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guru267
#541 Posted : Sunday, October 10, 2010 10:53:10 AM
Rank: Elder

You have been a member since:: 1/21/2010
Posts: 6,675
Location: Nairobi
@hisah so when do you see this phony rally ending?? I need a definite date when you think the melt down will begin....

Ever since the dow started its upward movement from 6k we've heard analysts saying the exact same thing you are they wouldn't touch it because they are waiting for a double dip recession which has never materialised.....

Mark 12:29
Deuteronomy 4:16
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sheep
#542 Posted : Sunday, October 10, 2010 2:19:09 PM
Rank: Veteran

Joined: 7/24/2008
Posts: 781
cyclical bulls last from 2-7yrs in a secular bear...we could say we're in the middle right now.

I dont think we are going to visit the 2009 march lows again...for that to happen a panic(20%+ in a matter of weeks) has to occur...a panic occurs in the middle of a bear market(30%+ decline) driving prices 50%+ down.

It is clear we're not in a bear so there can be no panic considering theres a lot of money waiting on the sidelines.

A crash(20% decline in a matter of days)occurs at the peak of a bull....considering the fact that this bull is pretty young(barely a year n a half old) that is not likely gonna happen right now as the shortest cyclical bulls lasted 2yrs.

The market may rally 1000pts to 2007 range which is the tradeable range of this bull after climbing the "wall of worry" for a few months and then when most people are fully invested ie no sideline cash...the great secular bear begins(around mid 2011-2016)...the trick is whether one will spot it...lots of volumes with no further progress(remember 2007)

Remember the markets are never wrong opinions often are...well this is just an opinion...but if one is the student of market valuations there is no way the current p/e of 20+ for the S&P is sustainable for even a decade.

The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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guru267
#543 Posted : Sunday, October 10, 2010 2:24:26 PM
Rank: Elder

You have been a member since:: 1/21/2010
Posts: 6,675
Location: Nairobi
sheep wrote:

Remember the markets are never wrong opinions often are...well this is just an opinion...but if one is the student of market valuations there is no way the current p/e of 20+ for the S&P is sustainable for even a decade.



@sheep then what you are assuming that during this bull there will be no growth in earnings of S&P stocks to push the P/E down and push the S&P up?????
Mark 12:29
Deuteronomy 4:16
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sheep
#544 Posted : Sunday, October 10, 2010 3:13:10 PM
Rank: Veteran

Joined: 7/24/2008
Posts: 781
@Guru

I have been reading a great book by robert shiller called IRRATIONAL EXUBERANCE.
Below is a relationship between earnings and prices.
The prices are running far ahead of earnings more than they ever did in this century......click on the graphs especially the one of p/e ratio as a predictor of 20yr returns.

http://www.google.com/ur...2=6WawqYXXJnXz8-kvl74wAQ
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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  | | Edit by user: Sunday, October 10, 2010 3:22 PM | Reason: Not specified
guru267
#545 Posted : Sunday, October 10, 2010 4:21:43 PM
Rank: Elder

You have been a member since:: 1/21/2010
Posts: 6,675
Location: Nairobi
@sheep the question is dont you think earnings will catch up... Many campany's on the S&P have been announcing 50% and higher growth in profits which effectively brings down the tRAILING p/e of 20 to a forward P/E of 15 and below which represents a fairly priced market...

One can also look at it from the dividend yield front... The ideal dividend yield in any market is one which is higher than bank deposit rate and bond rates..

Stocks on the S&P have a trailing div yield of 2.2% on average which is higher than bond, bills and deposit rates with many of these companies promising to increase their dividends resulting in a higher forward yield....

Lastly just before the stock market crash in 2001 and 2008 stocks were trading at much higher than P/E of 20 many were at around 50 P/E....

so i will wait for Q3 results to prove my sentiments to be true...
Mark 12:29
Deuteronomy 4:16
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sheep
#546 Posted : Sunday, October 10, 2010 4:43:48 PM
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Joined: 7/24/2008
Posts: 781
I dont think growth of 50% growth will hold.....the normal growth of big US co.s is around 7-10%...considering the greatest growth occurs within 2 yrs from a bear,the time for big profits is nearly up and the high valuations may not hold for long.
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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guru267
#547 Posted : Sunday, October 10, 2010 4:51:54 PM
Rank: Elder

You have been a member since:: 1/21/2010
Posts: 6,675
Location: Nairobi
sheep wrote:
I dont think growth of 50% growth will hold.....the normal growth of big US co.s is around 7-10%...considering the greatest growth occurs within 2 yrs from a bear,the time for big profits is nearly up and the high valuations may not hold for long.


@sheep so what do you consider a fair valuation of the S&P????
Mark 12:29
Deuteronomy 4:16
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sheep
#548 Posted : Sunday, October 10, 2010 5:06:56 PM
Rank: Veteran

Joined: 7/24/2008
Posts: 781
historically around 14.7 trailing....before the beginning of great secular bulls the market has sold briefly for a trailing p/e 7 which is half fair value!!
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
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hisah
#549 Posted : Sunday, October 10, 2010 6:07:38 PM
Rank: Chief

Joined: 8/4/2010
Posts: 8,977
guru267 wrote:
@hisah so when do you see this phony rally ending?? I need a definite date when you think the melt down will begin....

Ever since the dow started its upward movement from 6k we've heard analysts saying the exact same thing you are they wouldn't touch it because they are waiting for a double dip recession which has never materialised.....


Dow at 6k had to bounce due to extreme bearish sentiments where sellers give up selling. Now the opposite is at play with traders/investors waiting for fed stimulus. It is no easy feat to time a market since Mr. Market can remain irrational longer than one's funding. My opinion is based on the fact that the western econ fundamentals are really ugly from record high public deficits now rivalling 3rd world countries to zero job creation etc. This is why the US fed is propping the market through OMO (twin buying of treasurys & stocks). Once they stop it now with no investors pushing solid buy volumes and they stop the senseless debt monetization (money printing spree) and get all the banks to own up their underwater mortgages and toxic derivatives without cooking figures, then would the true picture come out clearly. If the US fed manages to print a mammoth of paper as they've stated this november, the stocks will rally! But this will debase the $ and rally commodities too. So priced in dollars or currencies the stocks will look profitable, but priced in gold or platinum or silver, they'll be devalued further! It is this deception that is hidden from the public. Plus the inflationary effects of this mammoth printing will eventually catch up globally. Now the opposite of this bulls play would be, what if the fed stimulus is lower than expectation. Imagine that... I'd buy $ for some easy profits among the fiat currencies as we head for another credit crunch.
As long as gold continues the parabolic stampede against the major fiat currencies, I'm not a buyer in any of the euro & US markets. And for the last 5yrs, the gold returns have been outstanding compared to the global stocks and still remains the same.Obviously some stocks esp tech, nuclear energy & metals penny stocks will do well in these markets, but I don't track microecons, but macroecons which gives a wholistic econ visual. Australia too is on the verge of a real estate meltup, i'm waiting to see how this bubble will deflate. Oh, and we forgot the Dubai project. At least they both have commodities to handle the heat unlike the west that has almost nothing solid to back up their fiat money. If stocks were on a hot streak due to glowing recovery econ data, commodities esp precious metals would be sidelined. So in short we have a commodities bubble in the making as investors rotate out of one asset class (stocks) to another. The usual classic boom bust boom cycle which forecasts a commodities boom decade.
@sheep - which money is one the sidelines. The global funds flow is shrinking. Check the latest IMF publications.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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  | | Edit by user: Sunday, October 10, 2010 6:18 PM | Reason: Not specified
youcan'tstopusnow
#550 Posted : Sunday, October 10, 2010 9:40:45 PM
Rank: Chief

Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
Frontier markets reap from euro crisis www.businessdailyafrica....44/-/hh8d0s/-/index.html
GOD BLESS YOUR LIFE
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