T Nation

How Far Can Stocks Fall?

The Nikkei Bubble
Can a bear market last for 14 straight years? Well, this is exactly what occurred in Japan, starting in 1991.

Our turn? Our PE ratio is way above its historical average (22 vs 15) and the dividend yield is way below the historical average (2.6% vs about 5%).

http://www.stock-market-crash.net/nikkei.htm

All markets will eventually go to zero. Hopefully that won’t happen for a very long time. As i recently said in another thread, I think the S&P 500 can easily fall to 800. If it breaks beneath that level, we could be looking at a long term decline to something in the 4-500 range.

[quote]on edge wrote:
All markets will eventually go to zero. Hopefully that won’t happen for a very long time. As i recently said in another thread, I think the S&P 500 can easily fall to 800. If it breaks beneath that level, we could be looking at a long term decline to something in the 4-500 range.[/quote]

Chartists saw 1180 on the S & P 500 as a major support point. The fact that it fell below that on Monday then failed to surpass it on Tues, during the 485 up day, confirms (to them) a bear market. I would never buy in at this level.

I agree about the forecast; yields are way too low and the PE is too high. Wait until it hits 800 to even begin thinking of nibbling. At 400 or so, I’d really put in some chips.

Buffett just announced Berkshire would buy up $6 billion of its own stock. Apparently somebody thinks we’re pretty close to the bottom.

[quote]tedro wrote:
Buffett just announced Berkshire would buy up $6 billion of its own stock. Apparently somebody thinks we’re pretty close to the bottom.[/quote]

this isn’t much of a bottom. probably banking on a bailout.

[quote]AynRandLuvr wrote:
I would never buy in at this level.

[/quote]

This market is full of trading opportunities.

[quote]tedro wrote:
Buffett just announced Berkshire would buy up $6 billion of its own stock. Apparently somebody thinks we’re pretty close to the bottom.[/quote]

I didn’t hear that, but I did hear that he is putting $3 billion into GE.

Damn. Who is it that has been harping on buying GE in this forum?

I guess great minds think alike. I just don’t know why it took Warren so long to come around. Every time we have lunch, I tell him he needs to get into GE.

[quote]rainjack wrote:
tedro wrote:
Buffett just announced Berkshire would buy up $6 billion of its own stock. Apparently somebody thinks we’re pretty close to the bottom.

I didn’t hear that, but I did hear that he is putting $3 billion into GE.

Damn. Who is it that has been harping on buying GE in this forum?

I guess great minds think alike. I just don’t know why it took Warren so long to come around. Every time we have lunch, I tell him he needs to get into GE.

[/quote]

I saw a breaking news headline on money.cnn.com. It’s gone now, but the article about him and GE is there.

I’m thinking the initial headline may have been a mistake, as I can’t find any other news source reporting it.

I find this whole issue to be more of a chicken little ploy than anything else. The economy has been in this shape for a while and rushing to fix it like Bush wanted will hurt more than help. I’m glad that congress is taking more time with this. Rushing into things is a recipe for disaster.

Warren Buffet, btw, is buying shit up like crazy. Also many of my stocks have gone up $1-2/share on average after the slight drop I took.

[quote]rainjack wrote:
tedro wrote:
Buffett just announced Berkshire would buy up $6 billion of its own stock. Apparently somebody thinks we’re pretty close to the bottom.

I didn’t hear that, but I did hear that he is putting $3 billion into GE.

Damn. Who is it that has been harping on buying GE in this forum?

I guess great minds think alike. I just don’t know why it took Warren so long to come around. Every time we have lunch, I tell him he needs to get into GE.

[/quote]

Don’t celebrate yet, RJ, there’s a long way to go.

[quote]on edge wrote:
rainjack wrote:
tedro wrote:
Buffett just announced Berkshire would buy up $6 billion of its own stock. Apparently somebody thinks we’re pretty close to the bottom.

I didn’t hear that, but I did hear that he is putting $3 billion into GE.

Damn. Who is it that has been harping on buying GE in this forum?

I guess great minds think alike. I just don’t know why it took Warren so long to come around. Every time we have lunch, I tell him he needs to get into GE.

Don’t celebrate yet, RJ, there’s a long way to go.[/quote]

If I’m on the same side of an investment discussion as Warren Buffet - and Buffet does exactly as I have been telling others to do - I’m celebrating.

Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

[quote]AynRandLuvr wrote:
Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

[/quote]

Yeah. Buffet is one desperate motherfucker.

Can you please provide a link to where you get your graphs?

[quote]rainjack wrote:
AynRandLuvr wrote:
Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

Yeah. Buffet is one desperate motherfucker.

Can you please provide a link to where you get your graphs?[/quote]

Of course. Here’s one.

http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=Ge

Maybe Buffett can make money with this slow motion suivide stock. Maybe it’ll go back up to $50, where it was a decage ago. Good luck!

[quote]rainjack wrote:
AynRandLuvr wrote:
Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

Yeah. Buffet is one desperate motherfucker.

Can you please provide a link to where you get your graphs?[/quote]

Just a small modification, if you please:
[i]
General Electric Co. announced an offering of “at least” $12 billion in common stock as the economic bellwether joined a number of other financial giants that have been forced to raise capital in recent weeks.

In addition, Warren Buffett’s Berkshire Hathaway again slid into the role of a rescuer as it agreed to buy $3 billion in perpetual preferred stock from GE in a private offering.[/i]

From the WSJ.

Buffett is buying perpetual preferred stock with a 10.5% yield, not common stock. He trusts in dividends here, not ownership (yet).
For more interesting tidbit on GE, also see WSJ’s article on its commercial paper. Yields have gone from 4 to 10% in a few months. (Another buying opportunity?)
How much this reflects on GE and its earnings, and how much it reflects on the general credit panic, is open to discussion.

[quote]DrSkeptix wrote:
rainjack wrote:
AynRandLuvr wrote:
Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

Yeah. Buffet is one desperate motherfucker.

Can you please provide a link to where you get your graphs?

Just a small modification, if you please:
[i]
General Electric Co. announced an offering of “at least” $12 billion in common stock as the economic bellwether joined a number of other financial giants that have been forced to raise capital in recent weeks.

In addition, Warren Buffett’s Berkshire Hathaway again slid into the role of a rescuer as it agreed to buy $3 billion in perpetual preferred stock from GE in a private offering.[/i]

From the WSJ.

Buffett is buying perpetual preferred stock with a 10.5% yield, not common stock. He trusts in dividends here, not ownership (yet).
For more interesting tidbit on GE, also see WSJ’s article on its commercial paper. Yields have gone from 4 to 10% in a few months. (Another buying opportunity?)
How much this reflects on GE and its earnings, and how much it reflects on the general credit panic, is open to discussion.[/quote]

Good Stuff! I wondered why the common didn’t get a big boost from his buy in. He’s basically lending them cash so they don’t go the way of the DoDo, like so many of these other financial companies. 10.5% IS a good deal especially from an old-line Dow 30 fixture stock.

Wouldn’t the issuance of such a preferred though decrease the value of the common? Also, GE having to pay such a high rate tells me that they’re in trouble. Between that and the 10 year chart I posted, I’d run from this turkey. The common, that is. That preferred is a sweetheart stock.

[quote]DrSkeptix wrote:
rainjack wrote:
AynRandLuvr wrote:
Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

Yeah. Buffet is one desperate motherfucker.

Can you please provide a link to where you get your graphs?

Just a small modification, if you please:
[i]
General Electric Co. announced an offering of “at least” $12 billion in common stock as the economic bellwether joined a number of other financial giants that have been forced to raise capital in recent weeks.

In addition, Warren Buffett’s Berkshire Hathaway again slid into the role of a rescuer as it agreed to buy $3 billion in perpetual preferred stock from GE in a private offering.[/i]

From the WSJ.

Buffett is buying perpetual preferred stock with a 10.5% yield, not common stock. He trusts in dividends here, not ownership (yet).
For more interesting tidbit on GE, also see WSJ’s article on its commercial paper. Yields have gone from 4 to 10% in a few months. (Another buying opportunity?)
How much this reflects on GE and its earnings, and how much it reflects on the general credit panic, is open to discussion.[/quote]

WSJ is not entirely accurate. 10% perpetual preferred, callable in 3 years.

He also received warrants for common stock @ $22.25.

[quote]AynRandLuvr wrote:

Good Stuff! I wondered why the common didn’t get a big boost from his buy in. He’s basically lending them cash so they don’t go the way of the DoDo, like so many of these other financial companies. 10.5% IS a good deal especially from an old-line Dow 30 fixture stock.

Wouldn’t the issuance of such a preferred though decrease the value of the common? Also, GE having to pay such a high rate tells me that they’re in trouble. Between that and the 10 year chart I posted, I’d run from this turkey. The common, that is. That preferred is a sweetheart stock.

[/quote]

I hope you believe the crap you write. I don’t. No one who wants to make money in the market long term should either.

Why do you even dabble in the markets if all you can provide is how fucking horrible it is?

How do you wake up in the morning and go outside if the entire fucking country is caving in?

Honestly - people like you should take the first fucking plane, train, or boat out of the fucking country, and move to Europe.

[quote]AynRandLuvr wrote:
rainjack wrote:
AynRandLuvr wrote:
Fell off the table over the last 5 years. Buy it for the dividend, if desperate I guess.

Yeah. Buffet is one desperate motherfucker.

Can you please provide a link to where you get your graphs?

Of course. Here’s one.

http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=Ge

Maybe Buffett can make money with this slow motion suivide stock. Maybe it’ll go back up to $50, where it was a decage ago. Good luck!
[/quote]
Unlike you - Buffet doesn’t live his life by the charts. In fact he considers chart whores idiots.

I tend to agree. But what does Buffet know - he’s only the 2nd richest man in the US.

Wanna know when he made his best buys? When chart whores were sitting in the bomb shelters worshiping their gold.

[quote]rainjack wrote:
AynRandLuvr wrote:

Good Stuff! I wondered why the common didn’t get a big boost from his buy in. He’s basically lending them cash so they don’t go the way of the DoDo, like so many of these other financial companies. 10.5% IS a good deal especially from an old-line Dow 30 fixture stock.

Wouldn’t the issuance of such a preferred though decrease the value of the common? Also, GE having to pay such a high rate tells me that they’re in trouble. Between that and the 10 year chart I posted, I’d run from this turkey. The common, that is. That preferred is a sweetheart stock.

I hope you believe the crap you write. I don’t. No one who wants to make money in the market long term should either.

Why do you even dabble in the markets if all you can provide is how fucking horrible it is?

How do you wake up in the morning and go outside if the entire fucking country is caving in?

Honestly - people like you should take the first fucking plane, train, or boat out of the fucking country, and move to Europe.

[/quote]

GE is a lousy stock. Why would pointing that out lead to all this stuff?

Optimism is one thing, foolhardiness is another. I think that buying most stocks is, for now, foolhardy. I have wished you luck, you may have noticed. I gave you charts and history to back these things up. You’re entitled to your opinion and I to mine. Why would any of that make me want to move to Europe?

I’m a country boy! :>