Posted on 02/12/2012 7:19:45 AM PST by blam
Here's The Chart That Has Stock Market Bears Ripping Their Hair Out
Sam Ro
Febuary 12, 2012
Stocks have had an incredible run so far since the beginning of the year. The S&P 500 is up a whopping 6.7% during the period, closing at 1342 on Friday.
In December, we surveyed 16 of Wall street's top strategists who told us that the S&P 500 would close at just 1363 by the end of 2012. At the time, five of those strategists had targets below 1342.
Why were they so conservative?
Well, some of the key risks cited included deterioration in the eurozone debt crisis, turmoil in the US political system, and slowing in the Chinese economy. All of which ultimately threatened corporate earnings, which is the key driver of stocks.
Here's the thing: earnings growth expectations have come down sharply. According to FactSet data, year-over-year earnings growth expectations for Q1 2012 have plummeted from 8.0 percent on September 30, all the way down to 0.0 percent this week.
Meanwhile, stocks roared ahead during that same period (See the chart below). This has the bears going nuts.
Have investors gone completely crazy? Maybe. As the saying goes, 'markets can remain irrational longer than you and I can remain solvent.' Credit Suisse's Andrew Garthwaite has written about numerous anomalies occurring in the global financial markets.
There is, however, one explanation for this bizarre disconnect between stocks and earnings expectations: valuation. Indeed, low valuations was one of the key reasons why BlackRock's Larry Fink recommended being 100 percent invested in stocks.
Soaring stock prices (numerator) amid falling earnings growth expectations (denominator) is a very quick way for valuations to rise back to historical norms.
(Excerpt) Read more at businessinsider.com ...
maybe the price is going up based on increased demand for stocks...not on any sound reasoning?
It’s no trick when the Federal Reserve’s Plunge Committee is printing money and throwing it into the market to make it seem safe.
This casino is rigged.
Or maybe stocks are rising on the increasing likelihood of defeat for that skinny-ass mack daddy.
Pundits maintain that John McCain’s pool numbers tanked in the Sunner of ‘08 becasue the stiock market began crashing at that time. I maintain that the stock market began crashing as a result of Obama’s poll numbers increasing. We will see a gigantic reverse effect as it becomes clear he will loose in November.
I’m looking to move $ from a low interest savings account to some mutual funds, but with the market at an almost 5 year high ... (gulp), I think I’ll wait.
Not that sound reasoning has ever applied to the stock market, but lets face it, all of the trillions of dollars that this administration has spent has to wind up somewhere. Why not the stock market? Even government is not efficent in the redistribution of wealth, and some money has leaked out into the market place. The old supply and demand curve you know.
You got that right.
Thanks to my own experience and some good FReeper insight, I went all cash early in 08. That pretty much saved my retirement.
Or panic is driving investors with money in various European securities seeking a safer investment haven.
There are moneyed folks all over the world desiring a place to safely park money and obtain some return. Europe is risky, America is less risky.`
Focusing locally, in America only, does not accurately portray reality
We moved a chunk into Missouri Municipal bond funds. They are double tax exempt.
Indeed it is. There's no way folks like us can keep up with the bug guys' electronic trading. Millions of shares switch hands in an instant. Computer programs decide what to trade and when. And we're left in the dust.
FWIW, I decided two years ago this was a sum zero game and got completely out of the stock market. Since then it has had a nice run. But, IMHO, given what we know about the world economy, the run is a house of cards. I'm at a period in my life where I value stability. And you won't find that in the stock market.
Hilarious to see the uber-bulls bleat on and on, not realizing they are only helping the rise continue. Markets climb a wall of worry. What is really a joke is how folks like Glenn Beck and Hannity continually say we are headed for “Greece”, that our markets will collapse, and to buy gold, but there is no way they do that with their own money. Anyone who knows me on FR knows I told you to buy AAPL, BIDU and MSTR in Feb 2009, along with homebuilders. I still have my buy hat on, and see nothing in the market or charts to change my mind.
Through reading your posts and others, that’s exactly the conclusion I arrived at. European money coming east. I’ve heard recently about some of this money going into Florida real estate. Particularly around Orlando.
May be a good place to invest. One in five houses (20%) in Florida are sitting vacant.
From what I’ve heard, as soon as a foreclosed house comes available, it’s snatched up within the hour.
From what I’ve heard, as soon as a foreclosed house comes available, it’s snatched up within the hour.
The Dow was just as high in the spring of 2011, then it collapsed down to the 10,000’s. It will happen again.
It’s called Pump and Dump.
From what I’ve heard, as soon as a foreclosed house comes available, it’s snatched up within the hour.
How can any person of experience believe this garbage?
Today’s stock market is far different than markets of the past. The primary distinction is that is a rigged market controlled by programmed trading and High Frequency Trade (HFT). Whether you understand or do not understand the last sentence, you should not be anywhere near the market.
Here are the points of difference that affect today’s stock markets (they are all related and interact):
1. Repeal of Glass-Steagall
2. Investment Banks and Surrogate Hedge Funds
3. 0% money created from thin air transferred to Investment Member Banks and in turn to their Surrogates
4. ERISA and the pacification of America’s Boomer Retirees by strategically goosing their 401ks
5. High Frequency Traders with computers so fast and near the action that they can see other trades and scalp profits in microseconds
6. Enormous portion of stock market trade volume dominated by HFT
If you have ever heard the word ‘kite’ used in the context of floating fake money by the timing of check processing, then you should understand that the entire New York Stock Market activity is based on a kiting scheme.
And the last note, the New York financial press is made up of mercenaries that will create and promulgate regularly disinformation on order from those with the ‘juice’.
The SEC is a joke.
The system is broke.
But they are damn good at charades. But don’t get caught up in it because you are their mark and they will rob you and make you feel the fool.
DOOOOOOOOOOOOMED. We're doomed!
And yeah, it is hilarious hearing the likes of Beck and Hannity say these things when there is no chance they are squirreling their money away in gold.
Lets face it, many conservatives want to believe the stock market is on the edge of collapse because they can't accept anything would do well during Obama's tenure. Many, I think, WANT it to collapse. All these people do is put all their faith in the doomsayers at Zerohedge and elsewhere and will continually miss the boat in bull markets when leftists are running the country. Hussein is an awful president, but that doesn't mean every part of the economy will suck forever. Nor does it even mean we may not experience a market and general economic strengthening. Many of these types of people were likely predicting the same thing at the height of the 90's boom and missed a great opportunity to make a ton of money in the market. Will the market come back down at some point? Sure, no doubt. Does that mean one shouldn't buy and invest wisely? Certainly not.
People on the left tend to do the same thing when Republicans are in charge. Assume the worst, buy into everything written that predicts doom, and believe there is no way the market or economy in general could strengthen or have a strong growth period.
The American economy is improving somewhat in spite of Obama. I think there is a reckoning coming for our massive debt, and think eventually we are likely to see a major collapse under the weight of the social welfare state - but that could be a decade or more from now. In the meantime, the markets could go up for awhile, unemployment may continue ticking down, and the economy in general might rebound to some degree - simply because it is hard to keep the American economic engine down forever.
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