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Dec 5, 2008 1:59 pm

I know I'm not a market expert, but the recent action of the market in spite of really, really bad news over the last few days appears to be very good.  The fact that the market has rallied from its lows during these days is interesting.


That being said, some analysts/managers/paid market whores see fair value on the S&P in the 600-700 range.


Could we be setting up for a decent sucker's rally? 

Dec 5, 2008 2:07 pm

I don't see much of a rally coming.  Too much bad news coming out.  Unemployment up, earnings down, auto bailouts and effectiveness of current bailouts questionable, retail sales down, damn near every industry is hurting, real estate down, everything you see is down except unemployment.

 
I just think there's too much headwind right now.  You might see a 1000 point rally that will be shortlived (which, I guess, would be the sucker's rally) like we had a few weeks ago.  But beyond that, I think we are headed down prior to any sustained updraft.  And unfortunately, if we break well below the support lines, all hell will break loose again like in October.
Dec 5, 2008 4:06 pm

Anyone who tells you that they can make sense of these markets is lying.<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


Is this the reverse of “buy on the rumor and sell on the news?”  Was everything already priced in?  I’m not sold on the thought process.


 


From 1966-1981 the stock market averaged a -.4% inflation adjusted return.  From 1982-2001 inflation adjusted annual return was 10/5%.  Will the next X-years be more like 1966-1981, like 1982-2001 or something altogether different?  My inclination is to say that it will be more like 1966-1981 but I’m positioning clients to be able to do reasonably well in all of those markets.


 


--WM

Dec 5, 2008 10:20 pm

snags,

you can't manage money strictly on what the indexes do or dont do. You have to look at other factors in the world and what is going on with investments other than stocks. Last year I was a total dumbass to many of my clients approaching retirement when the market was going up and i moved to cash and st - int term bonds because of the inverted yield curve. Today i am golden with those guys because they side stepped a huge hit in their portfolios. Twice in my life i have been correct in when to move portfolios into a defensive stance, last year when i saw the yield curve invert and a few other factors, and again in feb 2000, when i rotated money out of tech. I must admit, i dont have any clear buy sign that tells me it is time to get back in, but i do attempt to pick and choose my way back in when i see stocks i feel are bargains. I tend not to focus so much on the dow or s&p, but on the total picture and decide what the economy is going to look like going forward. If the economy does well, so should equities.

Dec 6, 2008 7:24 pm
jamesbond:

snags,

you can't manage money strictly on what the indexes do or dont do. You have to look at other factors in the world and what is going on with investments other than stocks. Last year I was a total dumbass to many of my clients approaching retirement when the market was going up and i moved to cash and st - int term bonds because of the inverted yield curve. Today i am golden with those guys because they side stepped a huge hit in their portfolios. Twice in my life i have been correct in when to move portfolios into a defensive stance, last year when i saw the yield curve invert and a few other factors, and again in feb 2000, when i rotated money out of tech. I must admit, i dont have any clear buy sign that tells me it is time to get back in, but i do attempt to pick and choose my way back in when i see stocks i feel are bargains. I tend not to focus so much on the dow or s&p, but on the total picture and decide what the economy is going to look like going forward. If the economy does well, so should equities.


Curious to know, what was it that took you out of tech in 2000? Was it the tulip factor, technicals, valuations, all or just a feeling? This is a serious question, not a wise as jab. I am interested in methodoligies that help one to make those judgements.
Nice call.

Dec 6, 2008 9:27 pm

honestly a gut feeling. When i had portfolios jump 25% in less than 2 months and pe ratios made no sense at all i moved tech money into fixed income. In addition I had made a killing on tech ipo's that I literally held for 1 hour in client accounts. Stocks would price at 35, open at 150, sell it at 193 within an hour. That was a major sign that it was to good to be true.