Are we starting to see some light at the end of the tunnel?
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  Are we starting to see some light at the end of the tunnel?
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Author Topic: Are we starting to see some light at the end of the tunnel?  (Read 6895 times)
Joe Biden 2020
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« on: March 12, 2009, 06:18:24 PM »

2009, while the Stock Markets and Unemployment Rate have gotten much, much worse, consumer confidence appears to be on the rise in January and February.  American consumers aren't holding back quite as much as they were in late 2008.  Although it must be remembered that two months doesn't mark a trend, it does say something.  Is it possible that we may be seeing light, however dim it may be, at the end of this long, dark tunnel?
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Fmr. Pres. Duke
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« Reply #1 on: March 12, 2009, 06:32:32 PM »

It depends who you ask. The good news is that the banks finally seem to be out of the dark, for now, with Citi announcing this week that they do not need more federal money and that they would make a profit this quarter. Bank of America announced they need no more federal money either and will be profitable for the year. Both of these signal a market rally for now.

Are we out of the woods? No, but even Obama admitted today the crisis isn't as bad as we once thought. If the financials can get turned around, we could recover faster than we thought.
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Joe Biden 2020
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« Reply #2 on: March 12, 2009, 06:59:08 PM »

It depends who you ask. The good news is that the banks finally seem to be out of the dark, for now, with Citi announcing this week that they do not need more federal money and that they would make a profit this quarter. Bank of America announced they need no more federal money either and will be profitable for the year. Both of these signal a market rally for now.

Are we out of the woods? No, but even Obama admitted today the crisis isn't as bad as we once thought. If the financials can get turned around, we could recover faster than we thought.

They did push the "recovery date" back to October, instead of August, but I agree with you.  If the banks continue to improve and the credit crunch is straightened out then the foreclosure rate should slow and we'll be on our way back up here within the next six months.
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Fmr. Pres. Duke
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« Reply #3 on: March 12, 2009, 07:10:06 PM »

Well, I'm going to try to make as much money as I can off this rally, whether it be a bear market or sustained one. For the first time in a while, we are finally getting a stream of good news coming from the banks. Reserves are up 20% in some cases. They are not in as dire straits as many of us thought.

A lot of this now lies on the Obama Administration's handling of the situation. If they take the right side on market to market and the uptick rule, this thing could sore for the next few months. If they choose to continue to beat the depression drum and scare the public to push through their agenda, then we will be back down in the 6000s or worse. I liked that he admitted we weren't in as bad of shape as we thought. It's a good start. 
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Sam Spade
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« Reply #4 on: March 13, 2009, 12:40:02 AM »

With the macros the way they are (and I'm not really speaking about government-released numbers), the chances that SP 500 @ 666 is the bottom is highly, highly remote in my mind (though it cannot be wholly dismissed - nothing can).

There should be a bear market run for a while at some point (maybe the point is now).  And even though I said it should reach SP 500 @ 850-900 or possibly even 1000, I would advise to at least start to convert to cash if and when we pass SP 500 @ 800, because I can't even guarantee those levels.  Of course, if you would have listened to me, you would have converted at the beginning of the year, natch. 

Two other things:

1) If you believe anything Citi or BoA tells you, I have a bridge to sell you down the street where I live.  Citi and BoA *might* be able to make a profit if we ignored all their Level 3 and off-balance sheet assets (how many hundreds of billions worth of worthless trash?), but I wouldn't bet on it.

In fact, it's another *tell* in my mind that we are nowhere near the bottom when people still believe what these financials CEOs tell them after being burned how many times now.  Pump, pump, pump, pump and then dump, folks...

It's only when people completely disregard, or acknowedge them as complete liars, anything these guys tell us that we might actually reach a bottom.

2) Reinstatement of the uptick rule would mean nothing because it hasn't had any impact since stocks went to penny movements instead of fractions.  Crashes come when people refuse to buy, not because you have to short at a higher number.

My guess is that mark-to-market will be removed.  Two scenarios can happen then - 1) Buy the rumor, sell the news (market jumps up in anticipation and then crashes when passed); 2) We skyrocket when it occurs.

jmfcst disagrees with me here, but I think removal of MTM is useless and actually makes things worse.  You see - right now financials are hiding all of their complete garbage in Level 3 or off-book.  It allows them to look much better than they are, so in a sense, MTM is already not being followed (since the off-book stuff is not being priced properly).  We know the Level 3/offbook stuff exists and just how bad it is - that's the reason why Citigroup has fallen from $50 to $1.50 - investors are not that stupid.

If you remove MTM, you will entice these financials to price everything to model, thus creating a greater amount of game-playing (a la Enron, which is why we have MTM in the first place), which, after early pumping, will in the end lead to a final ugly, ugly dump (when we figure out we can't trust anything being done). kaboom...
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« Reply #5 on: March 13, 2009, 12:58:39 AM »

If we're lucky, we will end up with a decade or two of Japanese-like hangover.

Anyone who expects the Dow to go back to five digits in the next 10 years, doesn't get it.
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Sam Spade
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« Reply #6 on: March 13, 2009, 01:21:52 AM »

If we're lucky, we will end up with a decade or two of Japanese-like hangover.

Anyone who expects the Dow to go back to five digits in the next 10 years, doesn't get it.

I think the outside possibility of the DOW hitting 5 digits during a major bear market rally still exists, but the narrow window on that is close to closing.

I do agree with you that the Japanese-like hangover option is the best possible result.  There are a lot of *really* bad results out there, some of which scare even me...
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Queen Mum Inks.LWC
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« Reply #7 on: March 13, 2009, 03:18:08 AM »

I'm overly optimistic when it comes to stuff like economics and politics, so I'm inclide to agree with BushOK.

My only fear is that the light we may be seeing right now isn't hte end of the tunnel, but merely an oncoming train (don't ask me what the train symbolizes in the analogy - I have no clue - my point was merely that it's something bad).
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Gustaf
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« Reply #8 on: March 13, 2009, 05:24:34 PM »

I was gonna do the train thing. Anyway. My answer is not really. Once the effects on the real economy sink in during this year things will turn down, imo.
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Mint
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« Reply #9 on: March 13, 2009, 05:32:30 PM »
« Edited: March 13, 2009, 05:36:21 PM by Mint »

I don't think so. My guess is that these numbers are being driven by recent reports on consumer spending + the stimulus. As soon as other, more sobering figures are released the market will dive again.. Like it has when confronted with similar news the last few months.
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« Reply #10 on: March 16, 2009, 04:17:16 AM »

There are mind games that go on in our marketplaces; I see this as a tactic to make the fickle little sh**ts hopeful for a little while and less frightened of spending. Government can play a role here (thus why Bush & Co. were afraid of admitting this was a recession, or worse). Placebos can seem to work just as well as the real thing sometimes. As Mint stated, however, hard data can turn that around.
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opebo
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« Reply #11 on: March 16, 2009, 04:49:43 AM »

Actually the whole event is 100% psychological, so a turn-around is certainly possible, manic-depressive style.
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Silent Hunter
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« Reply #12 on: March 16, 2009, 03:26:27 PM »

I'm overly optimistic when it comes to stuff like economics and politics, so I'm inclide to agree with BushOK.

My only fear is that the light we may be seeing right now isn't hte end of the tunnel, but merely an oncoming train (don't ask me what the train symbolizes in the analogy - I have no clue - my point was merely that it's something bad).

The oncoming train is deflation.
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Joe Biden 2020
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« Reply #13 on: March 16, 2009, 06:45:34 PM »

Well, what should have been a 5th straight day of gains on the major indicies turned into a paltry 7 point drop for the Dow.  I bet the international stocks drop a bit overnight and the futures point down in the morning.  It probably won't be a major sell-off, but it will probably erase some of the gains we made last week.  I sure hope I'm wrong, though.

In good news, though, my company's stock (NSDQ: OKE) has seen five straight days of gains and is up to 20.45 which is two points off its low early last week.  It was up near 30 points just in late February, but we've seen a major, major sell-off on that stock the two or three weeks prior to last week.
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Fmr. Pres. Duke
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« Reply #14 on: March 16, 2009, 08:48:33 PM »

THe charts still have this bear market rally lasting through Memorial Day before we see a major sell off. I bought 1000 shares of Citi at $2.15 and hopefully it will ride the wave of euphoria for a few days so I can make a nice profit. I'm not confident, but I think we will see some sort of bounce. The fundamentals say we should for the time being. Tomorrow we should get news that market to market is going to be eased. A lot of good news is coming out right now that is pushing the market up. The DOW was off today, but BAC and C were up 8% and 30% respectively. If C goes under, I lose about $3,000, but if it goes up to even $6 or $7, then I've made enough to where not having a summer job isn't do bad.
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Queen Mum Inks.LWC
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« Reply #15 on: March 16, 2009, 09:43:34 PM »

I'm overly optimistic when it comes to stuff like economics and politics, so I'm inclide to agree with BushOK.

My only fear is that the light we may be seeing right now isn't hte end of the tunnel, but merely an oncoming train (don't ask me what the train symbolizes in the analogy - I have no clue - my point was merely that it's something bad).

The oncoming train is deflation.

But deflation wouldn't necessarily be a terribly bad thing if it happens slowly.  The U.S. could benefit from the reversal of some of our inflation; of course, if it happens too quickly, that's when  it's bad.
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« Reply #16 on: March 16, 2009, 10:39:03 PM »

But deflation wouldn't necessarily be a terribly bad thing if it happens slowly.

Ask the Japanese how well that went.
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Swing low, sweet chariot. Comin' for to carry me home.
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« Reply #17 on: March 17, 2009, 05:40:12 PM »

With the macros the way they are (and I'm not really speaking about government-released numbers), the chances that SP 500 @ 666 is the bottom is highly, highly remote in my mind (though it cannot be wholly dismissed - nothing can).

There should be a bear market run for a while at some point (maybe the point is now).  And even though I said it should reach SP 500 @ 850-900 or possibly even 1000, I would advise to at least start to convert to cash if and when we pass SP 500 @ 800, because I can't even guarantee those levels.  Of course, if you would have listened to me, you would have converted at the beginning of the year, natch. 

Two other things:

1) If you believe anything Citi or BoA tells you, I have a bridge to sell you down the street where I live.  Citi and BoA *might* be able to make a profit if we ignored all their Level 3 and off-balance sheet assets (how many hundreds of billions worth of worthless trash?), but I wouldn't bet on it.

In fact, it's another *tell* in my mind that we are nowhere near the bottom when people still believe what these financials CEOs tell them after being burned how many times now.  Pump, pump, pump, pump and then dump, folks...

It's only when people completely disregard, or acknowedge them as complete liars, anything these guys tell us that we might actually reach a bottom.

2) Reinstatement of the uptick rule would mean nothing because it hasn't had any impact since stocks went to penny movements instead of fractions.  Crashes come when people refuse to buy, not because you have to short at a higher number.

My guess is that mark-to-market will be removed.  Two scenarios can happen then - 1) Buy the rumor, sell the news (market jumps up in anticipation and then crashes when passed); 2) We skyrocket when it occurs.

jmfcst disagrees with me here, but I think removal of MTM is useless and actually makes things worse.  You see - right now financials are hiding all of their complete garbage in Level 3 or off-book.  It allows them to look much better than they are, so in a sense, MTM is already not being followed (since the off-book stuff is not being priced properly).  We know the Level 3/offbook stuff exists and just how bad it is - that's the reason why Citigroup has fallen from $50 to $1.50 - investors are not that stupid.

If you remove MTM, you will entice these financials to price everything to model, thus creating a greater amount of game-playing (a la Enron, which is why we have MTM in the first place), which, after early pumping, will in the end lead to a final ugly, ugly dump (when we figure out we can't trust anything being done). kaboom...


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Queen Mum Inks.LWC
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« Reply #18 on: March 17, 2009, 05:59:27 PM »

But deflation wouldn't necessarily be a terribly bad thing if it happens slowly.

Ask the Japanese how well that went.

It wasn't gradual.  Like I said, unless it's slow (and I mean really slow), it's going to hurt.
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Fmr. Pres. Duke
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« Reply #19 on: March 17, 2009, 07:38:45 PM »

I've averaged down my Citi stake now and am long on BAC. I think if M2M is eased this week, the stocks should jump up. The charts say we'll be in this bear market bounce till Memorial Day. Play comeback while you can! I'm up 24% this month so far on my portfolio.
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« Reply #20 on: March 22, 2009, 04:11:20 PM »

I think we're starting to hit rock bottom; I don't think the DOW will fall below 6500 again, staying in the 6500-8000 range for at least the next 12-18 months.  I think it will be at least 3-4 years, though, before we've gotten back to the peak numbers.
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opebo
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« Reply #21 on: March 23, 2009, 02:24:00 PM »

Who buys stocks?  Whoever it is, they seem to be all excited today.
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« Reply #22 on: March 23, 2009, 08:56:00 PM »

I think people are done panicking and are now realizing that they don't have to hold back completely.  I think many are reorganizing their finances, are saving, and finding that they do have a bit left over.

I've noticed an upsurge in sales recently after a dismal January and early February.  Last week, for example, we did 12% higher than last year.. and last year we did 10% over the year before.  Not bad considering that book prices have not increased much at all in the past year.
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TeePee4Prez
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« Reply #23 on: March 23, 2009, 10:52:15 PM »

But deflation wouldn't necessarily be a terribly bad thing if it happens slowly.

Ask the Japanese how well that went.

For the housing market, MASSIVE deflation would be a great thing.
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Sam Spade
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« Reply #24 on: March 24, 2009, 09:02:24 AM »

But deflation wouldn't necessarily be a terribly bad thing if it happens slowly.

Ask the Japanese how well that went.

For the housing market, MASSIVE deflation would be a great thing.

Think about how asset deflation affects other entities (government, retirees, among others) before thinking this is such a great thing.  Smiley

Though I must admit we are in it - the housing bubble is, at best in my mind, about a little more than halfway through deflating (the shadow inventory is skewing things a bit too, for now).  And it will be a L-shaped recovery, not V or U.
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