Don't rely on chartism in these markets - you will likely get badly burnt. People are not behaving rationally and so charts are unlikely to work. There are over U$50tn in derivatives out there and these are unregulated and noone knows how these will play out. Most stocks are hugely oversold, they were also hugely oversold a few weeks ago. Go figure. Buy for dividend yield - a 10% yield today is likely to be 12% in a few weeks.
Andrew

 

Sorry but I recently went to finance an investment property with plenty down and strong credit...yes they approved the loan....at 8%...no thank you.

You have a vested interest in denying reality which is that right now banks are hoarding money.

Back to the market: What do you guys thing about buying say an index fund next week for 10K and holding long?

 

I will be EVENTUALLY moving back into an index fund, just not right now. I feel it will be a "safer" bet than individual co's. Of course, we are talking LONG TERM here. Glad this week is over! Good luck!

 

It's great time to spend money if you have it. I buy little things for my hobby since a grand spend today is insignificant compare to $20k lost in a day in the market

As long as you can weather things out, don't worry about your asset. Things will drive back up! Just look at dot bomb and 9/11. Both were hard hit on economy and less dramatic than the financial crisis. I think most people are over reacting in the market amplified by panic and fear.

Kudos to those with cash stashed up. I recently bought some stocks and have loss plenty. However, I'd recommend everyone keep their eyes out for bargain investments out there.

 

I totally disagree. Technicals are the ONLY thing working in this market. Following P&F, as I understand it, would have gotten you to cash in August, when the SPX relative strength index reversed down from over 70% bullish. You would still be in cash now, waiting for a bullish reversal since the most oversold conditions, using this methodology, since 1929. When the reversal occurs, review the individual sector bullish % charts to determine what sectors to begin allocating to. My guess is that Consumer Staples, Health Care and (conservative) Consumer Discretionary - like MCD will be the winning allocations for the next few years as Energy, Materials and a lot of the Industrials will be in the **** house until there is a sniff of global economic recovery. I think this recession could be long and nasty - perfect conditions for strong performance of long terms secular growth sector - which are trading at 10+ year low P/E multiples. I guessing there is a good chance we could see 3 - 5 years of 10% - 12% EPS growth and a 50% P/E multiple expansion. This would P/E multiples of companies, like JNJ for example, back to the 10 year average P/E. As the cyclicals will more than likely not be an option for quite some time, and the financials, now fully de-leveraged and like to stay that way, perhaps by Gov. regulation to some degree, their EPS growth should be less than 1/2 of the trailing decades results. IF the secular growth stocks ARE the only game in town for some time, the next 3-5 years could be quite rewarding in those sectors. I think the ONLY way to determine the when to initiate entering positions will be using the SPX Bullish % strategy. Get in too soon and fingers will be sliced off trying to catch the falling knife. Waiting until it 'feels good' will have left a ton on the table. A significant % of markets returns from similar poundings, historically, are early on in the recovery. This, of course, is just my personal opinion, and in no way is to be construed as any form of investment advice. GOOD LUCK!

At today's close, 2.0% of stocks listed on the NYSE in a bullish pattern! OUCH! Makes the 2000-2003 bear look like a picnic.

 

Hey Zip,
Be sure to throw a post in here when you think it's turning.

 

Tell me more about your scenario

 

This is different than the dot.com and 9/11. This is a worldwide financial problem that we are facing. Since banks are not trusting their customers and other banks; it will trigger down to other industries also. I wouldn't dive right back in because it will take a loooonng time to recover. Dont let the little spikes wheel you back in too soon.

 

From what I'm seeing, the commercial/ investment lending is seeing an increase in the terms/conditions, while the consumer lending is still very favorable on terms and lending...

RIght now is a great time to make a killing in the market if you have the cash and are savey enough to work the trends. But It's also kind of hard to follow some of the rollercoastering...

I think the market is going to have to "find" itself and bottom out where it will. We're probably there right now, but my guess is we won't be seeing any strong "bounce" out of it for a while...

I also agree it's world-wide now, and it really will require a global convergance on this problem to insure the world-wide market can recover from the last 30 days...

Changes, they're a-comin'...

Mike

 

It was one of the Condo/hotel units at the Hilton in Branson Mo.

180K unit I was putting 40K down plus closing.

 

Hey Zippy,

We're living in truly interesting times. The financials have not fully deleveraged. They peaked last year at over 30 to 1 leverage after they abandoned the Basel Accord rules and convinced the SEC starting in 2004 that they could manage risk themselves. They thought that they could hide risk through SIVs and manage risk through CDSs and other derivatives. Many financials are still running at 25 to 1 leverage at this point.

The cyclicals (Oils, Ags, Base Metal miners) are the few companies that are flush with cash right now and have the best balance sheets. They produce the things that the world needs.

The market will bottom when the credit market start to function again. This is a different cycle in the fact that it is a credit bubble and not a stock market bubble.

Just my two cents.

 

Totally agree. I have been thinking about my comment on leverage, and that I implied the de-leveraging has been completed, when in fact it has only just begun. It took 10 years to get levered to this degree, it will take a meaningful amount of time to unwind it.

True, they are flush with cash and many will have excellent balance sheets. With MANY high quality O&G Producers trading at < 1x cash flow, a LARGE bounce is due. After that short term phenomenon, capital will be looking out over the next 2-3 years for risk / return. The risk side of the equation points to limited or declining revenues for cyclicals - Economic Downturn 101. Sure we need the stuff, but the pricing of markets occurs at the margin. Odds are, there will be a lighter demand for "STUFF" over the next couple of years until we can see to the other side of the economic precipice we have only just entered into.

On the other hand, consumer staples stocks; KO, PEP, GIS, K, PG, CL etc, have highly predictable revenue streams, and are current trading at 10+ year low P/E's. Most have good dividends too.

I agree it's a credit bubble. It has also been a commodity bubble. Check out a 30 year chart of the CRB index. Another 50% drop gets us to the TOP of the 20 years ending in 2003. I know the whole China story, and I believe in it - LONG TERM - for the next few years, I don't think they will be in the market buying anywhere near the quantity of commodities that had been predicted - their customers, the developed countries, are reining in spending and hoping to keep their job and home. It's a big nasty circle. Each being dependent on the other for it all to work. Until expansion begins again, there are few stocks to own. True. That's why selecting the right sectors is so important. There's a long list of Staples and Health-care stocks that are down < 10% YOY where as the SPX is down > 42%.

Good Luck Guys.

 

It's refreshing to see well thought out investment rationale to back up your views. I agree on your views on the staples and the healthcare names. I disagree on your commodity bubble comment. I believe that it is a correction in a long bull phase. Everyone is too focused on the demand side and not enough on the supply side. With the large commodity producing companies having exercised so much production discipline through this cycle and the credit crunch/drop in prices shutting in production quickly, supply issues will be exacerbated in the future imo.

With regards to the more macro stuff, I don't think anyone knows what is going to happen due to the fact that the world has never been through something like this. I think that the greatest threat right now is that with all of the interventions happening around the world that there will be many unintended consequences. Like when Ireland guaranteed all of their bank deposits on an unlimited basis and capital from all across europe started to flow to ireland.

 

Bottom line guys, can you give 2 or 3 good stock picks for us that are looking for some value buys this week? I am just looking to drop around 1-2K per stock.

I promise not to blame you if you are wrong and will praise you if right.

PM me if you prefer, thanks.

 

Man wanted to buy before today but didn't get the chance....the market rebounded 11%, but was it a fools rally or the start of a recovery trend?