The Dow is down about 22% so far this year. Been a coupla sucker rallies and I think today’s is another one. When people around the world see how massive the cost of keeping everyone solvent is, the decline will continue.
Europe had several banks collapse in the last 2-3 days. The Euro is falling like a rock, and you are seeing a slight ease on the credit markets right now.
I’m not saying that we are out of the woods, but it’s 24 hours later, and I have yet to see any mobs roaming the streets in search of food.
It’s rarely as bad as the pessimists see things, and rarely as good as the optimists see the same thing.
Note: I don’t currently own any stocks, but have in the past. I only bet when the odds are heavily in my favor.
A lot of people jumped on stocks in late 1929 and in 1930. The Dow lost 90% of its value.
Stocks historically trade at about 15 PE and dividend yield of 5%. Right now the PE is well above 22 and the yield is terrible, below 3%. Odds would favor at least a pull back to a 15 PE, which is about 7500 on the Dow and proportionally to the S&P. In this environment, a PE of 12 would be appropriate, which gives us a Dow of 6000. However, in a true crash earnings will plummet so a Dow of 3000 would be the floor at which I’d put every penny within reach into stocks.
If you can find stocks that rise under such circumstances (which there actually are) then that’s cool. Most people will be losing their shirts.
No one will lose anything until they sell. If you are a panic seller, then you:
a.) have no business handling your own investments
b.) are a fool
I am beginning to agree with the others that you and HH are the same person. No one in their right mind should be predicting a DOW of 3000.
Who is John Galt?