Posted on 09/25/2002 4:32:32 PM PDT by rohry
Market WrapUp for the Week The Week in Graphs Storm Watch Geopolitical News Energy Resource Page Precious Metals Raw Materials Wednesday, September 25, 2002 Market WrapUp The Daily Drivel Most company earnings are suffering because of three factors:
If you leave out all of these factors, then you get down to the pro forma numbers, which are rising but at a slower pace than estimated. The reason pro forma numbers are going up is due to cost cutting, especially payroll cuts. Revenue growth at most companies has been sluggish. So for the markets to make a big deal out of GEs numbers, it is really no big deal. It is simply noise and nothing more. Markets are driven in the short-term by news, and todays announcement by GE doesnt make a trend. So, Why DID The Markets Rally? Wall Street is hoping to keep the little guy fully invested so you hear stories about the market being up 20% by the end of the year. That is not going to happen unless the government starts buying stocks like what is now happening in Japan. To go from a 27% deficit as we now have on the S&P 500, to a 20% gain by year-end is simply drivel. Most, if not all, analysts and strategists have been consistently wrong these past three years. I dont see anything on the horizon that is going to give us our miracle recovery. Maybe well start trading on pro forma sales numbers next. Forget the expenses. Why not go with sales and exclude everything else? The mantra that stocks are cheap will be addressed in the final installment of Bubble Troubles. If stocks were cheap, the big boys would be buying, and there is no evidence that this is happening at the moment. What is most evident with all that is said in print or the broadcast media is that investors are still bullish. Every word spoken reinforces the equity cult with standard clichés such as stocks are cheap, or, you have to stay invested for the long-term, or the economy is in good shape, and we are oversold. Nobody talks about P/E ratios at historical levels or that dividend yields are extremely low. Everyone is carrying on as if these last few years have been a correction in an otherwise long-term bull market. I hate to tell these bubbleheads, but the bull market ended in the first quarter of 2000. If they want to maintain their customer base or their listening audience, they better start talking about the bear market and how they can keep their client portfolio losses to a minimum. Telling investors to buy tech stocks or to stay fully invested in stocks because they are a bargain is going to lose their clients' money. This is also going to cause them to lose their customer base. This Bear Growls and He is Still on the Prowl In case anybody hasnt noticed, the Dow has lost 13.4% since its August 22 high of 9053.64. Weve lost over 1,200 points in the last month. A slowing economy, declining profits, a retrenching consumer, a Brazilian debt default, another default by Argentina, a derivative mishap, and an oncoming war is what awaits the financial markets in the months ahead. That is why September and October are usually foul weather months. The realities of forecasts made at the beginning of the year get adjusted in September and October. These readjustments to reality have an impact on the markets and there are still a lot of readjustments that need to be done to re-price stocks from a second-half recovery to a second-half economic and financial relapse. Three companies out of four have cut their third quarter estimates, according to a recent Bloomberg survey. If the profit recovery were going to take place, you wouldnt be getting these kinds of warnings. Fund managers could also contribute much of todays rally to quarter-end window dressing. Institutions may be driving up stocks prior to a quarterly close. Usually at the end of each quarter, fund managers dress up their portfolios in order to look better to shareholders. This year has been the third year of negative returns for most mutual fund companies, so shareholders arent too happy right now. The market remains weak technically with declining momentum, sentiment and other trend indicators showing no support for a sustainable rally. This is, in technical terms, simply a rally from oversold conditions and nothing more. Volume came in at 1.64 billion on the NYSE and 1.68 billion on the Nasdaq. Market breadth was positive by 23 to 10 on the NYSE and by 22 to 12 on the Nasdaq. Overseas Markets Asian stocks fell after a U.S. industry report showed consumer confidence dropped, signaling weakening demand for exports from the region's largest overseas market. Japan's Nikkei 225 Stock Average shed 1.7% to 9165.41. South Korea's Kospi index fell to a nine-month low, and Taiwan's TWSE Index to a 10-month low. Treasury Markets Wednesday's sole economic report revealed an unexpected 1.7% drop in August existing home sales to a 5.28 million rate, less than expectations for a 5.40 million rate. Thursday will see several reports including weekly initial claims, August durable goods orders, expected to have decreased 2.7%, and August new home sales, seen coming in at 980,000. © Copyright Jim Puplava, September 25, 2002 |
..yep, it's easy to be glib when things are going good...just like in poker: winners telling jokes; losers yelling "shut up and deal the cards"
Good luck to everybody! Stonewalls
Many people only have heard "buy and hold" and they will continue with that strategy until the pain gets unbearable.Memorable, bumpworthy line : )
You must be kidding. Asking him if hes had a sex change operation and then stating that not many changes [are] needed there isnt getting personal? If a sex change isn't personal, then what exactly would be? Look, that was a personal attack. I dont agree with either of you all the time, and Im hardly a LS cheerleader, and Im not as well read on economics or the markets as either of you. Both of you make factual statements from time to time. Since I dont the time to check every little fact each of you aver, Im forced to evaluate your positions based on trust. If you deny that was intended as a personal attack then I appreciate your making it clear just how careful you are with your statements, or how much I can trust you. One or the other."Is there a reason to get personal about this?"Nothing personal (towards LS) was intended.
Are you a member of the FR thread police or are you just assuming that LS can't defend himself for some reason?Neither. I enjoy reading well reasoned comments, and appreciate it when even those I disagree with provide comments, as it forces others to rebut them with substantive ideas. That helps me learn.
patent +AMDG
If you are looking for an exit point and have remained fully invested, these kinds of mini-rallies should be used to get out and invest in defensive bear market investments.It was a comment from you similar to this one that I credit with having saved me thousands of dollars. Thanks again.
A bear market is what we are now in, and this bear has a long way to go before it will end. The second phase of this bear is going to produce more damage than the first phase.I heard on the business news this morning (WCBS-AM, New York) that markets were also down prior to the Gulf War, but that they went up when the battle was actually joined. Clearly, the listeners were being asked to induce that a similar downturn is occurring now as rumors of war abound, but that the market will recover when we finally act to oust Saddam. How does this kind of "geopolitical" analysis fit into the Phase II theory?
American history has shown, repeatedly, that our greatest economic expansion came in periods with high trade deficits. We did not even go into surplus until the mid-1890s, as I recall. The 1980s had steady trade deficits, despite incredibly real growth. "Prosperity" and trade deficits are not at all linked, as the Spanish learned under mercantilism, when they always had trade surpluses---yet steadily fell behind England and France.
Second, and I think I also have made this point to you before, foreign countries often "double count" their exports and we accept their numbers (as far as I know) of the value of their count. I have seen, for example, RAND studies that have shown trade deficits as virtually non-existent in real terms of trade.
As for debt, I have constantly said to you---and you know this---that debt is a function of GNP/income and/or assets, both personally and nationally. I don't have the latest debt to GNP figures for the U.S., but in the late 1980s it was falling even as all the Dems and Robert Reich were whining about the national debt.
Several studies have shown our national debt to be highly mis-estimated. Our national assets are vastly undercounted, due to FEDERAL REGULATIONS.
For example, our gold stocks are valued by the measure $35 an ounce. Naturally, gold makes up a tiny portion of our national assets, but it is a prime example of how we have assets with market values 10X and 20X and even more what they are actually listed as on the books. The most recent estimate I have seen . . . and I admit this is about 12 years old (but I don't think much has changed) . . . that we had a slight national surplus if all assets are accurately measured (land, buildings, federal holdings, etc.)
Now, is that better?
Second, the experts and the polls do not support your view on who is leaving the market. Most tend to agree that these are first time investors. The people who are HOLDING are people like me, in it for the long term.
That's always and ever an excuse, not a wisdom. While it is true that for each investment, the term should be considered, and that there are wise long-term investments, and that "short-term" investment approaches tend to be mostly speculation and gambling, still folks make that kind of statement when they don't want to know from Adam, so to speak. It's wishful, not wise; ignorantly wishful.
Some great investor said, "In the long run we're all dead." -- yet that is not near enough of an adequate knock to the "in it for the long term" canard.
Non dividend growth stocks are speculation to me, just like gold is some.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.