FT Short View: Dow 6,500

The Kin · Aug 17, 2005

US Equity Markets are invincible! They will not go down. Expect the dollar to go up up up!

Optionpro007 · Aug 18, 2005

Quote from The Kin:

Expect the dollar to go up up up!
More...

Could you share your reasoning ?

Thanks

The Kin · Aug 18, 2005

Quote from optionpro007:

Could you share your reasoning ?

Thanks
More...

Nahh... Just a silly rant with no reasoning involved. I have no idea what the markets will do near term.

Optionpro007 · Aug 18, 2005

Quote from EqtTrdr:

no, it would be looked as a "can't get any worse" type of scenario and people will buy the dip like crazeeee
More...

a little history of a RE bubble, fyr...

http://www.stock-market-crash.net/florida.htm

killATwill · Aug 18, 2005

and which turning points has mr. klein been wrong about?

Quote from just21:

By Stephen Schurr, Financial Times
Published: August 17 2005 20:30 | Last updated: August 17 2005 20:30

Sid Klein has built a career on calling the turning points in the US and Japanese markets. He proclaimed in late 1989 that the world should short Japan.

In January 2000 he said the US bull market was over and stock prices would halve. In October 2002, he called the US market's bottom almost to the day.

Now, the investment adviser and publisher of the Japan Asia Investments newsletter says he is "pounding the table" once again, and investors in the US and Japan should prick up their ears.

Mr Klein tells the Financial Times that the Dow Jones Industrial Average "has the potential for 6,500 in 2006", nearly 40 per cent below current levels.

Based on this, he suggests the easiest way to hedge or profit is to buy 18-month puts on the Dow, a bearish options trade similar to the call he made on Japan in 1989. Even more interesting is his recommendation as the port in the storm for investors: Japan. Or, more specifically, Japanese value stocks that are focused on the domestic economy.

To back up his bearish call, Mr Klein points to many of the same signs he relied on in 1989.

The principal one is valuation. The US stock market, Mr Klein maintains, sports a price-to- earnings multiple that has become unmoored from the underlying earnings growth.

He says a p/e of 18 makes no sense in the post new-paradigm era of declining interest rates. If stocks stopped trading at a premium to the forecast growth rate, the Dow would easily fall to between 7,000 and 8,000.

Valuation rarely serves as a catalyst for a major downturn, but Mr Klein sees other candidates. The price of oil is one. Since this spring, he notes, US equities have not followed their usual pattern of moving in the opposite direction to oil.

Unless crude prices suddenly collapse, a correction should be forthcoming. Another possible trigger is slowing growth in China, which could translate into more muted purchases of Treasuries; this could spell higher interest rates and a slowing economy in the US.

(Speaking of China, Mr Klein construes Beijing's tip to its citizens to buy gold as another ominous sign.)

Mr Klein says investors should be less concerned with identifying the trigger than with positioning themselves for the correction.
More...

coasting · Aug 18, 2005

Quote from killATwill:

and which turning points has mr. klein been wrong about?
More...

You don't want to go there. But if you bother to go to this guy's website you'll see he's been bearish all throughout the last big ramp from April.

He might be right this time though. With Mark Cook on the same side the top has got to be in.

Covertibility · Aug 23, 2005

Sid Klein was on CNBC and I'll just gotta give him a big LOL. Elliot Wave...god help us these guys always crash and burn. Only a terrorist attack will bring Dow 6500 next year.