I think we've entered a new perpetual upside phase similar to the phase between 2003-2007 where the stock market surged substantially higher with very little volatility and interruption. The assumption is that there will be an economic recovery in 2009-2010 and unemployment will peak around 8.5%. The recovery is anticipated to be jobless due to increased outsourcing/insourcing and technological progress. Jobless recoveries are actually better for the economy and stock market provided the govt. doesn't go overboard with unemployment benefits and welfare. The market is currently scurrying up a very, very, high wall of worry with a target of around 11,000 for the DOW short term. Every shred of bad news has been discounted. Auto and bank bailouts and huge stimulus are expected in 09, and rates will remain at 0% for a year or possibly longer. The era of easy credit, deregulation, deficit spending, prosperity, and consumer spending is far from over.
Most of what you're saying is correct. The market has already digested the bad news. There's not a shred of bad news that anybody doesn't know about. I've found that the Fed's Target Rates, are highly correlated with the market. Generally the market increases with interest rates, and decreases. <i>But if the market took off on today's decrease why didn't we sell off?</i> Duh, the only move you can do from a 0% rate is up, and that'll be a massive signal that the economy is recovering.
He's been a bit early, very true, but the point is not what happened in the past, but what's happening going forward.
Here's a test, name 10 things that the market doesn't know that somehow you do? I'll name one for you, so you can try and think of other valid ones: The first is Reuters suing the Treasury for not disclosing what assets are being taken off of financial institution books and what's on the Treasury's balance sheet. As far as it goes, this is absolutely the only thing that's unknown at this point. <i>What happens when we find out?</i> Nothing most likely. We're already aware of the toxicity of all financial company balance sheets. Most have written off 90% of these companies values down to the cash as it's only asset. In that light, I don't see anything that hasn't been discounted. And if you say F, or GM, or Chrysler, you haven't paid attention. No matter what they're bankrupt.
One big up day and stock_trad3r is out in force, posting away that there's 100% up room to go. Come back to me when we break 1000. Most likely, we'll resume the downtrend in a few days and stock_trad3r will vanish into the woodwork again until the next up day.
Agree. All bad news and toxic assets have been discounted. The strength of the US economy and the economies of Hong Kong and Brazil rests on consumer spending and free trade. Germany and Japan, for example, have substantially higher savings rates than the US or Brazil and more protectionist labor/rade policies, which is why their economic recoveries aren't v shaped.
Nah Ivan I think he will stay here spewing his permabull nonsense until at some point when this mess is over he will say how he was right all along.... That's the benefit of not actually trading, he never has to worry about a blow-up. He can just opine about the bull market all day no matter how far down the market goes, when the market finally does come back around, he can say how he was right. At some point, the market will come back around and then...well, you think he won't shut up now...heh heh He will pretend he was right all along, even though anyone following his advice would have blown up long, long before the turnaround.