How Far Can Stocks Fall?

Off Topic Politics and World Issues
21

[quote]rainjack wrote:
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.

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!

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]

Well, bully for him! He’s a wizard at picking stocks. Wonderful! But the vast majority of people have gotten their asses handed to them. They try to bet against the market (down 22% this year) and lose.

Like I said: if you can pick the 1 out of 9 stocks that goes up and get rich, that’s great! More power to you!

Sidenote: Wal-mart is a company of criminals. They cheat their employees, and practice all sorts of discrimination. Google the documentary. Might want to disassociate there.

22

[quote]AynRandLuvr wrote:
rainjack wrote:
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.

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!

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.

Well, bully for him! He’s a wizard at picking stocks. Wonderful! But the vast majority of people have gotten their asses handed to them. They try to bet against the market (down 22% this year) and lose.

Like I said: if you can pick the 1 out of 9 stocks that goes up and get rich, that’s great! More power to you!

Sidenote: Wal-mart is a company of criminals. They cheat their employees, and practice all sorts of discrimination. Google the documentary. Might want to disassociate there.

[/quote]

I am down less than 3%. I am not an idiot. I have no patience for the “gold is king” crowd.

I love Walmart as an investment. It is a well run company. It has a solid balance sheet, and is a very good investment.

Very few people can pick one stock and get rich on it. I have never said that is what I do. I have a basket of stocks that I intend to hold for the next 30 years. That is investing. Anything else, in my opinion, is speculating.

23

buy up european bonds before they begin to cut interest rates. thats my suggestion. Also, it seems the health care industry is very resiliant to recession. May want to look for opportunities there.

24

Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

25

[quote]bdog527 wrote:
Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

[/quote]

That 975 is still above the historical average. Such a number gives a PE of about 20 with a dividend yield below 4%. That assumes that earnings don’t tank (in a recession!)

Look for 800 as a decent buy point. That’s a PE of 16 (once again assuming earnings are stable.) Begin averaging in then with any surplus funds. There’s a small chance that our market will fall more.

26

[quote]bdog527 wrote:
Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

[/quote]

This is pretty much what I believe is the most likely scenario.

27

[quote]on edge wrote:
bdog527 wrote:
Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

This is pretty much what I believe is the most likely scenario. [/quote]

Is that with, or without the bailout?

I think that without the bailout - it falls faster and a little lower, but hits the true bottom and starts a slow steady recovery.

With the bailout, I don’t know. I do think, though, that any “recovery” is built on eggshells and sand.

28

[quote]rainjack wrote:
on edge wrote:
bdog527 wrote:
Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

This is pretty much what I believe is the most likely scenario.

Is that with, or without the bailout?

I think that without the bailout - it falls faster and a little lower, but hits the true bottom and starts a slow steady recovery.

With the bailout, I don’t know. I do think, though, that any “recovery” is built on eggshells and sand.
[/quote]

The 975 target is factoring in the bailout package and assuming it is effective.

As you and others have stated previously, that may be a big assumption.

I have seen estimates for DOW 8000 sans any bailout package.

29

I’m sorry guys but this is a stock bubble. This chart goes back many years and you can see that stocks are grossly overvalued. This secondary top is actually an opportunity to get out, with most of your savings. Buy land (farmland would be ideal) or gold. This bubble is just plain popping. This is a classic double top. The rebound did not exceed the previous top.

There will be major support at around 800, but I wouldn’t be terribly shocked to see it hit 300.

30

Chart.

31

long term, what do you all think? This is back to '71

32

A 60 year chart is pretty meaningless in linear form. Unfortunately I can’t easily post a the log chart of without taking a screenshot, cutting and cropping which is more than I care to do. Your argument of a bubble doesn’t stand on that basis though if you take a look.

edit- refering to aynrndlvr

33

[quote]jp_dubya wrote:
long term, what do you all think? This is back to '71[/quote]

In 1971 we officially went of the gold standard. That growth is probably attributed to inflation of the money supply.

Long term you can expect more of the same thing assuming there is more credit expansion in the future. However, I would not use historical data to base a future bets on. History can only show historical events and cannot be used to predict the future.

34

[quote]bdog527 wrote:
rainjack wrote:
on edge wrote:
bdog527 wrote:
Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

This is pretty much what I believe is the most likely scenario.

Is that with, or without the bailout?

I think that without the bailout - it falls faster and a little lower, but hits the true bottom and starts a slow steady recovery.

With the bailout, I don’t know. I do think, though, that any “recovery” is built on eggshells and sand.

The 975 target is factoring in the bailout package and assuming it is effective.

[/quote]

I agree. I think the most likely scenario is that there will be a bailout.

I also agree with Jack. I think it ultimately falls further with a bailout, but faster with out one.

35

[quote]LIFTICVSMAXIMVS wrote:
jp_dubya wrote:
long term, what do you all think? This is back to '71

In 1971 we officially went of the gold standard. That growth is probably attributed to inflation of the money supply.

Long term you can expect more of the same thing assuming there is more credit expansion in the future. However, I would not use historical data to base a future bets on. History can only show historical events and cannot be used to predict the future.[/quote]

agreed, but it does show you where we have been, and what has happened. Charts and technical indicators are voodoo, but if enough people believe in the voodoo it is like a self fulfilling prophecy, don’t you think?

Stocks are an auction. period. There is no official reason for ups and downs. Perception of future price and action will determine the price. Markets are not efficient. No one would make or lose much money if it were efficient.

36

[quote]on edge wrote:
bdog527 wrote:
rainjack wrote:
on edge wrote:
bdog527 wrote:
Stocks can fall to zero.

However some very smart people I know have an ulitmate downside target on the S&P of 975 and I tend to agree.

In the interim if this bailout passes it could set us up for a 4th. quarter rally to 1300 or so.

This is pretty much what I believe is the most likely scenario.

Is that with, or without the bailout?

I think that without the bailout - it falls faster and a little lower, but hits the true bottom and starts a slow steady recovery.

With the bailout, I don’t know. I do think, though, that any “recovery” is built on eggshells and sand.

The 975 target is factoring in the bailout package and assuming it is effective.

I agree. I think the most likely scenario is that there will be a bailout.

I also agree with Jack. I think it ultimately falls further with a bailout, but faster with out one.[/quote]

A lot of people think that Monday was a crash and the bottom is in. I think that bail out or not, the derivatives market is not going to clear up over night and the real crash is still ahead of us.

There will be more large scale bankruptcies.

37

[quote]jp_dubya wrote:
Stocks are an auction. period. There is no official reason for ups and downs. Perception of future price and action will determine the price. Markets are not efficient. No one would make or lose much money if it were efficient. [/quote]

Exactly right. There is no reason except for how individuals value a company. The money supply does play into that. The more money in the system the more demand for stocks there will be and the more the price will be bid up in an auction. The fact of the matter is that under a central banking system large financial institutions always see newly created money first and therefore the stock market is a good indicator for the the amount of free floating credit.

We can imagine that the stock market will shrink a little bit just because there are fewer investors and a less available capital (and credit) in an economic downturn. This is a good thing because it will stabilize prices.

38

Stop paying attention to the equity markets. When the credit markets begin to ease then you can invest. Otherwise you have to be a trader and very fast.

LIBOR is above 4%, that is insane. Credit spreads are at historicly high levles. States are now asking for billions just to pay their teachers, police etc. because the commerical paper market is cllosed.

Like I said don’t invest now but if you have to have some money in be a trader and learn too hedge. Right now I am long NVS, PM and WMT while holding SRS (2x short the S&P)and GM puts and having a good day. However there is no way I would hold any position over the weekend. We can easily see a 50bps rate cut over the weekend or we can see a major banckruptcy.

Whoever said to invest in GE I have to disagree with. Buffett has perpetually preferred shares with a 10% yield and warrant which are essentially $22 call options.

He has a much better deal than you, he is getting $300M in cash per year for that investment and in the $ options. When they do their common stock secondary they are going to dilute all current holders.

Also I find it strange a AAA company is paying loan shark terms to raise capital they allegedly do not need.

39

Yep. Buffett ass raped GE. It’s no coincidence they pulled an equity raise right after his investment.

I keep saying the credit market is the canary in the coal mine. Until then, it’s dangerous waters.

If we get a swoosh down to 1050 or so on the S&P I’m going to consider getting long for a bear market rally.

Oh and watch Citigroup. They fucked themselves proper providing liquidity to Wachovia. If the FDIC allows the Wells Fargo deal to go through they will be the next to go.

40

[quote]DB297 wrote:
Stop paying attention to the equity markets. When the credit markets begin to ease then you can invest. Otherwise you have to be a trader and very fast.

LIBOR is above 4%, that is insane. Credit spreads are at historicly high levles. States are now asking for billions just to pay their teachers, police etc. because the commerical paper market is cllosed.

Like I said don’t invest now but if you have to have some money in be a trader and learn too hedge. Right now I am long NVS, PM and WMT while holding SRS (2x short the S&P)and GM puts and having a good day.

However there is no way I would hold any position over the weekend. We can easily see a 50bps rate cut over the weekend or we can see a major banckruptcy.

Whoever said to invest in GE I have to disagree with. Buffett has perpetually preferred shares with a 10% yield and warrant which are essentially $22 call options.

He has a much better deal than you, he is getting $300M in cash per year for that investment and in the $ options. When they do their common stock secondary they are going to dilute all current holders.

Also I find it strange a AAA company is paying loan shark terms to raise capital they allegedly do not need.
[/quote]

I can’t defend the 10% - but once the credit market eases up, GE will come back strong.

But what the hell are you talking about call options? They are warrants exercisable at 22.25.

That’s the fun part about the stock market. Some folks see a bad thing, others see a good thing.

I’m glad there are more people think badly of GE right now. It makes dollar cost averaging much more powerful.