Kudos to MMs

drsteph · Feb 20, 2011

Wow. Back after a while and I read a gem like that Mav. Nice post.

ammo · Feb 20, 2011

http://www.huffingtonpost.com/socia...nd-trust-holders-bogus_b_795145_70451444.html there is still a lot of marked to fantasy debt out there by banks that would bring their prices down quick if any of it was actually priced or even brought to light,don't fall in love with those rose colored glasses

kinggyppo · Feb 21, 2011

inflation

a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.

http://www.measuringworth.com/index.php

nitro · Feb 21, 2011

Quote from Rearden Metal:

Nitro, you don't think the market is currently cheap, I get it... but did you know that the corporate earnings of the S&P 500 are now at record levels? Did you realize that earnings have never in history been at higher levels than they are today? Now knowing this, why <i>shouldn't</i> the S&P trade at a price equal or greater than the old market top?

This is a serious question for your consideration...
More...

Earnings on the SP500 are nowhere near all time highs in gold terms. Guess what, when the Argentinian currency went to $1,000,000 per US dollar (or whatever it was), they had "record" earnings too. It is the most fundamental mistake to compare anything monetary without first normalizing for inflation, interest rates and therefore currency valuation. Even if you do this, it is still wickedly hard to compare.

This melt up is also due to the fact that CEOs are not hiring, and not paying dividends. A great deal has to do with stock buyback. That alone should be a warning sign that this is unsustainable.

Pekelo · Feb 21, 2011

Quote from nitro:

Earnings on the SP500 are nowhere near all time highs in gold terms.
More...

And that is your problem right there. Your program doesn't use "gold terms" but "dollar terms" so if the dollar is inflated, so is the market.

Pretty simple concept, really....

stock777 · Feb 21, 2011

omg, the model was right!

this is the same model that predicted the fall of the roman empire.

stock777 · Feb 22, 2011

I take it back, the model is retard

kinggyppo · Feb 22, 2011

http://www.akdart.com/postrate.html

ElCubano · Feb 22, 2011

Quote from Maverick74:

I think there are many things driving this market, all of which are legit. I've said this before on many other threads and I know people roll their eyes when anyone says this, but when you price the s&p in gold, we are still sitting on the march 09 lows. We haven't even rallied yet. This is important to note because it reminds us that a lot of this rally has been driven by a weak dollar. The question I would ask Nitro or anyone else making the case for a much lower s&p is, would you buy the dollar at these levels and hold it for say 3 to 5 years. Would you? I know I wouldn't. But if you are shorting the spoos, that is exactly what you are doing.

Let me bring up another point. When making the comparison to where we were in march of 2000 when the spoos where at 1550, our economy was primarily domestically driven. In fact you could argue it was silicon valley driven. The s&p 500, dow and even the nasdaq now are actually international indices. All of our growth is being driven not from the US but from overseas. Corporations are sitting on a record amount of cash. Over 2 trillion dollars. And where is that cash likely to go? To wherever the growth is. That will only drive this market higher.

I bring this up because citing high unemployment rates, us debt, over sized government, these ironically are factors driving international growth if you think about it and therefore driven our market higher. The worse it gets job wise in this country, the higher the market will go. Why? Because it means capital will be leaving the US where it's stale and held down by high taxes and regulations and will actually move to areas of high growth in other parts of the world. And since most large cap companies in the US are in those areas, those stock prices will be driven higher.

Next point I'll bring up to Nitro or anyone else making the bear case is, if you pull your money out of stocks, then where do you suggest putting it? In Bonds? In Gold? In CD's? Under the mattress? The fact of the matter is the s&p dividend yield is at record lows to bond yields. Never in history have we seen a major selloff under these circumstances.

Last comparison I'll make to 2000 is that rally was very concentrated in tech. This rally has been incredibly broad and diverse. The transports are making new highs, retail is strong, discretionary spending stocks, chip stocks, energy, metals, automotive, you name it. It's very hard to take the market substantially lower with such broad participation.

Then thrown in the fact that by and large, most people missed this rally. Sure they have been long early, then got out. Or they are just getting in now or maybe they caught the middle. But we are seeing record underperformance by mutual funds.

Everyone wants this market to go lower. The bears, the bulls, long term investors, mutual funds, even our government. Nobody wants this market to go higher.

Now do I think we are "technically" overbought? Sure, we could use a 3% to 5% pullback or even a 3 to 5 month sideways consolidation. I think both of those are on the table. But for Nitro or anyone else to be making a "fundamental" case for lower stock prices simply does not have the data or statistics to back them up.

As traders, we all get paid on price, not on opinions or fundamentals. We trade price. And price is going higher. I think Nitro is a very bright guy. But he has a weakness and it's a deadly one as a trader. Almost dogmatic. He is not willing to "protect" his capital, or investors capital, whatever it may be. As traders, we all have a fiduciary responsibility to ourselves and our family that we protect our capital first and make money second. This business is full or very bright people who are broke and destitute because they failed to protect their capital. This should be the primary concern, not where the fair value of the s&p is.
More...

Could this be the real "TOP OF S&P" post? stay tuned. Great post by the way.

Grandluxe · Feb 22, 2011

Helooooooooooo