Put the potential temporary rally aside, what makes you think we will inevitably descent to SP 400, and Dow 4000? Laundry list of supporting evidence so we can all comment and think about them?
Take a look at this chart displaying 4 Bear Markets, including the Great Depression. At this point, we should all be able to agree that we've entered into the worst correction since the Great Depression ... so before we call Great Depression II, let's just call it the Great Recession. Compelling Points 1. Time - We're only 1/2 the way through the Great Depression time frame and 2/3 the way through the Tech Crash time frame. 2. % Losses - We're currently at 60%. The Great Depression was almost 90% and the Tech Crash was 50%. Given the time frame noted in item 1, it seems very possible that we could hit 70-80% in the coming months. 3. 1995 - 2007 bubble - If you were to look at the S&P before 1995, you would see a market lacking any substantial bubbles that compare to the Tech bubble which occurred thereafter. One could make an argument that this is due to the Greenspan monetary policy but regardless, remove the bubble, and you will see a 400 - 500 range.
hmm, this chart is impressive in what the history has to say about today's mess... However, do you have fundamentals supporting your view?
I wonder what are the chances of follow thru... with real legislation, if there are any congressional hearings on changes to mark to market. It seems that there is a lot of talk and speculation concerning govt actions, but the rallies are sold into within a day or so and the govt action turns out to be very much inadequate. I sold my calls on FAZ on Friday in fear of a short squeeze due to something like what is being talked about. I considered getting long FAS or UYG, but I usually get burned in those when the moves by Washington end up being less than what was anticipated...like back when it was rumored that Geithner would seek to relax the mark to market rules and he did nothing. I wonder if talk of these congressional hearings will dominate the week, or if European Bank nationalization or possible GM bankruptcy will be more important stories??? Is anyone getting long financials next week ahead of the hearings?
Goldman Sachs : Level 3 Assets were approximately $ 66 billion as of November 2008 ( down from $ 68 billion as of August 29, 2008 ) and represented 7,5 % of total assets Morgan Stanley : level 3 assets were $ 78,4 billion as of 31 August 2008 8% of total assets Merrill Lynch : level 3 assets $ 61 billion, 7 % of total assets as of Nov 5th 2008 JP Morgan : as of 31.12.2008 6 % of total assets represent level 3 assets Wells Fargo : couldn´t find any figures as % of total assets Need to get rid off them
Everything goes back to the financials and a government solution to restore securitization/lending. Without that, there's simply no stable rock to hold onto as we tumble down this endless mountain of fear. Look I supported Obama, but why hasn't this been his biggest priority??? His populist rhetoric has boxed him into a corner that prevents him from implementing the only solution that will get us out of this mess. The taxpayer will have to incur huge losses as we over pay for these toxic assets in order to make the bankâs balance sheets healthy again. This garbage will then have to be sold to the Vulchers and Hedge Funds at much less than we paid in order to bribe them into restoring some sense of a securitization market. It sucks! Thereâs no other way to describe it. But itâs the only way out. All the spending Obama is doing now only prolongs the inevitable judgment day.