Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
15y
I do enjoy predictions and looking back at how they turned out. We are in a very interesting time right now, with high unemployment but a solid DOW/Stock Market.
Although I do not need to work, I have been testing the job market, mostly the Non-Profit sector, looking for a Finance Director Position. ( I enjoy the Non Profit world as it helps the less fortunate of our society). My last interview, the HR Director told me that they had over 400 applications for one job. The one before that, they had over 350 applications for one job. That is a lot of folks looking for work!!
So while there is no "gloom and doom" from me, there is reality. And the reality is, where I live, Gas is still $4.25 a gallon, unemployment is over 12% and foreclosures are still at record highs. I live in a strange economic area (Orange County, CA), investors are over paying for flips and banks are holding back inventory. Go figure!!
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
17y
The stock market is considered a leading indicator. That shows what the investment world thinks of the future prospects of the economy. We will probably see a bounce, if only for technical reasons, followed by a continued downward trend. Until things turn and corporate earnings pick up you will not see any major change in trend. Pretty ugly.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Of course, they need to make some more cash so they can line the pockets of the government officials for the next election to carry points for favorable voting on laws they need past.
Indianapolis, IN · Member since 2008 · 759 posts · 185 votes
17y
We tested 7,500 for a while.
Now we are looking at testing 6,500.
I feel we are going to test 5,500 as more and more people see that this stimulus package is not going to make that big of an impact, if any.
This is going to be a tough year, and this administration knows that. There will be more layoffs, more bankruptcies, more companies fold, and more money printed than at any time in history.
The stimulus was just a quick run out to get everything they wanted politically in one quick swoop, all while making Americans feel it was all in their best interest, and giving them false hope that Uncle Sam is coming to the rescue.
This is "Politics 101"
While unfortunate, It is my honest opinion that we can not rebuild all of this until it completely burns down.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
I agree that it will have to burn down before we can rebuild it. However, that's nowhere near 5,500 on the DOW. Our next stop should be at 5,700 on the DOW, but that will just be for a short layover. If the market follows the pattern established during the great depression (it could be much worse), then the DOW should get down to at least 1,540. If Elliott Wave Theory is correct, then that low will be between 400 and 1,000. We're in the early innings of this ballgame. We haven't seen the bad part yet. Furthermore, this isn't a v-shaped situation like we've seen in the past. If you go immediately to your basement and notice the shape of the stairs on the way down - that's what we're in for. We're on the top step right now and it will be a multi-year process to reach the bottom in the economy.
This is NOT a real estate issue. This is not a credit issue. This IS a decades-long overspending issue that will be unwound over MANY YEARS!
Indianapolis, IN · Member since 2008 · 759 posts · 185 votes
17y
I think Campbell Soup Company might be a good stock to buy over the long haul here.
It is down a lot this year, but I would bet sales will drastically rise as people are laid off, money gets tighter, and good ole Tomato Soup makes a strong comeback!
Is Campbells the next Microsoft, Amazon, Ebay?
Nahhhh..............you would probably be better off to just buy soup by the case and store it in the basement!!!!!!
Indianapolis, IN · Member since 2008 · 759 posts · 185 votes
17y
I do agree with Mike, I think most folks are looking for that V shape....but It is going to be a slow descent. There will be a few bumps up here and there, but there is more pain in store.
That said, I do not feel it will get to the 1,000 mark. I am not saying it is impossible, but I doubt (maybe "hope" is a better word) that it will happen.
I feel confident in the 5,500 mark, and I might even give in to the 4,500 mark if things really start to free fall.
People thought it was going to Dow 50,000 when it was booming, now people are predicting Dow 0 as it falls. I do not buy it, the general public is just too emotional and dramatic when they make these predictions.
America will find a way to pull out of this, that is one thing I do not question for a minute.
Indianapolis, IN · Member since 2008 · 759 posts · 185 votes
17y
Maybe Rich has the same reasoning behind his prediction as Obama does about feeling that $50 Gazillion Dollars is going to buy his way out of it! :lol:
Pleasant Hill, CA · Member since 2008 · 428 posts · 43 votes
17y
think we might see a few small rallies but for the next few years things will continue downward. I hate to be a doomer and gloomer but if history is any clue we are headed for a depression. Obams's plan is identical to FDRs New Deal in the 1930s and that led to a 10 year great depression. In every case in American history if you raise taxes in a recession it will become a depression. Time to hold on and get creative.
My liquid capital is out of the stock market. I am doing mostly short term put option trades and Real Estate investments right now. If you ask me Real Estate is the best place to make money right now. Deals are so cheap and you can yield 15% to 25%!
Compare the pattern of the Great Depression of 1930 and what is currently happening. http://budurl.com/DJHistory
The good news is that more millionaires are made in recessions than any other market. I'm hoping I might be one... :)
Josh, this is a good article but earnings multiples are only half of the story, lets say we take today's earnings and use an 8 multiple to predict the SP goes to 460(according to the article). But that is based on today's earnings and we know earnings will just get worse going forward for the next 6-18 months. So even if we bottom out at the multiple in previous bottoms we can't base the bottom on today's earnings.
Using that flat rate and assuming 460 is our bottom that would be a 34% decrease from where we are now. But lets say earnings fall by 20%, which would be conservative. You'd have to reduce the 460 by 20%, which would point to a real bottom of 368 S&P. Almost 50% from where we are now. I'm not saying we get to these levels but I am trying to keep in context of the article.
Who the hell knows where earnings are really going? It's still not priced into the market and analysts need to revise outlooks substantially. I never knew during the depression the index had negative earnings for 2 years...that is amazing.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
I don't believe ANYTHING I hear on TV as far as financial information. I've heard everyday for the past 6 months that "we're at the bottom". The day that the "experts" on CNBC or any of the other financial channels says that we've got a long way to go, you'll know for a fact that we've reached the bottom. RIDICULOUS!