Hey guys ..... yeah, you two. Startin to smell like piss here. Maybe you all could just knock off the civilian bullshit. go have another drink.
lol thanks--that cheered me up. Bull till 07 Well the bond bulls are enjoying what's on the horizon. But...4.90% then 5.63% to 6.40% and I'll be a happy bear.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=82247&perpage=6&pagenumber=2 In this thread a day ago you just posted that you see the fed -raising- rates in the next few months. For that to happen, these economic #s better be great, and earnings reports will likely be the same, so your shorting theory won't work - not until at least the fed shocks the market with your proposed rate cut at the most inopportune time. Until then, up is where we go. (disclosure, I'm short KBH right now.. have been; bleeding that is... buying calls on its way down just a hedge in case) furthermore in other posts a few days back you are going long oil, calling it up $20 within months time. If you believe that, then the fed will have no room to raise rates. I'm turning bullish, finally (it appears late, doesn't it) ... the only crimp(s) in this thing will appear with a strong signal: $75-$100 oil, surprise of mass credit default panic from this housing mess, and surprise massive job losses. Until then, buy away. And when you see these indicators, sell away.
[i am referring to S&P, not djia] http://bigpicture.typepad.com/comments/2005/12/pe_vs_sp_500_50.html according to this, around 20 at 87 crash. http://www.bullandbearwise.com/SPEarningsChart.asp according to this, we're at around 18 now. remember in massive price inflationary times, the market can not support high PEs, since stocks must compete with bond yield, dollar devaluation rates, etc. Thats why PEs were so low in early 80s. So remember, $100 oil, $10 wheat, and 10% interest rates (with similar inflation) will mean not only 18 average PE looks expensive, but even 10 might. Look at those PEs in oil crisis years !!! So massive inflation IS a death knell to the markets, since dollar denominated stock equity assets suddenly need to compete well with bonds and high yield overnight rates !!!
hmmm....yep. They're playing our song. Personally I don't use p/e's as a valuation yardstick but so many do.--That's information to use.
My thesis is very loose at this time and I cannot be certain if I am correct. In fact, the new car sales numbers might be attributable to the fact that cars are being made better with greater warranties nowadays. There are many hondas and toyotas with 200,000 miles that seem to run fine. If a consumers vehicle runs fine, why would they need to buy a new car? However, I dont want to simply ignore what is seemingly a historical indicator. Here are my loosely thoughts on all these issues. We have to first look at what is happening in the middle east. http://archive.gulfnews.com/articles/06/06/18/10047703.html http://www.cranestodaymagazine.com/story.asp?sectionCode=135&storyCode=2040338 http://www.zawya.com/Story.cfm/sid2006112513533300001 "As far as construction activities in the UAE is concerned, up to April 2006, there were almost USD $ 300 billion worth of active projects, according to a published report. Though the real concentration of the ongoing construction activities within the country is in Dubai and Abu Dhabi, the other emirates too are not far behind." The Middle East has more cranes right now then anywhere in the world. All this development is very expensive and the Arabs cannot afford for oil to go lower. In fact, a Saudi oil minister had made a comment stating that lower oil will effect their development. The Arabs have two choices at this point. Either to keep oil as high as possible or to default on the loans made in regards to the development. Bernanke's main focus is inflation and his speech back in May was very telling. In that speech he was legitimately angry when he saw how inflation had gotten out of hand. His personality is weird and he was not a good pick for fed chairman. I believe that the inflation we see is directly caused by oil. Indeed, all of the companies in the DJIA heavily rely on energy costs. So these companies simply pass on the costs to the consumer. In the earlier part of this year, I had noticed that most indexes were tracking directly with the S&P500 and the DJIA. In June, we noticed that oil started to go down and then the S&P/DJIA started to go up. The reasoning was for multiple reasons. 1) Hedge funds unwinding energy positions 2) Alleged action by the Bush administration to lower oil going up to election time 3) The hurricane season that never was. 4) Oversupply in the marketplace 5) etc. When oil did dip down, the S&P/DJIA started trending up. All of the other indexes then followed. The credit mess goes hand in hand with all this. When a consumer is paying increased rent, mortgage payments and dont forget taxes (that are based on the increased value), they are not paying for something else. That something is consumer discretionary. So my thesis is this: Oil&Arabs- Too much development going on in the middle east. Arabs wont let oil fall. The lowered oil was caused by a series of temporary events that have now past (ie election, no hurricanes, unwinding of positions by large money, etc) Bernanke&raised rates- Bernanke is too concerned over what a Big Mac costs at McDonalds and doesnt see the big picture. The big picture is that the increased cost of the Big Mac was not caused by low interest rates. It was caused by higher oil. As oil goes up, the DJIA/S&P will go down. Since many indexes seem to track these two indexes in lock step, those other indexes will go down as well. As oil goes up, inflation will follow and so will interest rates. In looking at a chart of the S&P500, I see it going up in a channel formation. Technically speaking, its setting itself up for one of the following outcomes: 1) A 4-6% channel rise until the summer time and then at which time it will fall 8%. 2) A spectacular V-top in which it will trend back to the blue line for a 7-10% correction. 3) A spectacular sudden correction of 7-10%. The equities in the S&P500 are mainly large caps that will not fall nearly as hard as the ones in the Nasdaq. So with that said, I see S&P500=1300 and Nasdaq=2000 at some point in the future whether it be January, May or even June. My best guess would be option #1. As for KBH, my best guess would be that it bounces off the 50 week moving average of $54 (think its already done that) and then channel down to either the 200 week or the previous bottom of 37 dollars. When it does channel down to the previous bottom, then we can start making argument for a long position. My belief is that KBH will be sold off more into December for tax reasons then anything else. January might see a slight relief bounce. I dont like homebuilders, its a market that is too risky. Real estate is in a dangerous area right now that is making me nervous. From 1890 to 1940, real estate prices were in a tragic fall until the veterans from WWII started coming back and buying houses. This could happen again. From looking at the housing chart, I see this happening again. KBHome might fall like a tech stock from 2000 at some point, but over a much longer and drawn out period of time. Let me take this opportunity to pump both HOFF and ULTR. Off-shore activities are now going to increase from the new congressional legislation on off-shore drilling that the senate will hopefully push through.
eagle I see things in a very similar light to you. commodity driven round of inflation. by the way, my largest short position the past few weeks is kbh, coincidentally. (its become the largest thru this ascent). not doing great on it, but perhaps it'll deflate a little. my cost basis is still under 50, so hopefully this 10% book writedown news late friday will be a help. another short I like is CRM. check it out. decent company, at $10. not $38. annualized sales growth of something like 30% over the next few years doesn't justify its current price. Plus, they spend all of their meager earnings on out of line options expenses - a trend management says is necessary to continue to employ talent. Clearly their margins are not worthy of this price. hell I think RIMM looks cheaper, much cheaper.
I believe BRLC is a good short. I said to long this at one time or the other, but come January everyone is going to be taking profits and then they are going to focus in on the accounting problems with this company.