Worst. Week. Ever.
Well, if you were long, anyway. Those of you who were defensive, or in cash, or God-love-ya, short, had a pretty good week. (Feel free to hit the wish list anytime and buy yourself something nice!)
This is a headline you probably have never seen before:
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I don't know if you will ever see more astonishing data for another 20 years:
Saturday, October 11, 2008 | 08:53 AM | Permalink
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Out the door canoeing...
but calculated risk has video of Paul Volcker and Charlie Rose this morning...good stuff...done Thursday..
Back tonight..
Posted by: Bruce in Tennessee | Oct 11, 2008 9:04:55 AM
["...will ever see more astonishing data for another 20 years.."]
You will.
Ya ain't seen nuthin' yet.
Posted by: Croft | Oct 11, 2008 9:17:15 AM
Barron's cover is quite hopeful...lead story says Dow is close to a bottom, the other front page headlines are "25 Terrific Stocks to BUY NOW", "Opportunities in Europe" and "Asia Looks Cheap." Not what you want to see if you are hoping for a good bottom soon.
Where is the bear on the cover? Still has a bull, though he is crying.
Posted by: Steve Barry | Oct 11, 2008 9:23:21 AM
Anybody have any thoughts on the gold miners? Seems like this would be a great environment for them, decreasing input costs while the price of gold holds it own, but they all seem to have been thrown out with the bathwater.
Posted by: spoonman | Oct 11, 2008 9:25:11 AM
My comments from last week's similar-looking chart apply again:
"re:
http://bigpicture.typepad.com/comments/2008/10/whackage-worst.html
What that chart is telling us is that prices of everything are falling, and the dollar is becoming more valuable. This is DEFLATION, and we haven't seen this beast since the Great Depression.
None of the usual rules of thumb apply. Deflation is self-accelerating, in that everyone holding any kind of liquid account has powerful, eminently rational incentives to turn those account balances into tangible $100 bills. The only stock to be buying now is in companies that make home safes."
You can read more at:
http://stevemdfp.blogspot.com/index.html
Posted by: Steve from Maryland | Oct 11, 2008 9:30:49 AM
They left my investment off the chart...QID up 30% for the week.
Spoonman: You would have thought that gold rising from 400 to 900 would be a great environment for miners...yet NEM from 2004-now went from 50 to 30. I can't even explain that.
Posted by: Steve Barry | Oct 11, 2008 9:31:33 AM
Impressive numbers. We still haven't reached capitulation though. Incredible volatility, and amazing velocity could add up to a day of freefall of unparalleled proportions.
Perhaps on Monday. Whipsaw action appears to be nothing more than shorts playing the market.
I smell 6000s on the Dow.
And, Real Estate deflating to at least half of its' peak, when all is said and done. Affluent areas, such as the Westside of Los Angeles are DITW (Dead in the Water).
http://www.westsideremeltdown.blogspot.com
Posted by: latesummer2009 | Oct 11, 2008 9:42:14 AM
What's really staggering are the foreign indexes. Imagine if Pakistan allowed share prices to decline. Imagine if Russia was actually open all day. Imagine if Iceland was open at all!
Posted by: Don | Oct 11, 2008 10:07:31 AM
On Fox just now, with Cavuto egging him on, Mike Huckabee has all but blamed the market dropping on suspicious trading patterns by "financial terrorists."
This gentlemen is certifiably nuts. He is a very, very scary man. I pray nobody takes him seriously. Barry, pelase do a piece on this.
Posted by: Steve Barry | Oct 11, 2008 10:08:49 AM
Spoonman, I'm hearing redemtions... I got a kick out of one of the guys on fast money last night who said that the sell-off in gold was an indication of how positive this weekend's meetings of the G-7...or is it "8" now? On that note some are talking G-20 should be next. As if more means you can get more accomplished...lol
Posted by: JustinTheSkeptic | Oct 11, 2008 10:33:51 AM
Today's NYT has a story about the dangers of going to cash -- no, not the long green. They mean selling your stock mutual funds and putting the money in a FDIC-insured bank. Don't lock in your losses, the Old Grey Lady warns. Don't self-medicate with the poisonous snake oil of 'market timing.' Stay the course; buy and hold and prosper.
Combined with the Barron's idiocies cited by Steve Barry above, the untimely media cheerleading can mean only one thing: CRASH MONDAY!
Posted by: Jim Haygood | Oct 11, 2008 10:34:06 AM
steve from Maryland, go read up on the depression of 1873, because that is more akin to what we are wittnessing now.
Posted by: JustinTheSkeptic | Oct 11, 2008 10:36:24 AM
steve from Maryland, go read up on the depression of 1873, because that is more akin to what we are wittnessing now.
Posted by: JustinTheSkeptic | Oct 11, 2008 10:36:24 AM
Bingo!~ We Have a Winner.
nice call JTS!~
now, if we can only repeal the Organic Act of 1871, we might start getting somewhere...
Posted by: Mark E Hoffer | Oct 11, 2008 10:49:23 AM
IMF Prediction of another 20 percent correction, could mean Down 6800. Lots of panic in the markets. Bearish sentiment at all time highs.
I think we see a rally very similiar to the rise we had after 911 in the markets. A correction is due, G7 will make the changes needed to calm the markets.
Rally until end of the year, 10600 give or take 500 then a test of the lows and perhaps 6800 in 2009.
Posted by: Jim | Oct 11, 2008 10:50:25 AM
Funny, Cramer says Monday's are usually the worst for the markets and may be black Monday. If that is not a buy sign I dont know what is. However something is still wrong, we should have collapased on Friday and didnt. Plus it is earnings week.
PUTs on DXD, Financial, Oil (All have paid 100% so far)
Call Gold and FCX.
Posted by: Robert Muncy | Oct 11, 2008 10:56:45 AM
Would not be surprised to see the market shoot up 800, or completely implode on Monday. (Which is why I am all cash right now.)
Posted by: Lionel | Oct 11, 2008 11:03:59 AM
It's not that bad. There are still markets up 40% for the month ;)
http://www.nypost.com/seven/10102008/news/worldnews/baghdad_goes_boom___in_stox_132978.htm
Looks like after war boom.
And no, this is not a recommendation...
Posted by: AG | Oct 11, 2008 11:19:43 AM
Steve Barry @ 9:23:21 AM
Also in Barron’s: the S&P100 put/call ratio is at the amazingly low level of just 82/100.
I guess most money managers are expecting a “V-shaped” bottom like we saw in 1998. (Not going to happen).
Posted by: D.L. | Oct 11, 2008 11:26:03 AM
Worst week ever and the Dow is still overvalued if you go by Robert Shiller's methodology. This crash sucks. But then again, the market did not tank entirely in 1929, the bear market of 1930-32 was what really pounded investors. I do realize most of you guys and gals are traders and not investors so I agree there are plenty of tradeable profit opportunities in the suckers' rallies ahead.
By the way, BR, kudos on being on Clyde Prestowitz's blogroll.
Posted by: CNBC Sucks | Oct 11, 2008 11:38:31 AM
I was up for the week and am well up for the year. Have mainly been buying puts.
However, I am thinking that maybe GM could make a long-term buy-and-hold. Too big and too iconic to be allowed to fail, and a merger with Chrysler makes sense.
Posted by: Bob Morris | Oct 11, 2008 11:42:17 AM
Here's my fundamental anlysis for the market...this John Hussman piece gives a list of price/sales at previous market tops and bottoms. Given the worst crisis since the Depression (with some chance greater than zero that it will exceed the Depression), it is not unreasonable to assume the S&P will trough at .7 times sales or less. Currently, the S&P tades at .91 times sales according to Financial Sense. So it has to drop 23% just to hit .7 times. Note that this projection assumes no loss in sales for the S&P500, which I think is ludicrously optimistic. So BEST CASE SCENARIO is the S&P bottoms at 700. If sales drops 5%, the bottom is 657...if we go to .6 times sales on that basis, not unreasonable, the bottom is 563. A true worst case would be 10% decrease in sales (a depression) with .5 times multiple, or 445.
Posted by: Steve Barry | Oct 11, 2008 11:54:51 AM
BP yielding 7.5%?? Looks like raw materials prices will be dropping (oil, metals, wood etc) since demand will be dropping. Where were the smart investors putting their money from 1930-1945?
Posted by: lurker | Oct 11, 2008 12:05:00 PM
I think a lot of people would be well served right now to stop trying to make money and spend time making friends and renewing family connections. Those with need to share the wealth, and those without need a lot of help right now...
If we would remember that wealth only creates more wealth by investing in the future, we would stop trying to store it in bigger piles and start spreading it around.
Posted by: donna | Oct 11, 2008 12:06:58 PM
Phil Gramm was right, I haven't seen so much whining...
Posted by: VennData | Oct 11, 2008 12:16:42 PM
Steve Barry @ 11:54:51 AM
“…BEST CASE SCENARIO is the S&P bottoms at 700. If sales drops 5%, the bottom is 657...”
SPX @700 for next year appears to be entirely reasonable.
Although I own QQQQ put options, I am afraid to initiate a long QID position at this point. I’m betting that a good opportunity to buy QID will come in January or February.
Posted by: D.L. | Oct 11, 2008 12:44:46 PM
