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Dec 6th, 2017
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Joined: Jan 2003
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OP
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Joined: Jan 2003
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Passing on a blip from Nouriel Roubini's website. This is a "pay" site, but offers free trial without sign-up obligation. Website It is déjà vu all over again. We have already seen this Groundhog Day movie at least six times over and over again in the last year or so: the market starts to rally – this time around about 8% in a week - and the chorus of optimists starts to say that this is the bottom of the economic and financial crisis and that we are at the beginning of a sustained stock market rally that signals the true end of this bear market.
Even before the latest bear market rally started last week I wrote the following on March 2nd:
Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months. Just one man'e opinion of course, but I've followed his predictions for some time now, and he's been uncannily correct. In this case, it looks to me that he may be right again. The timing may be a day , a week or a month or two away, but the basics seem to point toward a substantially lower market. My little dog in this fight got beat up pretty good, so I won't be in the second round, but I'm thinking that those who were knocked around a bit may have high hopes for a winner. The toughest decision is when to lick the wounds and walk away. Getting out during this "dead cat bounce" might not be the worst move.
Last edited by itstarted; 03/20/09 11:44 PM.
Life is Good!
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Joined: Jan 2003
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OP
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A Sucker's Rally This Bill Bonner editorial is a reminder that while virtually all of the Press and the Financial Guru's are predicting a turnaround in the economy... that the facts are being cherry picked. As long as you are just a bystander, then there's no harm done, but if popular opinion influences financial decisions, then it's a good thing to keep the facts in mind. IMHO, even the suggestion here, that there could be a bounce back (DJIA) to 9,000 looks wildly optimistic. Ummm... but maybe that's why I'm poor... 
Life is Good!
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Joined: Aug 2004
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It's the Despair Quotient! Carpal Tunnel
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It's the Despair Quotient! Carpal Tunnel
Joined: Aug 2004
Posts: 17,177 Likes: 254 |
I've decided to listen to everything Jim Cramer says, and do the opposite.
Works like a charm every time.
This week he's saying the recession is over.
Yeah....right.
Here kitty kitty kitty.
"The Best of the Leon Russell Festivals" DVD
deepfreezefilms.com
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Joined: Feb 2006
Posts: 12,129 Likes: 257
Pooh-Bah
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Pooh-Bah
Joined: Feb 2006
Posts: 12,129 Likes: 257 |
"The Market" is really like an over-eager puppy. When it is happy, it is crazy-happy (and stocks go for more than they are really worth). When it is sad or afraid, it also goes overboard (and stocks go for much less than they are worth).
A couple of weeks ago there were many stocks selling for less than the value of the cash the company had in the bank! That's just the way the market works: The popular opinion says "The sky is falling", so everybody sells no matter what the future earnings and assets.
What you see as a Dead Cat Bounce may just be people coming to their senses, or the ownership of American Companies returning to their "rightful owners" (the rich buying up cheap stocks).
I know I have one stock that was down to $2/share and last week paid me a $0.25/share quarterly dividend. (50% annualized returns!!!) This week it is over $4/share, so the dividend is more like 25%/year. Is that a Dead Cat Bounce, or sanity?
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Joined: Sep 2011
Posts: 18,003 Likes: 191
Moderator Carpal Tunnel
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Moderator Carpal Tunnel
Joined: Sep 2011
Posts: 18,003 Likes: 191 |
In general, I think the market is about where it should be and as the DJIA bounces around between 7500 and 8200 the value of the stocks that make up the index will come closer and closer to their real value. There are bargains out there, and I may just make a few small bets myself - but I won't tell you which ones until after I have made the purchases. 
A well reasoned argument is like a diamond: impervious to corruption and crystal clear - and infinitely rarer.
Here, as elsewhere, people are outraged at what feels like a rigged game -- an economy that won't respond, a democracy that won't listen, and a financial sector that holds all the cards. - Robert Reich
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Joined: Feb 2006
Posts: 12,129 Likes: 257
Pooh-Bah
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Pooh-Bah
Joined: Feb 2006
Posts: 12,129 Likes: 257 |
Wells Fargo & Co said it expects to post a record $3 billion first-quarter profit, causing its shares to soar 31.7 percent and providing a welcome jolt to the stock market and a still-troubled banking sector.
The preliminary results suggest that lenders focused on traditional banking activities may handle the recession better than analysts and investors expect, at a time the government is performing "stress tests" on 19 major banks.
San Francisco-based Wells Fargo is the fourth-largest U.S. bank, and the nation's first major lender to indicate how it fared in the January-March period. from: Wells Fargo shocks market with record profit I'm not dead yet! Really, I'm feeling much better...
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Joined: Jan 2003
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old hand
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OP
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Wells AND BofA...up over 30% and most of the other banks... up from 5% to 32% in one day.
Seems like most of it comes from new mortgages.
Hmmmm. I'm too slow to understand this... Banks borrow from the Government @ 2% and offer mortgages @ 6%. Am I missing something?
I realize that something made the investors excited enough to buy bank stocks, but this whole "profit" thingy is confusing. Help!
Life is Good!
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Joined: Dec 2005
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Pooh-Bah
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Pooh-Bah
Joined: Dec 2005
Posts: 12,010 |
The timing may be a day , a week or a month or two away, but the basics seem to point toward a substantially lower market. Dead cats bounce higher than one might imagine.... Thread started mARCH 20 DJIA 7278 one month later DJIA 8131 (about a 15% increase) and April 17 (Bloomberg) -- Confidence among U.S. consumers advanced to the highest level since the bankruptcy of Lehman Brothers Holdings Inc. pushed the economy deeper into the recession.
The Reuters/University of Michigan preliminary index of consumer sentiment rose to 61.9, the second straight gain, from 57.3 in March. The index reached a three-decade low of 55.3 in November.
Today’s report reflects signs that the longest U.S. recession in the postwar era may be easing. An improvement in confidence may help temper the slide in consumer spending, which accounts for 70 percent of the economy, and boosts the odds that the economic slump will end this year.
“The darkest phase of the recession is behind us, according to consumers,” said Jonathan Basile, an economist at Credit Suisse
"It's not a lie if you believe it." -- George Costanza
The whole problem with the world is that fools and fanatics are always so certain of themselves. --Bertrand Russel
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Joined: Feb 2008
Posts: 5,850
old hand
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old hand
Joined: Feb 2008
Posts: 5,850 |
My investment portfolia (portfolioes?) are back to the levels they were at in October when the bottom fell out. A long way to go to get back to where they were a year ago and that may never happen, but progress is progress. Interestingly, my investment guesses appear to have been backasswards; funds I left are doing better than funds I moved to. Fortunately, I didn't do a full divestiture.
"The white men were as thick and numerous and aimless as grasshoppers, moving always in a hurry but never seeming to get to whatever place it was they were going to." Dee Brown
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Joined: Dec 2005
Posts: 12,010
Pooh-Bah
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Pooh-Bah
Joined: Dec 2005
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By the way, just to be clear.... IMO we have seen the lows in the market, but I would not be surpised to see some pull back from these levels as the market seldom goes consistently in one direction. And, given the severe damage to the economy, I would not expect a full on bull market for a while.
"It's not a lie if you believe it." -- George Costanza
The whole problem with the world is that fools and fanatics are always so certain of themselves. --Bertrand Russel
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