Todays Stock Market Thread (DJIA 7784.58 (-234.68; -2.93%) NASDAQ 1282.55 (-36.60; -2.77%)

[newsperson999]

Dow 7,784.93 -234.33 (-2.92%)
Nasdaq 1,288.09 -31.06 (-2.35%)
S&P 500 819.51 -28.25 (-3.33%)

[steveegg]

I take "strong buys" in this market as "Eject! Eject! Eject!" These brokerage houses want to unload them as they see the crash coming.

[Dog Gone]

I've been out of the market (95%) since late 1999, earning a small amount on CDs and money market. My company contributes stock to my 401(k), which I have been selling on a regular basis.

I haven't gotten rich in the past couple of years, but my retirement account is bigger, something most people can't say.

I don't think this bear market is over yet by a long shot. Growth stocks that pay no dividend are still overvalued, and the air will continue to be let out of them.

On the other hand, some specific individual stocks may reach their bottom before the rest of the market does. I have no way of determining what that bottom is, either for the particular stock or the overall market, but at some price, the stocks that pay dividends are returning more on that alone than their cash alternatives.

If you saw a stock that was paying a 7% yield, based on its stock price tomorrow, how could you possibly lose by buying it? Sure, it may drop further, but you're still getting a better yield on it than if you bought a CD. As long as the company itself is not in trouble and can keep paying that dividend indefinitely, you'd be nuts to switch to cash instead.

[Dog Gone]

But the P/E ratio CVX is 30+, XOM's is 18, and BP's is 60! Not good. Historically speaking, the price should fall to 1/3 of today's values to make the P/E's assume "normal" values.

P/E is only important for "growth stocks". You can't expect a stock that's paying a healthy dividend to be valued the same as one that's not, especially in a bear market.

I'm not pumping BP stock or any other in the sector. I don't really care how low they go. I'm simply suggesting that the lower they go, the more attractive they are compared to cash alternatives.

[Afronaut]

The trouble with that nice 7% yield is that is can get cut to 3% in todays climate. When I was a trader during the 87 crash, there were closed end funds with paper that had some great yields and were trading at below NAV. They were there for only minutes....

Some stocks might look good down here, They might look even better in a few more weeks...

Tough call. No whiners when you get smashed though. The risk reward is not worth it.

[steveegg]

I really hate it when people say that stocks need to go all the way back to their historical P/Es. There's a lot more money chasing essentially the same amount of earnings. That along will drive up the price, and thus P/E beyond what has historically been called "safe". Does that mean that a P/E of 60 is good? No; but XOM's 18 sure isn't overpriced (assuming, of course, the earnings aren't cooked), and CVX isn't that far off at 30.

[wardaddy]

You sure didn't inspire confidence with that one.

You're right. AOL is more the badboy by default. They bought a company which was considered at the time to be marginally less valuable then themselves but now it looks like the reverse may be true. In either case both the purchaser and target were way overvalued at the time. It was supposed to be a match made in heaven but it seems only the M&A folks made anything out of this. AOL needs to concentrate on what they know and not swim with the sharks....media types like Ted, Levin, Pittman etc. I know...they are all gone now but the residue is damaging. AOL/TimeWarner will be dissected. It will have to be. It's worth more in pieces and will perform better that way as well.....the ...uh....merger that should never have happened.....like a bad marriage with a pretty girl. AOL saw glamour in TW and TW saw a huge subscriber base and in my opinion...some naivete to be exploited in AOL. Shame. My family has taken a big hit on that one. From mid 40s to what now???...12 or so?

[Dog Gone]

I guess I should have concluded my thought. The yield will look better after the stock gets battered again and again over the next couple of weeks. I ain't buying tomorrow, and I think there are some attractive stocks out there.

[steveegg]

Let's try the "along" again. A-L-O-N-E (I sure could use some sleep :)

[steveegg]

I definitely am not buying before 8/16 (unless the earnings statement's been signed off on by SEC rules).

[steveegg]

You got it. Of course, AOL also saw a whole heap of cable subscribers that'll gladly jump on board AOL High Speed (in the interest of full-disclosure, I have TW's Road Runner).

I can see 3 pieces coming out of AOLTW; the old AOL, the old (pre-Turner) TW (perhaps with 1 or 2 Turner properties, probably MGM, and maybe TNT or TCM), and the old Turner properties (which will quickly sink, especially if they don't get MGM/TNT/TCM back. That should make it worth a decent amount, though I doubt you'll get it back to the equivalent of mid-40s.

[Afronaut]

Hey I am out because I love the rush and the whole game itself... I started trading out of the Money options and ended with SP500 contracts and working on the floor of the NY Merc for 6 years... I am now recovered and breath easy on days like today.

Its just a horse race. The thing to remember is don't buy the horse, just ride it. Forget the buy and hold garbage....thats so 70's.... :)

[palo verde]

Hi rooroobird
I just found your post 93
I think he may be right
shopping sprees are fun, as long as people have the cash they will do it
I truly believe everyone wants to be happy now
and treats make people happy
Love, Palo

[steveegg]

Your perspective definitely is different when you're not in the game (or at least not heavily into it, don't have to make day-to-day calls, and aren't depending on its short or mid-term results for what little you're in for).

[who knows what evil?]

So, would August 16th be a good day to invest?

Perhaps the first WEDNESDAY in November might be a better idea...

[steveegg]

The economy outside of the market is reather strong. The only negative effect of the market's crash (which, sadly, won't be stopping in the next 3 weeks) on the economy itself is those that are depending on it for retirement over the next 5 years (maybe more depending on how many more companies come down with Cooked Book Disease).

I just dumped some decent cash for a good (but expensive) alarm clock (stereo/CD, with dual alarms and the ability to fall asleep to a station without affecting how the alarm sounds) and a semi-expensive pair of cross-trainer shoes. I'm not that concerned that the S&P 500 index fund portion of my 401k exceeded its 12-month loss the last 3 days (the fact that I am not touching it for 30 or so years has something to do with that).

[palo verde]

I too think 7800 is the bottom
Love, Palo

it's hard for me to imagine GOP losing elections over this
who in their right mind would vote for Dem now, if they saw thru clinton's corruption
but how can Bush's decisions not affect the stock market
fear, talk of terrorism, and war are not good for the travel industry

I always believe the maxim -- all countries grow rich together when peace and trade flourish

[steveegg]

Perhaps the first WEDNESDAY in November might be a better idea...

That's my fall-back date. Buy if the Pubbies hang onto the House and regain the Senate in such a fashion that the defections of McShame, Snowe-Job, Specter of a Man, and Collins (the woman, not the drink). Sell otherwise.

[steveegg]

Nice thought, but given that we're in a war, the maxim that holds is to the victor goes the spoils (and the booming economy).

[steveegg]

There I go again; leaving out crucial pieces of a post. Let's try that again:

...and regain the Senate in such a fashion that the defections of McShame, Snowe-Job, Specter of a Man and Collins (the woman, not the drink) won't give it right back to D'Ashole.

[Stefan Stackhouse]

I hear Warren Buffitt started buying last week

That's interesting. Anybody know what he's buying? Because that is the key.

He said he is buying "companies", he doesn't buy "stocks".

He looks for businesses that actually produce goods or services. . . and cash flow and profits.

What a quaint idea!