Stock Market

[jyl]

Couldn't find the orig thread on recent stock market slide.

FWIW, started buying stocks yesterday and continuing today.

[Hugh R]

Good,

Maybe you'll pull my portfolio up by the bootstraps.

[jyl]

I wish I had that much $$$, Hugh.

Basically:
- I'm finding attractive valuations again, in the sectors I look at (consumer and tech)
- Don't think fundamental outlook changed in past 2 weeks
- Compare to May 06, then GDP was 5%+, companies were blowing out estimates, fundamentals were great, business inventories low, retail sales gro strong, forward earnings growth estimate was >15%, while now GDP is 2%, companies have been missing numbers, fundtls are weak, biz invtry high, retail sales is zero ex-inflation, fwd EPS gro 10% and falling - but none of this is new, we knew it all several months ago
- I expect GDP gro zero% in 1H07, have expected that for appx 1 yr, and think recession (GDP gro <0%) in 2007 is 50% chance
- I believe stock market is anticipatory and bottoms before economic fundtls bottom, so time to buy is when fundtls weak and getting worse
- Wild card is financial accident, e.g. big hedge fund or banks caught on wrong side of subprime, I don't have any way to predict that
- I'm still housing market bear, think many financially stressed families will lose their homes and many residential construction workers will lose their jobs, but what % of consumer spending did those households represent anyway, for rest of consumer I think the MEW spigot will be shut off but I think that's already largely happened. I still expect to lose $$$ on my house in the next 2-3 years.
- I also think employment rate will deteriorate, but consider that a lagging indicator
- Main thing I'm watching is inflation, right now don't think Fed in position to cut rates, not with core inflation >2% and unit labor cost +6%, so don't have that catalyst to look forward to in near-term - maybe by 2H07

Interested in other views and data points. Some of you watch this stuff a lot more closely than I do.

Caveat - only my personal opinion, which could change at any time, and I think for most individual investors trying to time the market is a bad idea.

[turbo6bar]

I agree with your first points.

I believe stock market is anticipatory and bottoms before economic fundtls bottom, so time to buy is when fundtls weak and getting worse

What bottom? I suppose you could argue there is no bottom in a soft landing.

I think it's too early to know the full economic effect of the sour housing market. A lot of new jobs and wealth were created in the last boom cycle. What happens to GDP growth and unemployment when we lose the housing boost?

I'd give up my bear costume if:
1) I saw declining consumer and government deficits, as opposed to seeing the lower Fed rates.
2) I saw the economy shift towards producing goods and services instead of trading trinkets/McMansions back and forth to each other.

It's easy for me to be bearish on the stock market, because I do better in real estate. Regardless, there's nothing wrong with diversification.

[KFC911]

I increased a few of my holdings last week the day after the 'crash'... which was a 'big nothing' after the gains over the past year. Just a minor correction and a buying opportunity...

[KFC911]

Originally posted by turbo6bar
..... Regardless, there's nothing wrong with diversification.

I wish I had your real estate expertise (and success ), but I tend to do better in the market (I'm split roughly 50/50, not counting my residence).

[tabs]

Mother handles all my finances...all I do is buy the spoons...This past weekend I figure that I got $6000 to $7000 in Spoons for $3700. We shall see.

[jyl]

Originally posted by turbo6bar
What bottom? I suppose you could argue there is no bottom in a soft landing.

I think it's too early to know the full economic effect of the sour housing market. A lot of new jobs and wealth were created in the last boom cycle. What happens to GDP growth and unemployment when we lose the housing boost?

I'd give up my bear costume if:
1) I saw declining consumer and government deficits, as opposed to seeing the lower Fed rates.
2) I saw the economy shift towards producing goods and services instead of trading trinkets/McMansions back and forth to each other.

It's easy for me to be bearish on the stock market, because I do better in real estate. Regardless, there's nothing wrong with diversification.

I agree, there is no way to know until its in the history books. Have to make guesses err estimates and then place bets.

[turbo6bar]

The betting part is what I don't like. I'll sit in treasuries until the slam dunk comes along. No on ever lost their shirt being safe.

[competentone]

Originally posted by turbo6bar
The betting part is what I don't like. I'll sit in treasuries until the slam dunk comes along. No [one] ever lost their shirt being safe.

....and no one ever made a fortune without taking risks!

Additionally, if the stock market is like "betting" to anyone, you are approaching the subject in a very wrong way.

[jyl]

I use "bet" because I think of the stock market as playing the probabilities. No one ever has complete information. So you assess - how likely is this scenario, and what is the likely result, how likely is that scenario, and what is the likely result. And then you scale your bet, sorry, investment to the degree of confidence.

[hytem]

Looks like the market is recovering nicely today.
But you have to wonder about that guy Greenspan, who seems like a Svengali to the market. Remember "irrational exuberance" and all those interest rate hikes just before the elections in the summer of 2000? Killed the market. Then the four rate drops in January 2001, as soon as Bush was inaugurated. Mmmm. 1% CDs.

But this time, he dug a dagger in W with that "recession in 2007"remark. That one spooked the market, and exacerbated the Shanghai reaction.

Who is the Fed Chairman, anyways? Somebody tell Greenspan.

[turbo6bar]

like I said before, I have a superb hedge called investment RE. If I didn't have RE for appreciation and income, I'd be one scared puppy. I think betting is the right term, except with investments you're making educated 'bets.' Issue for me is I know RE a heckuva lot better than equities.

Right now, I'm keeping expenses low, expanding my education, and taking things easy, because I believe all asset prices are elevated. Long RE, long cash, and neutral stock market lets me sleep at night and will never put me in the poor house. That's because my expenses are low and an growing skillset/education means I'll never be looking for a job. I know that isn't ideal for other folks.

[cantdrv55]

I caught a few minutes of CNBC while having breakfast this morning. Seems Ted Turner is making big moves in the solar power industry. Cost per watt is running at about $4 but will need to be down at around $1 to be competitive w/traditional power. Turner thinks solar is going to be the way to go and is making moves into lowering cost per watt somehow. He is investing lots in it.

The folks who are making the material that go into bullet proof vests for our troops are expanding their ceramics manufacturing that supports the solar industry.

[on2wheels52]

No money in the shoebox right now for bargain stocks, bought into two oil drilling ventures in February. Will know in six months or so how that plays out.
Jim

[competentone]

Originally posted by cantdrv55
I caught a few minutes of CNBC while having breakfast this morning. Seems Ted Turner is making big moves in the solar power industry. Cost per watt is running at about $4 but will need to be down at around $1 to be competitive w/traditional power. Turner thinks solar is going to be the way to go and is making moves into lowering cost per watt somehow. He is investing lots in it.

The folks who are making the material that go into bullet proof vests for our troops are expanding their ceramics manufacturing that supports the solar industry.

Maybe it will go as well as his investments in buffalo meat?

I expect that Turner is counting on the government subsidies/tax credits (and the likely "carbon-credits" crap that is going to be forced onto U.S. businesses) for a good return on his investments.

With the tax credits offered right now, it can make sense for some businesses to install solar power systems. There are potentials for investment and good returns on solar, but there will be a whole lot of "scammish" investment "opportunities" for the "sky-is-falling, let's-blame-the-witches, CO2-is-causing-global-warming" ignorant masses to lose their money in! I'm sure Turner will be right on top of things ready to make money; the public is "ripe" for harvesting.

[hytem]

The time when things are happening, you don't hear about them.

I think there's going to be a paradigm change soon--off oil and maybe coal as well. The switch will be towards wind and nuclear power, and batteries/hybrids for cars.

I suspect the board rooms of the big companies are busy now with meetings on how to make money on Global Warming--what changes will be needed, etc. We are too oil dependent--put simply. Partly because of trucks and SUVs being exempt from mpg rules, and partly due to media misinformation about nuclear energy (it is used safely in Europe).

The media needs to talk more about the energy issue, as well as health care costs, and less about Iraq and Hillary/Obama. They are part of the problem. Call it civic responsibility.

[Rich76_911s]

Originally posted by hytem

Who is the Fed Chairman, anyways? Somebody tell Greenspan.

If you don't want to hear what Greenspan has to say, your crazy. He's had access to information and more experience than almost anyone else on Wall Street. All he said is that there is a chance of recession. There is a chance of recession every year, this isn't a secret. And after a 6 year bull market he figures that the odds of a recession are 1 in 3.

Maybe his message is not a popular opinion, but take it and use it as information to make a better more informed decision. I for one put a heavy weighting on his opinion over a lot of the other yee-ha's on CNBC everyday.

It would be nice if Bernanke could distribute his opinion as openly. You have to know that regardless of his opinion he has to give a Bullish spin.