Posted on 01/27/2009 6:29:52 AM PST by mnehring
Stock futures are pointing to a rising market Tuesday, but I still worry that the market will find a reason to go south instead.
Rampant, persistent pessimism is becoming a self-fulfilling prophecy. The disease already spread to companies and consumers. Can't anyone see the good side of bad?
Take Hershey (HSY Quote - Cramer on HSY - Stock Picks), for example. The Pennsylvania chocolate maker said sales and profit rose more than 50% in the fourth quarter as it increased advertising spending on its core brands, Reese's and Hershey's.
That's good news, right? But no doubt the market will interpret this as a sign that the economy is getting worse. If more people are eating chocolate, they must be depressed and that's not good.
Verizon Communications (VZ Quote - Cramer on VZ - Stock Picks) said profit rose 15% in the fourth quarter as it signed up more wireless and broadband subscribers. Oh, that can't be good. It must mean that more people are staying home and getting their entertainment from the Internet and are so depressed they need someone to talk to.
In many cases, companies like Travelers (TRV Quote - Cramer on TRV - Stock Picks) are reporting a decline in profit as they struggle in this slowing economy. Why isn't that a good thing? They are still profitable, right? They are holding their own under difficult circumstances. Good for them.
But no. Traders will no doubt focus on the decline in investment income at Travelers. Who didn't have a decline in investment income during this ultra-pessimistic period (see what I mean about it being a self-fulfilling prophecy?)
I could go on and on. American Express (AXP Quote - Cramer on AXP - Stock Picks)? Profitable. Texas Instruments (TXN Quote - Cramer on TXN - Stock Picks)? Profitable. Corning (GLW Quote - Cramer on GLW - Stock Picks)? Profitable.
Come on, folks. How about a little love for all the companies still making money?
So, invest in sweater companies? :->
After I boycotted Hershey for moving their candy making to Mexico? I don't understand how they can still make a profit without my business.
I’m sure the marketing spin of chocolate for health reasons has really pumped HSY.
Liquor stores and shoe repair businesses tend to do well in times like these.....
American Express?The company that became a “bank holding company” in order to get money from the Fed?Yeah,they’re profitable alright.
What’s sauce for the goose is sauce for the gander, or for the bull in this case. Recall the daily spin from Cramer and his accomplices at CNBC from those gone-forever days of DJII 14000:
- Dollar down is BULLISH FOR STOCKS because it makes US exports cheaper for foreigners; that’s more revenue for US companies who do a lot of business overseas
- Dollar up is BULLISH FOR STOCKS because it indicates that foreigners want dollars to buy US stocks and exports
- Interest rates down is BULLISH FOR STOCKS because it reduces borrowing costs for companies which goes straight to the bottom line
- Interest rates up is BULLISH FOR STOCKS because it puts pressure on The Fed to cut interest rates
- Oil up is BULLISH FOR STOCKS because it means bigger profits for energy companies which are heavily represented in the DJII and S&P
- Oil down is BULLISH FOR STOCKS because it means more money in the pockets of the American consumer who will be able to buy more stuff
etc.
Right the millions unemployed because of the downturn...soon to default on homes, credit cars and auto loans are a figment of our imagination...it’s all about pessimism...BS. They want to sucker you back into the market so they can take more money from Americans and pay their CEO’s those all important bonuses. Sometimes there is good reason for pessimism. As for the market, it seems to run mostly on emotion these days. How can one invest when there is no way to value anything these days?
credit cards not credit cars.
Yeah, I remember when Glenn was telling us last spring that the market was going IMPLODE, and to move our retirements to safe haven.
Or not. I can never remember which one it is...
That's it! That's the ticket!
The fact that Verizon is doing great while all these other companies go under proves that there is no God.
Invest in companies you believe in and have sound fundamentals, not the market as a whole (just be sure to diversify). History in down markets (recessions, etc) have shown there is money to be made for those who don’t panic and invest wisely.
I don’t have anything to say about Verizon from a business perspective, they run a tight ship.
Forget the stories, how are you doing personally? I see lots of traffic on the roads. I see people in the stores buying stuff. Sure, there have been layoffs and there will probably be more, but what you have to realize is we've been hovering near 5% unemployment for several years. Most economists consider this level full employment. That wasn't going to last forever. Sales in certain sectors aren't going to be what they were in 2005, but that does not mean that healthy companies are failing. What we've seen so far are failures of companies who weren't on that solid of a footing to begin with. Interest rates remain low and the TED index has improved dramatically over the past couple of months. Last I checked it was below 1.0, down from a high of over 4.0. This means credit is freeing up and banks are lending to each other again. Fuel prices remain low. IBD, among others, calls for an end to the bear market by the end of the 2nd quarter of '09.
You can wallow in other people's misery, in large part misery that was created by their own actions, or you can look for the positive things that are occurring daily.
Sometimes there is good reason for pessimism.
True, but what I'm saying is it can become a self fulfilling prophecy if you let it. Remember the Carter years, then what happened after Reagan took office and began positive diatribe about the greatness of America?
Pessimism is definately a self fullfilling prophesy, it is also one of the dim-0s main tools in an election. Tell people everyday that the economy is in the tank, and people become afraid to buy things, employers become afraid to hire new workers, and the economy DOES tank. They did it to get klinton elected, and they did it this time to get potus elected. I’m afraid it may have gotten away from them this time though.
Hi: Could not get the Cramer links to work; can you send me correct link? Thanks!
Click on the source article and follow them. Looks like they where relative instead of direct links in the original.
It should be mentioned that 1930, the year after the great stock market crash, was rather calm, and several times it looked like the market was going to recover.
Right now, many people are still locked into what I call “the TV mode”, in which the president is sitting in the Oval Office when an aid bursts through the door and yells “Mister president! We have a problem!”, and then the president has 50 minutes to solve the problem for good, leaving things exactly the same way as they were before, and awaiting the next panicked aid.
The truth of the matter is that our economy is not in a condition of “optimism” or “pessimism”. Instead, an analogy to our economy is what would happen if you ran out and bought a late model Ferrari, and didn’t have the money to make payments.
No pessimism needed. The only issue is how and when your car is repossessed. You can be as optimistic as all get out, and it won’t change the situation one bit, either.
Right now our economy is deeply in debt, and it’s a fact of life that many people seem to have forgotten, that you cannot spend yourself out of debt. In fact, the *last* thing you should be doing when you are deeply in debt is to spend more money.
It should also be mentioned that the Republican way around things, of growing the economy, won’t work either. If you’re wages are $10/hr, even if they are raised to $20/hr, you still aren’t going to be able to afford that Ferrari.
And just because the US government is not a person, doesn’t mean the rules don’t apply to it as well. Just this year alone, the government has promised half the GDP of the entire nation. And that’s not even their money.
The bottom line is that in 2008, the US government got about $2.7T in tax revenues. That should be their income. But they spent far more than their income, and this should mean that they can’t spend any more than that.
It doesn’t matter if they want a Ferrari in every garage, they can’t have it. No pessimism needed there at all. Just realism.
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