Now is not the time to panic

A quick note to those who might be led astray by those here who tout the idea that the market goes up in the long run. Note that the “long run” can be a “marathon run.” The Dow was at its peak of about 380 in Sept 1929 and didn’t see 380 again until November 1954!! Yup, it sure did go up in the looong run!

In 1955, a single working man with a full time job at a garage could support a family with a stay-at-home wife. And now, for the first time in history, the average savings rate of individuals in the US has become negative. Both spouses work, and still use credit to buy groceries. The states, and the federal government are in the same boat as the people. The gov’t borrows like crazy every year just to operate, with net liabilities over $33 trillion. If all of the property, public and private, in the country could be sold, it would not equal that value. The United States is bankrupt. There is no possible way that the gov’t can meet existing social security and medicare obligations, that corporations can meet their exorbitant pension obligations, that private citizens can meet their own deby obligations. Yet we have grandstanding politicians who say “healthcare for everybody!” With what money will the economy recover? American corporations are as heavily laden with debt as the government and private citizens. The United States economy was on top for a long time after WWII, and we started to think that infinately and magically increasing standards of living were some kind of national birthright. So when our industry could no longer compete, we started borrowing to fund the American Dream. And our international credit depends on the value of the US dollar, which has lost 40% of its value since 2000 (why do you think everything is so expensive?). And the value must go down. The US has been living above its means for decades.

So, which way do you think the Stock Market will go? Up forever? There are only 2 ways to get rid of debt: pay it, or default. And the United States is about to default big. It will not be pleasant.

How much of the stock market is based on the assumption (still) that consumer spending will continue to rise in the US?

That much, it will go down. Consumers are out of money. Washington is out of money too, but they are still spending like they have it. That too will end.

“someday” is arriving. I echo what was said below, when is it time to panic?

Too late.

Sit down, buckle up and hold on. Its gonna be a rocky ride.

To Anonymous. Lets think about thinks from an INVESTORS point of view. How much has your net worth grown, invested in equities if you were in the market before the dot com bubble burst? Does a smart “investor” put new money in an over valued market? (or an overvalued stock if you are a stock picker). Do smart investors rebalance their portfolios on a regular basis? My point is that smart investors trade and even time their trades, and while they can ignore the averge moves in the market they need to pay attention to major trends.

LOL. What a waste of my brain capacity reading all these responses. The only response with any valuable insight for an INVESTOR (try to differentiate between investors and traders) comes from Peter in Warrenton. Everyone else is flexing their knowledge in a narrow market context (Ex. using one data point such as market PE or total national debt to make an up or down forecast) or are just going down the Bush and Chaney have ruined our country road. Both show an inability to seperate emotion from logic which is key to making money in the market as an investor or trader.

A year and a half ago wall street bears were saying the market was over valued. Bulls replied that there was lots and lots of cash out there yet to invest, which would make its way to the equity market and keep it growing. For months now we have been facing a “liquidity crisis”. That cash has not made it to the equity market and we are faced with a major correction where we could return to more reasonable earnings per share. Look for the DOW to loose as much as 500 points.

Are you bracing for more market and economic pain or do you think the worst is almost over?

Brace for more market pain, just in case. We’re only 9 months into what could be a 2 to 3 year bear market. The market has fallen only 20% from the October, 2007 peak; it can fall a lot more. In 2000 – 2002, the S&P dropped 50% peak to trough, which is another 40% from where we are right now. The NASDAQ tech stocks dropped 80%, which is about what the financials will fall, peak to trough. So, don’t get complacent, and don’t get aggressive; it’s way too early.

Economic pain will be less common. We could still turn down into a recession, but outside of autos, housing, and mortgages (which are all tanking), the economy is actually growing at a nice clip. If you seek and keep employment in growing sectors, your future will be much more secure.

Let’s hope that it’s not a long recession, or at least not a deep one.

I do get tired of hearing “Now is not the time to follow the herd mentality” only when the market has taken a nasty downturn. Why did we not hear that self-serving advice from March through May when the market was on a “hot tear to the top” of the current big slide to the real bottom?

I would like to hear from those folks who were bragging about how well they were doing after supposedly getting into the market in March near THE bottom – how are y’all doing now? And I wonder how many poor folks took your short sighted, bad advice; I hope none.

I have said here in past comments that I THINK the bottom will come some time this fall or even later this year. I hope I’m right, because if it doesn’t come until next year then we are relly in for a “bottomless” bottom.
I certainly agree with the comment that market P/E ratios are not even close to what they should be, especially if we expect to see a bottom that can launch the market into a significant upturn.

Here’s the analogy that quickly comes to mind: When it comes to this market and to the US economy in general, it is probably BETTER to stay on a moving train when it werecks, than it would be to jump off at high speed when over a bridge!

Bush, Cheney, McCain, Obama, whoever – make no difference. Our economy is globalizing rapidly, and is largely influenced by major multi-national corporations. As a major debtor nation we are now getting the short end of things. Probably deservedly so.

The time to panic has long passed us by…just like the rest of the productive world has.

In reference to a discussion about our debt, a friend of mine asked me “what comes after Trillion?” She asked as if the amount of debt would stand as the only detectable means by which one could tell if things were improving or getting worse.
I love her, but she is as ignorant as most American’s about our problem. America CAN NOT CONTINUE AS IT HAS. One day, nobody will lend us anymore money and one day, nobody will want our worthless fiat currency.
We can’t expect to continue on our merry way until one day our debt will be in “Quadrillions”. WE ARE BROKE.

So, who is going to pay back our $9,000,000,000,000 debt? I am reminded of the people who made real estate “investments” and borrowed against their overvalued assets to finance their lives. This $9T debt too represents an orgy of overspending and consumption that could not go on forever.

It’s too late to panic…It’s over.

Now is not the time to panic? I believe this statement was made six months ago when the DOW was down 1500 points, begs the question, when is it time to panic?

There will be great celebration once the corrupt Bush administration leaves office. Cheney, in a financial disclosure, has been investing in Euro’s for years, betting against the US economy. Google This~!: Is Cheney Betting On Economic Collapse? July 5, 2006. Cheney’s betting on bad news? 6/2/2006.

I foresee stagflation, (no growth and inflation), as the US taxpayer (you and me) tries to pay for the crooks that have been in office for the past eight years. I do not envy the next president of the United States. This poor soul will be caught holding the bag; much like Jimmy Carter was in 1980. The Reagan administration finally turned it around after three years in the early eighties, of course many services were cut and the standard of living was impacted.

Bush, Cheney and all their financial, and oil cronies need to be tarred and feathered and road out of town. These guys have definitely sold US a bill of goods. To bad the taxpayer will not be able to file some form of civil suit against these crooks.

P/E for the S&P is still at 16.28. Real bottom is when S&P hits p/e of about 12 which means 1000 or so? In other words, we could so -25% before it turns around.

LOL, inflation is running at 12 percent a year (forget what the government says they are lying to keep S.S. payments from destroying the budget), oil is going to $250 a barrel, Bush will invade Iran Nov 27 the first new moon after McCain is elected, even with 35 percent reduction in house prices the average American still can not afford a house, the economic rebate check went to pay off credit card debt and will not even budge the wallets of store owners, people have quit putting money into their 401k plans as they have seen 10 percent drops in their money there and besides they need the money to put gas in their cars and help finance Iran’s nuclear weapon (we are still sending Alaska oil to Japan and taking Iranian oil the Japanese brought in order to save the Japanese transport costs from the middle east to Japan). We produce more oil in Alaska than the West Coast can use so this works out better than shipping the oil around South America and to the Gulf of Mexico to be refined. But it kinda goes against the sanctions we have on Iran but what the heck we support China as they take over as World Leader from us.

Basically our government is out of money and broke and we are going down.

I see the stock market closing at 2,000 in two years.

I had to laugh the other day. For the first time ever I saw an advertisement on your site for the FDIC advertising how you won’t lose a penny because your money is insured. That really boosted my confidence that the banking system is all healed and it’s all up hill from here.

I don’t think we’re anywhere near the bottom. There are too many unresolved problems floating around out there (housing, inflation, credit, energy). Government reports are a joke. They try to church the reports up as positive as they can make them to the point that the report is worthless because it’s not even an accurate picture of what is going on.

The first part of this year I didn’t really notice a huge slow down. It seemed like stores and restaurants were still fairly busy. Just over the past month I’ve noticed a major slowdown. I just got back from a vacation resort I’ve been going to for the past 20 years and it was pretty much a ghost town compared to the years before. I think the second half of this year is going to get ugly. The stimulus check helped bandaid things together for a little bit longer but that bandaid has since worn out.

In my opinion we’re probably closer to the top then the bottom. The market may jump back and forth daily but I think overall it’s on a downward cycle.

Who cares when the stock market is going to turn around? It WILL eventually turn around. Don’t forget – over the long-term the stock market has gone only one way … UP. Also don’t forget – the current market gyrations aren’t being caused by investors, they’re being caused by traders. Investors know what they buy, know what they hold, and know when there’s a good reason to sell; they’re not generally going to sell in a panciky market just because it’s a panicky market. I am losing no sleep over this market …

What I want to know is what the hell is GONNA turn our economy around?
- REAL inflation is double digits! 2-4% the government tells us is BUNK!
- REAL wages have been in decline for years! 1-3% cost of living increases have been a JOKE for years. I personally took a 25% pay CUT.
- Not a big union fan BUT workers have no strength in numbers anymore to demand a fair wage.
- Lastly, how can our economy grow when we consume more than we produce and have been doing so for decades now?!?!

The only thing on the horizon that I see that could actually help our economy, and the world, is a substantial investment in new energy technologies to move away from fossil fuel dependence. This would create jobs, new technologies and remove some of the power from the oil countries.

Ah it seems just like a quarter ago that the second half was going to be the comeback kid! So buy buy buy… or is that blah blah blah

Come on folks, here we are the incompetent washington beating war drums to invade IRAN, suddenly after the first bomb to hit tehran shoots gas to $10/gallon, and you think the worst is over? The worst will be over when the Bush & Co. are out of the white house and charged with war crimes. And the main reason for this invasion to come: The US can’t stomach the fact that IRAN is trading its oil in EUROS not the ever becoming worthless dollars, you attack iran and you expect russia and china to just look on? What about china dumping the 1trillion dollars in tbs and american people waking up from their deep sleep will have their 401k savings worthless, the dow loosing 3000 points, look you can’t win in iran. I can’t wait to see oil at gas stations costing $10/gallon, all those who voted the madmen in white house will be their day to “celebrate” again another war on terror is being fought bra bra bra ….. The days of US super power are over, imagine a country like iran giving washington sleepless nights.
Paul R. La Monica I encourage you to teach the american people about this madness, or else the world economy MUST collapse in case the US government does something stupid like this.