underlying environment right now IS FUNDAMENTALLY different than 2002);
2. I cannot take seriously any analysis that talks about moon phases and astrology.
Steve
P.S. I WAS right about you as a parent; though bribing my not be the best policy most times, your optimism regarding your daughter's career illustrates my point -- tell her I give her a big thanks for serving our country!
Handballer
Active member
I'm pulling for you Birchtree, both as an invester and for the love you have for your daughter.
Birchtree
Well-known member
Steveg,
You may not realize it but a fellow by the name of Arch Crawford has the #1 rated stock market news letter and he deals strictly with Astrology. There are several of these like minded guys that are widely followed. I read them every chance I get - just a little more information in the ole arsenal.
You may not realize it but a fellow by the name of Arch Crawford has the #1 rated stock market news letter and he deals strictly with Astrology. There are several of these like minded guys that are widely followed. I read them every chance I get - just a little more information in the ole arsenal.
steveg
Member
Birch --
Yeah, it's a little bit more of SOMETHING in the arsenal, I guess... I'm not sure how having "the number-one rated market newsletter" says ANYTHING about how accurate someone, or their approach, might be -- it is more likely correlated with folks enjoying what they have to say, or the manner in which they say it...
handballer --
Don't get me wrong. I'm pulling for Birch too -- and everyone else on here. That's one of the big reasons I post -- I want to hopefully do my part, in some small, miniscule way, to help EVERYONE to make plenty of money for his or her retirement.
My only contention is that broken clocks are right twice a day. If you are a perma-bull OR a perma-bear, you will find yourself looking like a sage for certain periods of time, at least once over the course of 20 or 30 years -- obviously. It's those who can be bullish when appropriate, and bearish when appropriate, that are ultimately the ones to follow, of course.
Despite my posts, I am NOT a pessimist, or a perma-bear. I was a strictly "buy and hold" investor for the past 15 years. Right now, I'm bearish, and that's because of what I see happening around us. If folks like Birch would acknowledge at times that some signs point toward a downturn, then I'd be more apt to pay attention when those same folks are screaming "bull." However, if you only have one way of viewing things (either perma-bull or perma-bear), then I find it hard to take such points of view with any more than a grain of salt.
Again, there most likely WILL come a day when the perma-bulls can say "SEE! I TOLD you so!" But, in my opinion, they also have to acknowledge that their one-sided perspective led to them taking a BEATING on the way down, as they constantly saw each down leg as "the bottom..." In other words, perma-bulls and perma-bears really are not "accurate," they simply are correct -- like the proverbial broken clock -- "twice a day." ACCURACY means APPROPRIATELY ADJUSTING your perspective, correctly, in advance of changes in the market.
Steve
Yeah, it's a little bit more of SOMETHING in the arsenal, I guess...
I'm not sure how having "the number-one rated market newsletter" says ANYTHING about how accurate someone, or their approach, might be -- it is more likely correlated with folks enjoying what they have to say, or the manner in which they say it...handballer --
Don't get me wrong. I'm pulling for Birch too -- and everyone else on here. That's one of the big reasons I post -- I want to hopefully do my part, in some small, miniscule way, to help EVERYONE to make plenty of money for his or her retirement.
My only contention is that broken clocks are right twice a day. If you are a perma-bull OR a perma-bear, you will find yourself looking like a sage for certain periods of time, at least once over the course of 20 or 30 years -- obviously. It's those who can be bullish when appropriate, and bearish when appropriate, that are ultimately the ones to follow, of course.
Despite my posts, I am NOT a pessimist, or a perma-bear. I was a strictly "buy and hold" investor for the past 15 years. Right now, I'm bearish, and that's because of what I see happening around us. If folks like Birch would acknowledge at times that some signs point toward a downturn, then I'd be more apt to pay attention when those same folks are screaming "bull." However, if you only have one way of viewing things (either perma-bull or perma-bear), then I find it hard to take such points of view with any more than a grain of salt.
Again, there most likely WILL come a day when the perma-bulls can say "SEE! I TOLD you so!" But, in my opinion, they also have to acknowledge that their one-sided perspective led to them taking a BEATING on the way down, as they constantly saw each down leg as "the bottom..." In other words, perma-bulls and perma-bears really are not "accurate," they simply are correct -- like the proverbial broken clock -- "twice a day." ACCURACY means APPROPRIATELY ADJUSTING your perspective, correctly, in advance of changes in the market.
Steve
Birchtree
Well-known member
Well that all certainly makes for good sense. Think about this for a moment; retail sales to be released on April 14th are looking for a fourth straight higher month. Who is spending that money? Many are now calling for 950 to 1000 and several prominent analysts are calling for the rally to extend until September - how high will it be by then? With so many investors looking to buy a pullback, we aren't seeing much of one so far. Hesitation can be expensive. You say 15 years as a buy and holder - did you dollar cost average all the way down during the last bear market - if you did you came out smelling like a rose especially if you kept that DCAing going all the way back up. That's the way to accumulate shares.
steveg
Member
Birch --
We'll have to keep an eye on that retail sales number...will be interesting. According to Denninger, a good bit of the increased spending in March, if you looked inside the number, was GASOLINE -- and NOT gallons purchased. Gallons purchased apparently decreased a bit. It was the rise in gas PRICES that fueled a good bit of the "increased consumer spending."
As I've said, I will not be surprised if we rally some more here, short term. I just do not see a full-fledged recovery given the underlying BS.
Finally, yes -- I did dollar cost average all the way down. I have moved around my account balances some via IFT, but have kept my new investments each paycheck buying stocks. And yes, if you look at just my purchases of new shares, I have indeed accumulated shares -- many at a nice, low price. However, I also took a 32% beating last year. No matter how you look at that, you can't make THAT smell like a rose. Fortunately, I'm up 5% so far this year; if I can beat the market by 32% this year, I guess I break even.
Steve
We'll have to keep an eye on that retail sales number...will be interesting. According to Denninger, a good bit of the increased spending in March, if you looked inside the number, was GASOLINE -- and NOT gallons purchased. Gallons purchased apparently decreased a bit. It was the rise in gas PRICES that fueled a good bit of the "increased consumer spending."
As I've said, I will not be surprised if we rally some more here, short term. I just do not see a full-fledged recovery given the underlying BS.
Finally, yes -- I did dollar cost average all the way down. I have moved around my account balances some via IFT, but have kept my new investments each paycheck buying stocks. And yes, if you look at just my purchases of new shares, I have indeed accumulated shares -- many at a nice, low price. However, I also took a 32% beating last year. No matter how you look at that, you can't make THAT smell like a rose. Fortunately, I'm up 5% so far this year; if I can beat the market by 32% this year, I guess I break even.
Steve
Birchtree
Well-known member
And as a plus it's been nice chating with you today - we're getting to know each other. Corepuncher has been spending time on the other board so I don't think he minds us chating in his thread. I've done a little lurking over there but I won't offer any criticism at this time. An ETF is still a mutual fund no matter how it's sliced and I still prefer individual stocks. I own 321 of those puppies in my oceanic account and am holding 68C and 32I in my tugboat account (TSP).
steveg
Member
Birch --
Yes, I agree it's been nice chatting. But, CP hasn't filled me in on the "other" board; I'm out-of-the-loop on that one. Hey CP -- you holdin' out on me?
EFTs? Way too risky for me. THAT is some scary stuff -- at least the "triple inverse" type of stuff I hear him talk about, or whatever. Might as well be playing the slots at the local casino, the way I see it!
Steve
Yes, I agree it's been nice chatting. But, CP hasn't filled me in on the "other" board; I'm out-of-the-loop on that one. Hey CP -- you holdin' out on me?
EFTs? Way too risky for me. THAT is some scary stuff -- at least the "triple inverse" type of stuff I hear him talk about, or whatever. Might as well be playing the slots at the local casino, the way I see it!
Steve
Corepuncher
Well-known member
I'm content in G fund for now.
There are only two possible scenarios unfolding...
1) This is a bear rally.
2) The bear market is over.
I put about a 99% probability to #1 being true...there is no way this bear market is over....not until house prices stop going down and job losses stop. Both are accelerating to the downside, and an auto bankruptcy will not help the matter.
For those of you racking up the gains, great job! But consider this...it is much easier to scale out of stocks while you are going up than it is when we start going down again. Before you know it, all your gains will be gone so be careful!
There are only two possible scenarios unfolding...
1) This is a bear rally.
2) The bear market is over.
I put about a 99% probability to #1 being true...there is no way this bear market is over....not until house prices stop going down and job losses stop. Both are accelerating to the downside, and an auto bankruptcy will not help the matter.
For those of you racking up the gains, great job! But consider this...it is much easier to scale out of stocks while you are going up than it is when we start going down again. Before you know it, all your gains will be gone so be careful!
DCguy
Member
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRor2wiMrs9k&refer=home
Russell 2000 Rising 36% Flashes Warning for S&P Rally.
Higher it goes up, faster it must fall:worried:
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