Where does the mkt go from here?

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Apr 16, 2009 11:49 pm

Last night i got a call from a client at 530pm, a blue collar hair dresser in his 60's, he's got 110K with me.  Back when fnm/fre/aig were being 'bailed out' he was trying to day trade them and lost all that he put in.  His rationale "they're going to bail em out- they gotta go up".  I said to him that the companies will survive but the stock prices won't, he wanted to play along anyway, not a lot of money, no big deal.  Last night at 530pm he was all excited to talk to me "i got my tax refund and i want to try and make up my losses" i asked how much do you have, he said 2K.  I said hold on to it and when you're scared of the market give me a call.  He said "really?".  I didn't tell him that he was my contrarian indicator.  WE ALL HAVE CLIENTS LIKE THIS.  The market has rallied a good deal from the lows and i'm curious as to the sentiment out there.  Personally, I'm looking to reduce equity allocation as the mkt rises from here.  I'd love to hear what people are seeing and hearing out there.

Apr 17, 2009 12:04 am

We will continue to see big dips during this runup. But as always ahppens, investor sentiment will drive the market higher. It will drive P/E ratios up (which drove the last Bull Market), and as we return to profitability growth, we will return to more "normal" market growth. The market grows due to inflation, earnings growth, and P/E growth. It drops for those same reasons. When the P/E ratios get out of whack high, we enter a Bear. When it gets out of whack low, we enter a Bull. It always happens (referring to secular, not cyclical markets).

Apr 17, 2009 6:25 am

Sicko, great story, really typical.
On the one hand, its pretty clear that after a run up like the one we've had, lighteining up is the right thing to do.
On the other hand, thats pretty clear. As Don Hays, one of my favorite strategists said a week or so ago, selling right now seems to be the easy (and thus, maybe crowded? - my words in parenthesis) trade.
So like Jack Welch said yesterday, nobody knows and if someone tells you they do, then run.
Develop a long term allocation strategy, be tactical around the fringe, and stick with it.

Apr 18, 2009 8:10 am

everyone says "buy and hold" dead





everyone says "cash is good"







everyone says "bear market rally"







everyone has "learned" "sell the rallys"









My brothers.......this is a once in a generation opportunity.    



Be very very greedy.





Everyone is fearful.



Get an s and p chart. take a look at 1982-1999........



This is 1982.

Apr 18, 2009 10:00 am

I find it hard to be optimistic about the 'market' when the economy looks so weak. Unemployment is still going up, which will lead to even more bankruptcies and less consumer spending and fewer profits for stockholders.
And it's not like 1982, when Volcker and Reagan had the right combination of fiscal and political policies in place.
I think the demographics and the debt and the politics are all working against us today. Having the boomers in charge, heading into retirement is a nightmare, imo.
I still like stocks, for those with a 10- or even 20-year horizon, but I'd rather hold 10 or 20 companies that I like and not be in the wider market.
Fwiw, I'm in a county which has been in recession for 10 years, so that makes me even more pessimistic.




Apr 18, 2009 10:04 am

Every bull mkt starts with some kind of catalyst.  For example in the mid 70's stocks got too cheap, they didn't get as cheap this time.  In 1982 we had the reagan revolution with lower taxes.  In 2003 we had a housing bubble which carried the mkts.  What industry is going to sop up all this unemployment.  People are going to hunker down and pay back their debts.  On top of all this the us govt is printing like mad and increasing its debt load which they will have to repay.  I just don't see a new bull mkt from here.  I think its quite possible to retest and maybe even break under the march lows. 

Apr 18, 2009 10:27 am
S&P low 666:

everyone says "buy and hold" dead


everyone says "cash is good"



everyone says "bear market rally"



everyone has "learned" "sell the rallys"




My brothers.......this is a once in a generation opportunity.    

Be very very greedy.


Everyone is fearful.

Get an s and p chart. take a look at 1982-1999........

This is 1982.

 
You are dead wrong, even if we have bottomed we will retest and probably slightly undercut the lows at least once.  Study history, NO bottom has ever been formed with a short squeeze move like this. 
 
My guess is we trade between 6500 and 9000 for 5 years and then break to new lows as people begin to retire from Baby Boom generation. 
Apr 18, 2009 2:03 pm
sickowire:

  What industry is going to sop up all this unemployment? 



If you ask Obama, Pelosi, and Frank, it would be the "government" industry.

Unfortunately for us that industry doesn't actually make anything that actually adds to our GDP...

Apr 18, 2009 8:17 pm
You are dead wrong, even if we have bottomed we will retest and probably slightly undercut the lows at least once. Study history, NO bottom has ever been formed with a short squeeze move like this.



My guess is we trade between 6500 and 9000 for 5 years and then break to new lows as people begin to retire from Baby Boom generation. [/quote]



Global economy.    



100000 times bigger then anything we have seen before in history. obama cant screw it up



It got side tracked a bit with credit meltdown.



you hold your cash. next decade: 20 plus a year minimum



agri



infra struct



commods



global tech



This meltdown is a good thing.   a purging.   sort of like forest fire. new tree will be so awesome.











Apr 18, 2009 10:31 pm

Some great comments here. Most world growth is outside the US, blue chip US stocks will benefit. Small caps will do their thing, this part of the cycle is normally a time of great innovation, but capital is constrained. I believe that will change pretty soon - Americans will get tired on sitting on their hands, some leverage will return to the capital markets.


Look at the dividend yields on large cap stocks indexes, no sense in holding more cash or fixed than is prudent for the cash reserve or spending needs. Energy of all kinds holds great built-in promise. As does alternative economy investments, like services, internet and media entertainment, consumer convenience staples, of course health care.


The short term numbers don't matter, S&P 666, your trading range and time frame will begin to look pretty silly, very soon. Just printing money alone will cause a grab for real assets (stocks, bonds, real estate) that will smoke a Dow 9000.


The US has one of the higest population growth rates in the world, many, many hungry mouths and emptying gas tanks will continue to drive basic demand and create fortunes for the few.
 
I wouldn't stand around and wait with that cash for too long. The market is always a leading indicator, and the power of spending by the US government will come down like the hand of God. I'm not saying taxes won't go up, but prices, demand, capital leverage, foreign investment and exports, and even productivity will.