Sorry folks, market's a long way off bottoming. I mean how can anyone start to get super bullish, we haven't even taken out the yearly highs. The world is just so short term these days, in almost everything. A few examples; The first few days of the Iraq way didn't go too well and so the majority reported it was a disaster. Then ONE good day and nope this thing is going to be easy. Ferrari have a bad 2 or 3 first races to the F1 season and the majority of people write them off, saying that Maclaren are now the ones to win the championship. Then Ferrari get a win and no it's theirs for the taking etc. The indexes haven't even taken out the yearly highs (apart from QQQ) and it's off to the races. No wonder Warren Buffett has made so much money, he can think for more than a week. Markets as we know love to suck people in and spit them out, so what about this possibility. We take out the Dec 02 highs, blow every short on the planet out, suck every long in and then go down. Anyone who doesn't buy some cheap long dated puts here (even as insurance) is missing a good play. Also how about this for a possibility, we trade just like Japan for the next 5 years. Big rallies, big sell offs with the lows always being taken out by not much, a massive trading range with a gentle downward slant. Stocks ultimately won't bottom until the mere mention of the stockmarket causes certain people to literally puke. Best position now for investors is in cash, ready for the fire-sale prices that are coming over the next 5 years.
This isn't the case now for "certain people"? There are plenty of people who got annihilated in "dot.com" stocks. As well as "blue chip" nasdaq stocks like SUNW, CSCO, INTC, WCOM and to a lesser (but still substantial degree, MSFT). And then some listed beauties that were very widely held....LU, ENE, NT. and so many other telecom stocks. I think an 80% drop in the Nasdaq had quite a few people very ill. Was the market overvalued at it's highs? Obviously. But real people bought stocks then with their very real money. Not Henry Blodget though. He just told others to do it. Anyone remember Jeff Bezos being Time Magazine's "Man of the Year"? When was that? 3 years ago? 2? Lot's of puking going on for the past 2 or 3 years. Retirement accounts destroyed, margin calls that left people broke. I read about some guy that worked for Microsoft, exercised his (employee) options, and after his tax liability went negative equity. And MSFT wasn't one of the real bad ones. I personally know someone who works at NT, and was buying stock in her ESPP right up to the top. Plus her 401k was all in NT stock. She is not a unique case by any means. But she is a complete basket case now. Peace, rs8.5
This excerpt from the Barron's piece makes the point that earnings are not that bad: "Since 1979, note the folks at Ned Davis Research, a stock-market research firm in Nokomis, Fla., analysts have forecast an 18.7% annual earnings increase for the Russell 1000 growth index, which includes many tech stocks. Instead, earnings have grown 6%. This year, the Street is expecting Russell 1000 Growth profits to increase by 14.3%, but some companies already have delivered year-over-year quarterly profit gains of 37%." Personally, I side with the bulls in the near term, but I suspect the bears are the one that could be on the money by the end of the year.
A headline like that at the top of a bull market would certainly be cause for concern, but now, three years after the top, I think it could be bullish because it will encourage the public to get back in to equities. Also, IMHO, the market indices look like they've been basing for the last 6 - 8 months and may be starting to turn up now (especially the Nasdaq). Additionally, earnings seem to be turning up again in many beaten down companies. That being said, at this point, I'm still trying to balance my exposure by having both short and long positions in my portfolio, and then use good trade and risk management to let the market tell me which way it wants to go.
The problem with this is that the public - through the urging of mutual funds and pretty much everyone else on the Street - is discouraged from timing the market. Therefore, when the time comes to buy at or near the bottom of a bear market, they cannot do so because their portfolios are so cash poor, and they're hardly likely to put whatever discretionary income they may have - if any - into the market since they're still trying to deal with the decimation they've experienced. This is one reason why markets fall so much faster than they rise (though hardly the only one).
headlines are only dangerous when everyone believes them. how many people really believe that the bull is back? for Barron's, it's a pretty safe bet. they might get enough mileage out of any rally to justify. imho, the daily dow chart looks awful, but....