Don't Buy the 'Stocks Are Cheap' Hype: Weak Earnings May Mean a 'Washout' in '09

Welcome to what history will come to call THE GREAT RECESSION! If you can hold for 5+ years then invest, if you are can not then trade (short term, day trade). The P/E ratios when the Dow was at 14,000 simply won't exist any more... This IS the time to buy if you can invest - if you can trade, well hold on to your wallet.

Where was this "Brain Surgeon" with his wealth of info back last December when everything was coming apart. With this kind of insight and negative crap. Maybe Skelator and this guy can hang out and look up for the Sky that's Falling. The USA is stronger than some may think.

Is the ag industry the next one to tank?

THE RECESSION IS ONLY 3 MONTHS OLD--WHEN JOB LOSSES EXCEEDED 100K PER MONTH. WE HAVE AT LEAST A YEAR TO GO. STOCK MARKETS N-E-V-E-R RISE AT THE BEGINNING OF RECESSIONS--THEY RISE AS THE E-N-D DRAWS NEAR. 'DON'T BE STUPID.' TURN OFF THE 'BULLS ON TV'--THEY 'WORK' INDIRECTLY FOR VANGUARD ETC.--WHO BUY COMMERCIAL TIME. GET REAL--AND 'SMELL THE FOUL EARNINGS' AHEAD!!

I'm 100% agree with John Mauldin. After next washout my plan is to invest 40% of my cash now and will be keep buying if the economy is below expectation. Cheers!

I'm 100% agree with John Mauldin. After next washout my plan is to invest 40% of my cash now and will be keep buying if the economy is below expectation. Cheers!

There is still a long way to the bottom. This is all just getting started. www.matthindt.com

I think investors are underestimating the amount of deleveraging that is occuring. This is a vicious cycle we are in, jobs losses cause more forclosures causing less connsumer spending causing companies to lay off more people causing governments to print more money to cause more deflationary pressures to cause more job losses. As much as commodities have come down, I think I am going to overweight commodities as these are items the world will not stop needing whether there is a massive slowdown and worthless money everywhere. I hate to be so negative but this has been a long, long time coming & I'm not sure the goernments tinkering is not going to have it's own set of reprecusions. Have fun out there and be safe!

You said: "Don't Buy the 'Stocks Are Cheap' Hype: Weak Earnings May Mean a 'Washout' in '09" I agree, but isn't the opposite also true? If earnings for some of the better companies come in better than the (extremely low) market expectations, isn’t there room for an explosion to the up-side too?

Yes stocks are cheap, very cheap if you're a long term investor (5y+)you could not ask for a better time to position yourself! Take the time to pull up a Dow chart from 1974 till today. This is just a dip, look at the overall picture not at all the negative sentiment. By the time this guy thinks the market is turning IT HAS TURNED SIX MONTHS AGO! Stop trying to call a bottom, the bottom is for day traders. Buffet called it again, this is the time to position yourself for retirement!! I have found that by the time these guys tell you to start investing again the market is over valued and on the way down and they're all on the way out with your money! But then again I'm not on TV so what do I know!?

A rally today? Looks like the suckers have shown up again to be fleeced.

Kenneth C - Go back an look at Mauldin's historical comments. He was predicting all these negative economic results before the market swooned. He is no Johnny Come Lately. Here's a reprint from his newsletter back in June. He is no recent Bear... "We have seen the heads of virtually all financial institutions stand up over the last few months and claim the worst is behind us. Why would anyone listen to these people? They didn't see the disaster coming, and yet somehow they are qualified to tell us it is all alright! Perhaps I am just unduly sceptical, but this reeks of a conspiracy of optimism. The recession has barely started, let alone reached its nadir. The market moves of late have all the hallmarks of a classic sucker's rally. This isn't discounting the recovery, this is denial! Far from being behind us, the worst may well still be ahead!"

Sounds like he is fairly accurate if China starts having financial problems.....remember, they are the ones that have bailed us out so we can do bailouts. Sounds like we should start rebounding in the summer. Need some time to washout the struggling companies, banks, etc and after that confidence should start to gain momentum. Probably need to let the Big 3 file bankruptcy so they can actually operate competitively, lower prices to be in line with imports and then start making and selling cars again.

Sounds like he is fairly accurate if China starts having financial problems.....remember, they are the ones that have bailed us out so we can do bailouts. Sounds like we should start rebounding in the summer. Need some time to washout the struggling companies, banks, etc and after that confidence should start to gain momentum. Probably need to let the Big 3 file bankruptcy so they can actually operate competitively, lower prices to be in line with imports and then start making and selling cars again.

We have seen many good name companies, Bear Stearn, Lehman, Fannie Mae, Freddie Mac plunged over 90 % become penny stock, go to benkruptcy, we have not thrugh the worst of this credit, financial , crisis, recession, How would you know your stock will be another penny stock next year, despite it is cheap no, by bottom fishing at Dow Jones, below 8000.? The plunging housing, stocks, consumer, business demand will hit hard on all sectors of industries,even in defensive and biotech. No one can be immune from it. details on www.osawh.com/riskm.html www.osawh.com/SP500.htm www.osawh.com/macro.html

"My world is mostly hedge funds and alternatives." Just another salesman.

Humans can never predict the future. Because you guys are so short-sighted like this trying to predict for the next year, you can't be rich like Warren Buffet. Because you guys are short-sighted like this, Warrent Buffet accumulated that much wealth! When you invest in stocks, you MUST think like Warren Buffet! The next 10 years, 20 years, 30 years or even 50 years! Otherwise, don't even invest a dime in the stock market. Just stick to your miserable $1,000 cash or bank CD for your life.

Hey "kenneth c" the US is stronger then some think. I would like for you to point to a indicator that says that. Manufacturing is only 10% of our fakonomy. I suggest people read more books and less broker talking head video clips. I suggest you research the Weimar governement and oh lets say Japan for the last 18 years they have dragged through. Also stop drinking the Keynesian kool-aid, and stop believing that the Federal Reserve is one federal and two that they have reserves. Then you can wrap that wet bag for a head you have around monetary policy and realize we have more debt then any nation in the world. Try 7.9 times what we make and raising everytime they announce GDP is dropping. Simply printing more won't help anything either. Yes, simplisticly a few WallStreet firms and the central bank system just robbed us blind and then got Congress to rob us again with a bailout.

I agree with mikemayzak but even when day trading stick to short term scalp trades.. it means you have to sit on the computer, but there is lots of money to be made in this environment... forget the future.. we have no idea what is coming.. and logic is not in control now...

The stock market has long been portrayed as the choice of the masses for "superior returns", you hear it in finance classes and retail securities brokers all the time 11% over the past century...but look at the returns now over the past 10 years..FLAT. Baby boomers are starting to retire, that means the outflow of money into the market will only increase, to me its a supply and demand system, less demand ie less money going into the market and therefore less returns. Also, who is to say what a "proper" p/e ratio should be? If I bought a small business, I wouldn't pay more than a p/e of 5, in other words, five years to get my cash out of the purchase, to me anything above that is overated. Also, there is a lot of hype above yields being so high, a dividend can be changed quarterly at any time by the board vanishing your "high yield stock". You will never see another bull run like the one through the 80s to 2006, EVER. I've made more money in CDs than the stock market in the last 15 years, I lost principal during the dot.com bubble when I was told to invest in "growth stock", lost money in this recent drop too. CDs are better with no thinking or stress involved!