Now Everyone Thinks The Market's Going To Crash

The Business Insider ^ | 5-303-210 | Henry Blodget

[blam]

Now Everyone Thinks The Market's Going To Crash

Henry Blodget
May 30, 2010, 10:23 AM

A month ago, with the market charging ever higher, climbing the "wall of worry," most bearish voices had been silenced. Now they're back with a vengeance.

(Why? Because, as we saw clearly at the depths of the market crash 15 months ago, what most people expect the market will do in the future is what the market has done in the recent past. The most recent past is a month in which the market has fallen more than 10%. So more people are getting bearish. If the market falls another 30%, people will get REALLY bearish. And the irony is that, by then, stocks will actually be attractively priced--much more so than they are today, and much MUCH more so than they were a month ago, when everyone loved them.).

In any event, Brent Arends in the WSJ observes how people are suddenly paying attention to the bears again. And many of those bears are predicting there's a lot more pain to come:

Some pretty smart people are cautious. Seth Klarman at Baupost Group is worried. John Hussman of the Hussman Funds says all sorts of warning lights have lit up across his screen. Even Ron Muhlenkamp of the Muhlenkamp Fund, who usually takes a sunnier view of things, says he has moved a big chunk of his mutual fund into cash in case there's a plunge.

How far will it go? Mr. Hussman says the technical indicators have only been this bad 19 times before in the last half century -- and on average the market plunged about 20% over the following 12 months. When markets were also high, like now, the picture's even worse.

Ugh.

[snip]

[cripplecreek]

Socialism is not good for private companies.

That all depends on whether the company has a friend in the white crib.

[EGPWS]

Glad I’m secure in my poverty.

Hang on to it tightly so you don't lose it!

[SF_Redux]

this calls for a few more rounds of golf, right obummer?

[Frantzie]

You are not even close to blood in the streets. This also assumes you can rebuild after blood in the streets. The USA is headed towards Zimbabewe thanks to idiots who watch TV being manipulated by Hussein and idiots watching keeping the networks in business.

Fox? Saudis are shareholders. The Saudis who’s #1 goal is to export Islam to the West to take over. The American public are idiots. Keep watching the ball games people.

[DB]

I have a T-shirt that says:

“I started with nothing and have most of it left”...

[bootless]

ping ... what do you think?

[Freedom_Is_Not_Free]

(Why? Because, as we saw clearly at the depths of the market crash 15 months ago, what most people expect the market will do in the future is what the market has done in the recent past. The most recent past is a month in which the market has fallen more than 10%. So more people are getting bearish. If the market falls another 30%, people will get REALLY bearish. And the irony is that, by then, stocks will actually be attractively priced--much more so than they are today, and much MUCH more so than they were a month ago, when everyone loved them.).

Spot on. This is why most people buy low and sell high. They know not to, but emotionally they think a soaring market will keep soaring and a plunging market will keep plunging. As far as fair value on the S&P, I think it is closer to 800 than 900, but then who the hell am I. Just some dumb-bunny layman typing on an electronic bulletin board. I'm not smart like the brilliant economists who said the world de-coupled from the US economy, there was no housing bubble, housing would decline in an orderly mannre without a crash and would not impact the "greater" economy. I'm just a dumb-bunny who went all cash in December 2006 and am still way ahead of your typical buy and hold mutual fund buyer. So what do I know?

[Glenn]

It’s going into forclosed homes and buying them for cash.

That activity is driving my sister-in-law nuts. They are relocating and attempting to sell in this atmosphere. She gets a dozen calls a week with offers to pay cash if she will would simply sell for nothing.

[waus]

I sure hope so. I’m looking to make a fortune over the next year buying puts. Crash and burn Mav........when you have a muslim communist in charge of the entire US, what can you expect.

So, basically, profit from other people’s misery, it’s the American way.

[Kartographer]

I’ll buy her house for a case of spam, a brick of .22’s. ;-)

[blam]

"Was it Buffett who said We are greedy when others are fearful?"

"I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." - Warren Buffett (as quoted by Chris Dixon)

[dalereed]

The banks are padding themselves to brace for the next round of forclosures and making very few home loans .

A lot of forclosure sales are only taking cash offers.

[Tzimisce]

Why?

Because people are figuring out that we have a radical left wing government.

[screaminsunshine]

Well look at the Cuban or old Soviet economy. A good example of where Obama and the Democrats will lead us. Everything is cheap but there isn’t any.

[EGPWS]

Everything is cheap but there isn’t any.

Including personal freedom...

[blam]

This Week Watch Australia Disappoint The Global Recovery Bulls

[Little Bill]

Blam, my FRiend, anyone that is retired and still in the market with eating money is a fool. I compare these market swings with 1932, I think that we are looking at an 1875 DEPRESSION.

[upchuck]

It's interesting to read all sides.

The only one who really knows what's gonna happen is Mr. Market. And he's usually pretty closed mouthed.

Like bears? They're all here.

[beethovenfan]

I guess your income has already been redistributed.

[screaminsunshine]

U Got It!