can not believe people are still talking about a bottom. I personally think the market has not even priced in a recession. I must say, when the market bottoms, I'll be the first to buy, but you must be crazy if you think the bottom is here. We have one of the worst crisis in American history, a recession, oil ten times the price it was in the year 1999 (therefore inflation), a dead dollar, gold at $900.00/ounce (again, inflation), a lack of liquidity, a big money house failure (Bear Sterns), a negative savings rate (first time since great depression), and the Dow is barely 1500 points away from all time highs. It's funny, oil goes from $30.00 to $110.00, pulls back to $100.00, and all of a sudden, everything is all right again. The dollar collapses for years now, has a one day bounce, and everything is all right again. People, do not be fooled by media headlines. The truth, oil is at $100.00+, the dollar is dropping (big time), gold is at $900.00+, inflation is a bitch, and interest rates have nowhere to go but up. Oh yeah, there's that credit crisis thing. Again, the bottom will come and I will be the first to get long, but you must be crazy to think it's here now.
I think the trade deficit actually shrank recently. Which was part of my point about the large cap multi nationals.
Fine you can feel that the world is doomed. Ok great.
But my question was did you actaully do any research to show that the earnings of the dow components is decreasing?
See, if you just feel earnings must be decreasing without researching it, then go short the dow instead of just saying the dow should be lower. Someone else who researches it will probably buy the dow and then sell it back to you for more.
That's where just feeling the dow should be lower will get you.
Have you done some kind of analysis on how much cash each of the dow components has?
I never said the dow shouldn't fall more. I just asked if you had any specific analysis for thinking it really deserves to be X. Or does everyone just 'feel' it should be lower because they just 'feel' the compays are screwed without actually looking into it?
These earnings that you speak of are in the past. Securities, as you know, are priced for the future and the future does not look very bright, so all stocks should be priced accordingly. Also this, 'ya ya there is a credit crunch', is not a joke. If companies find it difficult to borrow, than they can not expand, if they can not expand they can not grow, therefore they can not hire, and so on and so on. And their earnings suffer, therefore hurting the price of their stock.
Most companies on the Dow are fundamentally strong, but thats not really in question at this point. Our economy is driven by the consumer. The consumer at this point is on the defense, and this is the beginning, also add in shrinking GDP, growing trade deficit and mounting debt. Slowdown will mean people will lose jobs, further worsening the problem. Not trying to chicken little here, but it is what it is. There has to be some major fundamental changes that need to occur first before things get any better. I think its best to allow these things to happen naturally, rather than the Fed or Government prolonging the inevitable.
No, I agree. When the bottom comes, it will feel impossible to buy, so I agree. But, I find it hard to believe after all this bad news, the Dow's low point will be 11700. When tech busted the markets took a hit bigger than this. This is not tech, this is the banks, this is credit. The home builders got caught, the money houses got caught, now I believe the credit card companies will feel it and than GM will go bust. There is more to this story than sub-prime lenders. Remember, we are only approximately 1500 points away from all time highs on the Dow. It just feels like there is much more room to sell. The only reason the markets have room to rally is an decrease in interest rates, and those rallies are artificial because rates will soon go up very, very fast. The only thing that could change my opinion is if oil falls to $55.00 per barrel. No doubt I may wrong, but I am pretty confident about this. What do you think, I truly appreciate opposing views.