Bad news is good news

Wall Street has their own bubble and it hasn’t burst yet.

Plant trees and save the world

I think we will see the market tread mostly sidways with a slight upward tilt.

The government does not want to rescue the housing situation…prices need to come down to make it affordable for the middle class to purchase homes again. Many baby boomers were counting on their home values to help fund thier golden years. So many will have to keep on working…and this might be a good thing…they will be less likely to withdraw money from thier 401k plans…probably put more in on the hopes of a market rally/recovery. Also they will pay taxes longer…and stay off social security longer.

So I think the government will walk a fine line…don`t let the stock market fail…and try to keep housing coming down without panic. And of course keep an eye on inflation so as not to have to raise social security payments much.

Lets try and think out of the box for a moment shall we? Greed is never going to go away. Enticing those with less ’smarts’ to spend themselves into debt beyond their ability to pay – will never go away. Post-war economy problems? Think about this idea; Invest in our infrastructure by building a superhighway across America similar to the Autobahn in Germany. Why? This gives millions of construction companies – all USA based – jobs for years while at the same time providing an alternate means to see America. If needed we eminent domain the land needed and then charge for it. As far as the drivers who use it go – if you oppose using it then don’t use it. Economy meltdown you say? Put the money into something we in America can use – not a forieng investors pockets. Think about it.

My biggest fear about the economy is post war. It could be 1991 again If the war will end next year, a lot of job loses, a lot more foreclosures yet to come. How do we suppose the war to go on for long, on the other hand?

Financials have not yet bottomed. They will continue writing off mortgage-backed securities until all of the sub-primes and a lot of the primes have been written down, maybe to zero.

Interestingly, non-financials are STILL growing earnings at >10% per year, in spite of the financial/housing/mortgage problems. This is very good news.

The overall blended bottom is being formed right now.

The major problem is IMHO that the USA relies on monetary policy
to “fix” a falling stock market. When stock prices rise to
unsustainable levels, the Fed sits back and watches. When they
start to fall to realistic levels the Fed steps in, as does the
administration. The focus IMHO is all wrong and all based on
relying on consumers to spend more than they should. The trade
imbalance tells the story of the US economy. The deterioration in
the US currency tells the story of both the trade deficit and the
lack of desire to invest in the USA. What is needed is a restructure
of the US economy based on improved productivity, less imports,
savings, balanced budgets, diplomacy instead of war. Inflation of
asset values (viz: stocks, houses) can only go on so long. When that
comes to and end as it must, the CPI is the next crutch. That leads
to stagflation. What was needed in 2001 was a market correction.
What was delivered was a housing bubble. That led to a spending
spree. This economy that was created by free enterprise is being
killed by misguided intervention (IMHO). Now the sleeping dragon has
been awoken however, and it may take intervention of another kind to
make USA competitive again. For the immediate future – stagflation.

The markets positive reaction to bad news is always puzzling. It seems like the “market” has detached itself fronm the economy. With the credit restraints and the banks severe tightening of lending standards this is going to be one very difficult time.
The investors reaction in not unlike that of people running out on the open beach after the first tsunami wave.

No way has the bottom been achieved.
There are strong possibilities of criminal wrongdoing in the Financials services companies ( Banks, Brokerages, and Mortage companies)and Law suits a PLENTY coming. Also, We haven’t even seen the beginning of a huge Retail slowdown. As of Now, every retailer is batting down the hatches, will lay off thousands, and are in for a Long year. Add Oil ( $100 a barrel today) and NOW, we are being told an Airline Merger is Good foe the World? My God, all it’s good for is Mgmt., Brokerage firms, and everyone else suffers from price increases and less choices.
BTW, Don’t forgetthe Home Builders? Let’s guess how many will file chapter something in 2008/2009, afterall, No Cash, No Carry!
This is bad…..and it’s no where near at the bottom. Remember, in august, Mr. Stien ( the comedian economist ( said Citi was a steal at $60. Where has Ben gone to hide, Citi might go under before we can buy it at $5.
PCMAINEMAN!

And the walls came tumbling down…so do the economic walls of America.

With oil prices surging past $100/barrel and retial prices surging, people will become stingy with their money and, well, the walls will come tumbling down.

No way are financials out of the woods, and here’s why:

Housing sales peak during the spring and summer and we have a whole new wave of summer 2005 subprime, alt-opts, and jumbo ARM’s that will overwhelm the banking system that is already being held together with duct-tape and cardboard.

Derivatives are bets made with substantial leverage, and a lot of them bet wrong. How long before they start undwinding?

How will California make good on their huge municipal bond refunding? They were already billions in the hole when things were good…

Bottom? We’re still on the beginner slope, it seems…

“bottom” is the wrong choice of words.
during stagflation, a market moves
sideways for a long period of time ,
and market returns do not keep pace
with inflation.
we are only half way through the boom
in commodites.
you want to own gold, silver, and oil,
and you want to avoid most other stocks
and bonds.
hang onto your precious metals position
until the p/e on the dow is under 10.

The market suffers from the same similar attention defecit disorder as do us americans. It is a fickle market subject to too many knee jerks and doom and gloom scenarios. Keep your money in and keep buying. You will see the market up aroun 13700 by year end as the basement is now showing to be around 12300.

Economy will not recover while oil is any where near $100 and gas is over $3. If energy can rally when demand is down and inventories are surging, what will happen when the summer driving season comes and then you get the added ‘hurricane premium’?? Dow will easily fall below 11K, maybe even 10K.

More of a sincere question than a comment, so I would be very appreciative if someone could help me.

If prices have been moving up (I don’t care what the numbers say, stuff like gas and milk is almost twice as expensive as it was 2-3 years ago) and the income people have hasn’t gone up as much, how do we make it through? I know tons of people who have been taking out 2nd mortgages and refinancing their house to pull cash out as a way to supplement their income. I am not an expert, but this does seem like a house of cards. How can this be the bottom when foreclosures still keep getting higher and higher. (Countrywide reported almost 7.5% of loans are delinquent.)

Any help is appreciated.

We are headed for a super stagflation and much misery.

Dow 10,000, Maybe 8,000. It is going to take 2 to 3 years to work out the excesses and american’s to pay off there debts. This is just the beginning.

The Stock Market is as good as teh US Economy. The US Economy is in a shambles. Therefore, the Stock Market has no place to go but down. ‘Way down.

I expect a soft economy to damp down the markets for the rest of the year but the worst of the volatility will end in 90 days, providing opportunities for long term investors.

This time of year is historically is a period of slow down; post holiday spending slow-down, and bad winter weather typically gives a winter season short term economic contraction. We have also had a long overdue correction from the real estate and sub-prime collapse. And also it is important to remember that bad news and emotion sparks investor nerviousness, so the “doom and gloom we are in a recession” hype from media pundants (when we ARE NOT) has the markets going highly volatile.

Remember Orson Wells causing panic with his “War of The Worlds” broadcast? When you guys in our TV and internet media over hype the politcally motivated “recession hype”, you cause similar market panic and over-reaction.

I think we have the worst of this correction behind us, and it has been more volatile then necessary because of the media hype-masters. I think we need some more objective and factual media coverage of the markets, and less of the Doom-and-Gloom sensationalism.

The market may sway either way short-term but the consumer is on life support (this writer cannot be that much of an anomaly)… gift cards are being used for necessities, inflation for what real people buy in real stores is way higher than the official stats – and the service sector is down. This recession could be the worst since the 60’s or 70’s.

I’m not sure and don’t believe anyone else is. But I am confident that “buy and hold” (with some exceptions) is still axiomatic and that portfolios will continue to grow over the long haul.

When the monoline insurers get their downgrades, that’s when things will get really interesting. Dow 10K.

I see Dow 10,000 coming. We are seeing some of the worst economic data since not the 2001 recession, but the 1991 recession! Tighter lending standards, soaring foreclosures, plunging home prices, weakening job growth…at some point profits will start to suffer. It takes awhile for these things to work their way through the economy, and when they do, profits are going to plummet, and so will stocks. I’m short the market huge. People are starting to spend less and banks have drastically reduced their lending. That spells recession, for sure.

I believe the consumer is getting squashed by the decrease in home values. The consumer has been tapping into their home equity to pay off their credit cards for the past 5-10 years. Now they won’t be able to do that anymore, and this will cause a rapid decrease in spending for the next few years.

Probably more along the lines that the market is stabilizing as all the day traders have bailed out and what’s left now are the long-term investors. Also, a lot of the doom and gloom crowd are also out of the market. Those of us that are looking at the big picture and the long game are sitting tight and/or buying up as much as we can now while the markets are depressed.

When the balance of the sub prime mortgage corrections take place, find high ground. That is when the real bloodbath will begin.

The global market decline that we saw a few weeks ago was just a faint thundering of what’s coming very shortly onto the world scene. Markets have been unjustifiably “propped up” for years. Starting in late March you will see global economic upheaval on an unprecendented scale.

I think the market is bi-polar right now. No one knows what is going to happen and the daily swings in the equity and bond markets seem to support this. One day the “experts” say we may be at or near the bottom and the next day it’s back to the worst is yet to come.

My evidence is somewhat anecdotal, but when normal bond owners are told by their brokers that the market has entirely dried up and they can’t sell their bonds (try again next week!)that the damage is worse than anybody realizes. I think the DJIA will hit 11,000 before we see 14,000 again.

I think we reached the bottom in late January. Market bottoms usually happen on high volume and that day was definitely that. Most of the people that wanted to sell I think have already sold. The market is looking to move up from here.