A classic would be a 10-15% snapback rally, 1-2 months of sideways action in the 1000-1150 area, then a successful retest of the 800s (on ultra bad news like worsening economic numbers or more bankruptcies) and then a multi-month rally in the face of bad news on big volume back to the 1200/1300 area. Would be ultra bullish. Probably of course will pan out completely differently
This is the perfect opportunity to sock away long-term buy & holds in commodities, commodity stocks, emerging markets, and stocks in high quality companies. Let's face it - markets have had a historic massacre, one of the worst weeks in history, a 40% bear market (nearly 60% in Japan), valuations are very attractive in some sectors and almost nowhere is expensive. If you are not going to buy at least some stocks on Monday, then you are never going to buy stocks, period. Yes, there will be more volatility, there may even be new lows. But unless we have a rerun of the 1930s, stocks and commodities at these levels are FAR more attractive than cash & bonds, which are the only other things you can put your money into. Cash and bonds are pure trash at this point - pathetic yields, and nowadays cash in the bank is probably *more* risky than a diversified portfolio of blue chips & commodities. I think this is one of the few times where you should forget about timing and short-term movement, and just focus on the fact that buying now will most likely see significant gains in 3, 4, 5 years tie. Only a low probability Depression could cause you to lose money long-term.
A great time to buy is now. Buffett is no fool. It will take years to get back up to 2007 levels but it will get there. Then the cautious who put their money into cash AND held on in cash will be kicking themselves imho Keep clear of GM and similiar companies though. The top brass on over a thousand times the wages of the shop floor should be railroaded outa town - the overpaid incompetents.
well back in 74 we had p/e's in the 7's which is almost half of what we have now. so just something to think about... also we haven't fully priced in the potential (and seemingly more likely) credit downgrade of the u.s. or the prospect of HIGHER oil prices. it's funny the one thing people aren't really thinking about is the potential for oil to move higher in this weakened economic environment. when the credit crunch struck it also struck the potential expansion of companies like PBR. PBR came out and said that the credit crunch was effecting their future plans. so if the oil companies can't drill the reserves they have discovered because they can't mobilize the necessary financing then you have a problem. also, with the ever expanding debt of the u.s. you have to believe the dollar will eventually be hit thus helping to drive oil prices back up.
1. Commodity stocks (& commodities) due to HF liquidation into a thinner market than expected. Valuations are truly surprising, I agree. 2. Prefer to be someone in my 40's who hasn't gotten destroyed in the downmove sitting on cash to allocate into distressed assets than someone in my 20's with no cash and mucho debt. 3. Not sure about the depression thing, Cutten. Suspect things will be worse than we expect.
Not sure if we bounce from here or not, or if we test Friday's low, then bounce. Or even if we keep crashing. Personally, I think it is time for a bounce - but I also thought that last Wed, Thu and Fri too lol Lately the market has been having intraday moves in 60 minutes, that normally take a month or more to develop. Such wild moves are not only a gift to traders, they are also in some proportion, an indication to the shitty shape of the economy. Friday the DOW had a +1000 point bounce - even tho that only took about and hour, it was still a bounce that normally would have taken at least a few days - or perhaps more than a week. THAT very well could have been "thee bounce"......depends on time frame vs point move imo. Also imo, chart not showing any reason to buy yet. So far, the market has consistently, totally and completely flipped off the "bailout" with a loud and clear crash. Hard to believe we reverse without some earth shaking news coming out this weekend. I dunno, I guess I'd feel a little better about the whole mess if I could see the massive amount of unemployment being helped by this stupid bailout, which I think is a total farce. Steve