I flipped on the TV at about 5:10 (80 minutes before the open) saw what was going on and was ready for a crash--we may get one later today, who knows--I fired off an email to clients warning them of ugliness, I scrambled to figure out how many shares I would need to buy for a couple of different names (would only be buying one however) and then the panic never came or at least not yet.
The decline thus far today has been well within the tails for this bear market. I may yet do something today but after the threat faced earlier compared with how it is actually playing out there is a shortage of fear. I'm ready to go but I do not expect to buy anything without a real scare during the regular session. Right now there is relief.
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24 comments:
Roger, even acting defensively you are down well over 25% this yerar which is a lot better then the 40% average. What exactly are you buying with the cash you took out at this point or are you just sitting???
By "ready to go", I am assuming "ready to buy"...
Look for downdraft at close - 30 min.
I'm placing MOC orders on my "glad to own it at current price, especially 2 years from now" stocks.
R in NY
MOC might be a difficult tactic to execute. I'm not commenting on the notion of buying stock at the close that might be a good trade or a bad trade but in terms of markets functioning as you would expect MOC might be difficult versus manually entering orders. Just an opinion.
Tell me about it, Roger, it's not easy waking up to such AWESOME news. I've been in cash for about a year now, and I'm now beginning to think very, very long term. Have you seen the VIX? If you have a moment, check out, "An Unexpected Tale," amongst others at www.financialtales.com Thanks.
Roger,
I completely agree with your interpretation of the action this morning, but a few more relief days and I will be in a panic :)
MOC prices will be much higher than at the current levels (positive vibes).
My reaction at 5:10 was, oh shit.
My concern was wow, this will be a bad day for clients which I prefer not to have of course it is inevitable over the course of a bear market.
After my first reaction I wondered is it (SPX) going to have to go to 700 before it is over.
I don;t think it will but I am prepared to be wrong (again) about where the bottom is.
I don't really care about being wrong for the sake of right or wrong but I do have regard for the fear it instills in people.
Yeah yeah. we know everyone has been in cash since the highs last yr.
I very much want to buy things on my list today, will decide late afternoon, but am worried about people talking about Roubini. Lets say the market is forced to close for a couple of days next week. Has this ever happened and how do things look coming out of an event like that? jim
How low for EWY? I facetiously mentioned 10 to a friend, and it looks like it might get there.
As late as the 1960s the market was closed every Wed to catch up on the paper flow.
I believe it was closed for several days (so more than the customary 1 day closure for a deceased president) when Kennedy was assassinated.
Russia has taken the lead in market closing followed by Indonesia. I really doubt it will happen here, really doubt it. But hey, what the hell?
If we did close it would scare people, contribute to the fear and then end just like it will end (eventually) closure or not. Ending farther out than we would like probably.
Dear Roger, et. al,
Okay so my Bull Durham feel good
sweet spot year end rally may be
in jeopardy but I have to say there
are a lot of long term 5 year buys
here or coming.
The low of October 10, as you know
is holding but I wouldn't get
Warren Buffett long yet. Maybe if
the m/a 50 day at least come into
play.
I am actually seeing some ups in
the portfolio today diversified
but still well blended for the year. Some of the nutty prices
that may get nuttier are AA at 9.74
what does that mean no more alum
inum? And IR at 17.10 after high
of 52.21 I guess no more com
pressors forever. And finally
TEX at 12.90 down from 83.33 that
must mean mining and manufacturing
is done.
Above it all I was really impressed
by the ceo of DOW yesterday and
his commitment to the dividend.
That's another stock cut in half.
Ricky
I've probably thought it a thousand times (and said it not quite so much) over the past year but this market really does feel like getting your face pushed through oatmeal: You feel as if you can't hold your breath another minute but also can't help thinking the bottom of the bowl where all the yummy raisins are must be close.
I'm all set to go long another 10% any time this market wants to show a sign of real capitulation or even, gasp, a trend but in the meantime I'm exposed enough (choke); not unhappy with the long positions I established in the past couple weeks (even though I could buy roughly half of them cheaper now) but there is no where to go from here so, the devil with all that, it's a beautiful fall day and there's a big brown trout out there singing my song.
If everyone is in cash as some commentators have suggested and fund managers are at their max cash positions (an assumption), who is left to sell? Foreigners? What about the dollar?
We're down just over 40% from the October 07 high. How low can we go? Another 5-6% to the previous intraday low?
What can cause a big drop if there's few to sell???
Just curious.
Well I've made my decision early. I do not think the Oct 10 low can hold in this environment. It would be taken out late today or Monday, unless some big announcement is made. So I've got to unload my short term double long today, hold everything else I've bought in the past few weeks, and refrain from buying anything until after that event happens. no prob if im wrong. jim
All the clowns here claim they are in cash but I would bet the majority are heavily invested in retirement accounts. The people claiming 90% cash are likely talking about their 25k trading account and not the 500k portfolio that is now 275k.
Wasn't it great to wake up to all those guys at Bloomberg telling us we were in for a big crash! I have not deserted the market and have definitely suffered. I've held firm on the belief that the stocks I've chosen are good, extremely under-valued, with great balance sheets, debt-coverage and continued growth prospects. That said, I still have to bolster this knowledge with positive data to offset the overwhelming negativity.
I do believe we're heading for a global recession. But does this mean the end of the markets? Just to keep my emotions in check, as you've wisely advised, I reviewed global recessions. Yes, there have been some and yes, the world markets survived! I'm not an economist or historian so I can't critique the articles I've read, but the data shows that the US had a decline in gdp from 1990-1991. The market suffered but recovered, relatively rapidly. Worldwide, recessions have occured with markets also eventually recovering.
I keep track of % changes from peaks and year to date % changes in numerous markets around the world and the drops everywhere are significant, okay, body-slamming, stomache-churning horrible. But, apart from Iceland, it's hard to believe markets can drop much more than they already have, particularly with the velocity and weight of October's drop.
Anonymous 10:27
I must be one of the clowns you are talking about. My retirement is 40% invested in equities (including my 401(k). I was 20% a couple of days ago. Technically, the "cash" portion of my 401(k) is invested in a "stable value fund".
If you want to include my total networth (home equity, rainy day fund, retirement, etc etc) I'm only ~19% in equities.
So yes, some people have lightened up this year. Not bragging since I'm still feeling the pain as most people are. I am most fortunate that I was smart enough not to invest our "rainy day fund" of 1 year + living expenses in the market. It's safe (I hope) in CD's and savings account making on average 4.5% return.
I'd like to thank you once again
Roger, for all your guidance:-)
What helped me the most was your
advising us to have a plan AHEAD
of time...I did that, and I am
able to think clearly when needed!
Look out below!! Here comes the S&P 750. David Rosenberg from Merrill Lynch is probably right.
BWJR
Roger,
The following is an excerpt from Roubini's blog. He is calling for SP500-600 and appears to have some merit to it. What is your take?
Early Friday Morning Update: Yesterday Thursday I gave a speech in London (see video below) arguing that markets were in sheer panic and becoming literally dysfunctional and unhinged. I also made the point that policy makers may soon be forced to close financial markets as the panic selling accelerates.
Indeed, we have now reached a point where fundamentals and long term valuation considerations do not matter any more for financial markets. There is a free fall as most investors are rapidly deleveraging and we are on the verge of a a capitulation collapse. What matters now is only flows - rather than stocks and fundamentals - and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife. There are no buyers in these dysfunctional markets, only sellers and panic is the ugly state of this destabilizing game.
And while panic and destabilizing market dynamics is the driver of financial markets even economic fundamentals are awful as investors are finally realizing that a severe US and Eurozone and G7 and emerging markets and global recession is coming and will be deep and protracted. As I have argued for a while equity prices may have to fall another 30% based on fundamentals alone before they bottom out. Why so? In a severe two year US and global recession S&P 500 firms earnings per share (EPS) could realistically fall to $50 or $60. If P/E ratios fall to 12 this implies the S&P 500 index falling to a 600 to 720 range. If P/E ratios fall - as likely in a recession - to 10 then the S&P 500 index could fall as low as 500 to 600. So even based on fundamental factors alone there is another 30% or more downside risk to US equities; and now, on top of such fundamentals, thee is also an ugly and nasty panic-driven market dynamics at work.
I was accused yesterday of being alarmist arguing that policy makers may have to shut down financial markets. But today Friday Asian markets and in free fall and European markets are also in free fall. And US equties futures have fallen so much today before the US markets have opened that trading in the S&P futures index and the DJIA futures index has already been suspended in Europe as these indices reached their daily limits of a 5% drop. So it has taken only one day for my prediction that markets will be shut down to start to be realized. If - as possible -the free fall will continue today once US markets open then automatic circuit breakers on the S&P 500 may be triggered and trading may be stopped; and if - as likely - the capitulation panic continues today and in the next few days authorities may be forced - as I argued yesterday - to close down financial markets for a week or more in the next few days. We have reached the scary point where the dysfunctional behavior of financial markets has destructive effects on the financial system and - much worse - on the real economies. So it is time to think about more radical policy actions and government interventions of the type I discussed in my London talk yesterday.
obviously i hope he's wrong. beyond hope (does that make me a hoper? lol) i don't believe relying on PE ratio compression and expansion is the best way to find a top or a bottom. i don't think there is much predictive value there. interest rates in the early 80's were sky high when PEs went to single digits; a very different world.
Roger: Why are you fretting over a bottom, when a monthly chart clearly indicates by a simple straight edge on lower highs since Nov 07 that a true bottom is not due till next spring. Maybe even later. This will end like 1974, so study past
s&p charts and save you and your clients some anguish.
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