Down goes the Dow

Prognosticator wrote:

Actually it did. Buying then turned out to be great for me.

How do you make any inroads with a guy who thinks losing @ 60% of the value of his equity holdings in 2008-09 was "great" for him?

Marketplace religious fanatics

Pointing Out A Trend wrote:

http://davidstockmanscontracorner.com/u-s-companies-give-recession-warnings/

no doubt there is a slowdown.

but the US doesn't go into recession without a catalyst - or at least the US economy HASN'T gone into recession without a catalyst. it would be perhaps unprecedented if we just slipped below the waves without an incident causing the sinkage. Could happen, but it hasn't happened at least for decades.

What happened a year ago is this:

the stock market started predicting a slowdown. Stocks stopped rising.

Now we have that slowdown...well done, stock market. You nailed it.

So what is happening now?

the market now seems to be predicting a blah next 6 months but no Igy type bear market.

How do you wrote:

Prognosticator wrote:

Actually it did. Buying then turned out to be great for me.

How do you make any inroads with a guy who thinks losing @ 60% of the value of his equity holdings in 2008-09 was "great" for him?

Marketplace religious fanatics

Who said that?

agip,

Good morning. The stock market fell in advance of the last two recessions, not the other way around. Looking for a recession to predict the market direction may not be your marker. The underlying strength of the market has been "the Fed has our back," and the myriad of easy money policies from global central banks. Even so, the growth of the economy has not been robust. Many assume a rising stock market is equivalent to a rising economy, not so. The stock market indicates nothing more than the willingness or lack thereof to accept risk. Easy money has encouraged speculators to borrow cheap and gamble that the game goes on. Conservative investors have bought into the proposition that dividend stocks are a superior asset to cash or cash equivalents. The psychology changes when buying on the dip no longer works. The breadth of the market has narrowed and the index is supported by large cap tech stocks of AAPL, AMZN, FB, and GOOG. Since earnings are declining, the market is more overvalued than it was this spring.

Igy

Say wha? wrote:

How do you wrote:

How do you make any inroads with a guy who thinks losing @ 60% of the value of his equity holdings in 2008-09 was "great" for him?

Marketplace religious fanatics

Who said that?

R U retarded or something?

The Million Dollar Shack:

http://wolfstreet.com/2015/10/27/million-dollar-shack-in-silicon-valley-video/

I'd say the stock market fell in advance of 5 of the last 2 recessions. Meaning a stock market drop doesn't necessarily predict a recession.

I think you missed my point tho - that the US economy is such a resilient critter that it takes a shock to throw it to the negative. I don't see a shock, with low interest rates, low inflation, low oil, low unemployment, little conflict...

the politics are absurdly bad I suppose - if HRC has to drop out I suspect the market would suffer - that would mean a president...Rubio? JFC. But if HRC had to drop out probably Biden would jump in which would be about the same as HRC.

And one catalyst could be waht you have suggested - that low interest rates have perverted the system so thoroughly that we can't see it.

agip,

I really don't see the Presidential Cycle as more than a psychological factor. I would feel differently if someone actually emerges who proves to be a leader.

I see the stock market being resilient, but I disagree that the economy is the same. The economy would not need the zero bound Fed policies otherwise.

We have a nation addicted to the smart phones, social media, fast food, leased autos, the Kardashians, and yet can't rub two nickels together to put into a retirement account.

Most investors miss the point that savings not return drives the growth. Too many investors are unrealistic about what lies ahead.

If what I say is far too pessimistic, well we will all be better off. On the other hand, if what I say is an image of a country a little off base, we have much work to do.

Igy

How do you wrote:

Say wha? wrote:

Who said that?

R U retarded or something?

Well, definitely something.

How do you wrote:

Say wha? wrote:

Who said that?

R U retarded or something?

Given those choices, I'll have to take "something".

Now please answer my question. Thanks.

new recovery high for the SPX - only 2.6% below 52 week highs

Earnings down 4.4% for the quarter. Market more overvalued not less.

Ghost of Igloi wrote:

Earnings down 4.4% for the quarter. Market more overvalued not less.

but what do you think earnings will look like in 6-12 months, Igy?

Isn't that the more important question?

amazing to look at the chart - in the US the dip has been completely filled in - all that utter panic and shoveling stuff over the side...it has come to nothing. nada. nothing but nada.

In retrospect we still don't know what caused the market to fall off the table - the catalyst was China but that's been a drumbeat - it didn't come out of nowhere.

Just wild guessin' I do think some petro nation sovereign wealth funds decided to sell billions of dollars and it just shot the stops.

agip,

The question that should be asked, is with declining economic news why are the markets going up? Answer: the belief is that global central banks have given a free pass to equity investors. We will see if that thought is brilliant or foolish.

Igy

Ghost of Igloi wrote:

agip,

The question that should be asked, is with declining economic news why are the markets going up? Answer: the belief is that global central banks have given a free pass to equity investors. We will see if that thought is brilliant or foolish.

Igy

fixed, just for you, Ghost

"The question that should be asked, is with declining economic news why are the markets going up? Two possible answers: that global central banks have given a free pass to equity investors or that earnings will recover in 2016. We will see if one or both of those theses are brilliant or foolish."

With your experience I fail to understand why you are so deadset against the likelihood of an earnings recovery next year. Seriously - why is that so incredibly difficult to even imagine?

agip,

It is possible, but not likely. The trend is moving the other direction.

Igy

Ghost of Igloi wrote:

agip,

It is possible, but not likely. The trend is moving the other direction.

Igy

trends change! businesses adapt! this has been going on for hundreds of years!

I think your better argument is that you don't really care if earnings recover - you believe that the market is priced for perfection and even if earnings and sales do rise next year, market returns are likely to be poor.

agip,

I am open to being wrong. I will personally benefit if I am wrong. I do think the market is priced to perfection, and so any improvement in earnings must be very large to support stock prices. Much of the optimism is driven an industry that never considers stocks to be a bad investment. We will see if they are correct or have taken a weasel's approach instead of urging caution.

Igy