Seriously. Housing values still dropping, 401(k) and retirement funds decimated, retail sales worse than they were in the early 80s and getting worse, car sales absolutely anemic, banks in serious trouble (Paulson warned quietly yesterday to expect more bank failures), commodities plunging due to true demand destruction, government laying off employees at state and local levels as well as cutting budgets and floating more high interest debt, bank lending frozen for both consumers and business, corporations paying record yields to float short term paper, yields on savings accounts and cd's and treasuries incredibly low, consumer confidence absolutely in the toilet, fast rising inventories of durable goods and all things wholesale and retail, massive, inefficient government deficit spending, and most importantly - JOB LOSSES and ACCELERATING JOB LOSSES! I'm not pessimistic. I'm a realist. There is a difference. You think it's bad now? You think we're close to capitulation? You have people salivating over the fact that we're at or near a bottom everyday here and everywhere. There is nothing to be optimistic about now, with the exception that there will be a true crash, even though we're not even remotely close yet, and for those of you who have liquidity and are willing to have a very long term horizon, you will see opportunities in both bonds and stocks if you can shake off the yoke of the true, massive gloom that is capitulation when it does finally arrive - on its own time table, not yours.
"There is nothing to be optimistic about now," I cracked open an egg this morning and I got a double yoke. This is usually a good sign.
But the US economy is still growing, albiet slowly and is fundamentally strong. Consumer spending is holding up very well and wages are still rising. There are no signs of contraction Unemployment isn't a big deal as long as it doesn't go above 8% or so.
Ha ha ha ... that's great. Keep believing that until the GDP numbers actually come out and prove you wrong. If you think all the problems we are seeing now won't ripple through to the general economy then you are delusional. The economy is fundamentally strong until consumers stop spending money - then the music stops. Go grab your chair.
Cheap? I remember when YHOO looked cheap at 95, so I bought it. LU was cheap at 40, so I bought it. CMGI was cheap at 60, so I bought it. CSCO was cheap at 70, so I bought it. Thanks for making me take a trip down memory lane.:eek: :eek: :eek: What a spring/summer that was. On the bright side, at least I didn't buy e-toys.
The fallacy here is that the capitulation will be obvious. Look at other major market bottoms, and you'll see headlines, price action, volume and sentiment extremes similar to today's. No, I'm not calling a bottom here, but when it occurs, it will catch us by surprise. Most will say "That was it?!" with a preconceived notion of what was supposed to happen. However it occurs, it won't be "obvious" to spot. If it were that easy, we'd all have jumped in together in 1982, late Fall 1987, March 2003, etc. It may end in a huge crash. It may end at a point of exhaustion where bears are unable to impose their will on the market so easily. However it ends, most people will get it wrong....as always.