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Did anyone listen to the 29 minute explanation from Jeremy Grantham to CNBC last November on why stocks will get cut in half again?
From a story this week:
"That suggests stocks have further to fall, whether it happens right away or slowly over time. If earnings were to suddenly revert to their historic average relative to wages, shares would be left at 24 times earnings. That in turn would mean stocks would have to fall about 40% to return to their average level relative to earnings.
For the Dow, a 40% decline would put it just below 7,000. That might seem extreme, but the Dow has fallen to nearly that level three times in the past 15 years: once after topping 9,400 in July 1998, once after nearing 12,000 in January 2000 and of course, once after reaching 14,000 in October 2007." How Much More Could Stocks Drop? - SmartMoney.com
Isn't there typically a huge sell off around November/October anyhow?
The best time of year is usually mid October to February.
Last year September and October were good, when historically they are the worst months. Then November through everything else, was good too. We did not get the normal late summer early fall "correction."
Since we did not get it last year, as normal, we are paying the piper now for our sins of not having a 10% decline since last August, 2010. Last August, as Ron Insana stated the other night, we went down 17%, so this correction we have had over only a week, or so, is still mild.
This is a correction that did not take long at all. Down 10% in no time.
What Europe does over the weekend and how the market reacts to our S&P downgrade will determine things on Monday.
I am fearing the worst because of that circus of a debt deal in Congress. S&P told the idiots up front they wanted a 4 trillion debt reduction. Congress gave them about 2.5 trillion over 10 years. What a joke. Washington has no idea how stocks work and they need to let Bill Gross and others advise them The only thing they accomplished that weekend was to avoid a default date. The date the President signed the thing we went down 265 points. It was a joke and Congress has no clue about economics and stocks. There are people predicting that when China and other large countries get tired of taking dollars that go down in value, they will create a new world reserve currency and then no one will take dollars. How can we pay our debts then? We'll have to some how buy the currency the group of countries are using. What will we use to buy it if no one takes the dollar? We are headed down that path.
How to pay your debts:
1. Raise taxes, YES, on those who make over $250,000 friggin dollars a year. Make all incomes over $500,000 give up their social security benfits and let that go to the debt, not to some "research project" on how antelopes mate in the Rockies, and all other stupid spending they do. Donald Trump knows how the government wastes money.
2. Cut spending (stop paying $65 for a bolt and nut, and $500 for a toilet, go to Home Depot like the rest of us).
The best time of year is usually mid October to February.
Last year September and October were good, when historically they are the worst months. Then November through everything else, was good too. We did not get the normal late summer early fall "correction."
Since we did not get it last year, as normal, we are paying the piper now for our sins of not having a 10% decline since last August, 2010. Last August, as Ron Insana stated the other night, we went down 17%, so this correction we have had over only a week, or so, is still mild.
This is a correction that did not take long at all. Down 10% in no time.
What Europe does over the weekend and how the market reacts to our S&P downgrade will determine things on Monday.
So it sounds like their could be a good buying opertunity here pretty soon?
Seems to me much of the issue is big investors are taking out insurance just in case counterparty risk balloons thanks to Europe. Lots of big money is going flat taking out their leverage and setting aside some cash for if and when it seems safe to get back in. Takes a few months and some behind the scenes resolving so sit tight a little while, but there is a big strong rally looming once the cash deploys and risk on trades generate more levered buys. Now of course if there really is a big Euro implosion it could take longer and see a lot of damage before that buying environment returns.
As long as compnaies are makig profits like now then I thnik we see us just slowly moving along. But I certainly don't see companies taking more risk and include taking on more employees to any great extent.The recent dowgrade is just another reason to not expect much confidence to return for now.
As long as compnaies are makig profits like now then I thnik we see us just slowly moving along. But I certainly don't see companies taking more risk and include taking on more employees to any great extent.The recent dowgrade is just another reason to not expect much confidence to return for now.
From what I know and heard, the market may react violently to the S&P downgrade. We are no longer the best credit risk out there.
The actual affects of the downgrade are minimal in the long run.
I read where interest rates might go up 3/4% for some types of loans and debt. We can earn the AAA back at some point.
Too bad Congress failed to do what S&P told them to do which was $4 trillion in debt reduction. They were told by S&P what needed to be done and they spent a week on the deal, and come up almost 50% short.
And the market is wanting the ECB to purchase Italian bonds, and as of a few hours ago they were undecided. The countries who are not involved in the mess do not want to help the others. The Euro was a disaster to begin with. Too many countries with too many different economies to be using the same currency. The Euro may be divided back into individual countries in the future according to Dennis Gartman, a highly regarded analyst.
I'd expect the market to sell off on the S&P downgrade. Fitch and Moody's kept the U.S. at AAA but with a "negative" watch.
Congress needs to put in place increased revenues, even if it is new taxes, and cut spending.
Downgrade means nothing, just a bunch of noise. There is nothing predictive about bond ratings, investors don't even really use them. About all they dictate is where investment grade begins and ends. Market movement on Monday will all be about Europe.
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Well, I don't have a crystal ball to help predict anything but I have a feeling we haven't seen the end of it.
