I think 11,250 is being optimistic.
More like 10,750. That’s probably too rosey too…but I see a big blood bath around April.
-Mike
I remember trading during the tech crash,around the time the nasdaq was like 1200-1300…The day I’m talking about the nasdaq was down 100 points…Everyone was doom and gloom and my buddy said “12 more days like today there won’t be a nasdaq to trade”…Just made me laugh thinking about it…You can bet the fixed income crowd (along with anyone else who owns stocks)is going home crying this weekend…Closed end funds,SIV’s,equities,funds,bond funds got killed this week…Even my non-volatile list got hit…The baby is being thrown out with the bath water…Patience,more blood to come…VIX is ready for a bounce…Let’s see what happens…Dow predicition 9350 official bottom sometime in 2010…(my prediction was a joke)…
Interesting…
I’ll be the first to admit that I may be short-sighted on this one.
If you consider the curvature of a bell, with the period 2003 to 2006 being the upside, your 2010 (joke) might not be that far-fetched.
Sucks…but there ain’t no quick fixes.
Thanks for the input.
-Mike
What every investor needs to be thinking about is…What is your outlook for the upcoming year FOR BUSINESS. If you think we’re headed for a recession you have to be very careful about WHAT your buying.
You all know what I think is coming, so I won’t bore you with it. But I do have some stocks that are in the process of turning around that have not gotten killed in the last month. These are DOGS right now, and they’ll be DOGS for probably a few years. But…these stocks are actually very decent when all hell is breaking loose. No one is watching them, no one expects anything from them, the economy is NOT going to help their cause. They’re cyclical. When the economy does recover, they will rocket back just as they have in every recession this country has ever had.
I’m not losing a lot of sleep at night watching these stocks just lay there.
There is so much bad news priced into them that economic news just doesn’t move them. The fact is both GM and Ford are actually breaking sales records in other parts of the world. If our economy gets hit hard having something going on OUTSIDE the USA is not a bad backup plan.
they will rocket back just as they have in every recession this country has ever had
This situation imvho is going to take a very long time to burn off…There is alot of fat to be trimmed still …Take a look at this 2 family selling near my area…$815,000 and you are lucky if the annual rent roll is 4k a month (using the basement as an illegal apartment…
http://www.mlsli.com/uniDetails.CFM?MLNum=2035871&typeprop=1&start=1&rpp=100
These people will take years before they realize their property is really worth less than half the current asking price…Right now there is zero reason to buy %95 of the properties in the larger cities and surrounding counties…We need to bleed the excess and I think the stock market will get many false breakouts and many will feel this is my opp to get in…But catching a falling knife can be very painful…In RE and equities…Nothing worse than a choppy sideways/declining market…Will eat up investors all day long…Be careful approaching rough seas in this country,not just financial and real estate markets…
Look back at the dot-com era / post 2000s. Didn’t the DJIA drop from 11,000 to 7,000? That is a significant drop. People were whining & crying like crazy IN THE MEDIA. That scared Average Joe, who ran out in sold all of his stocks. But in the end, the market bounced back. And it’ll bounce back this time. Stocks are always overpriced anyway, usually with anticipation of future earnings built into its/their price, so I’m not suprised of the DJIA’s drop since everyone & their cousin (I’m speaking about the media) is crying again about a recession.
Negative news = fear = more demand to sell / less demand to buy = lower stock prices
My prediction:
Bottom = 12,000
LOL.
But in the end, that’s just a guess. It might be 1,200.
I know I’m starting to buy though!!!
RookieNYC,
I think you mis-understood me. I didn’t mean ALL stocks or even housing will rocket back. What I did mean was this…
We all know that as the economy slows, people pull in their spending. We’re already seeing it in the numbers. One of the first things people cut out are new car purchases. People FIX their cars during a recession instead of buying new. As the recession lingers it is actually creating a huge, future, pent-up demand for new cars. This pent up demand doesn’t show itself until the ecomony rebounds. Once that happens people literally can’t buy new cars fast enough. They’ve been driving a used car for an average of 10 years following a recession. (bought it new in 04 scheduled to replace in 08 but recession hits so they keep it 3 or 4 more years) Those are NADA stats. I was in the car business for over 20 years. My family even longer. I know what I’m talking about here.
The way to make money at this is to buy the stocks of car companies that have been KILLED. They have to show signs of turning it around, they have to have future product that people want to buy, and they have to build reliable vehicles. GM and Ford are at this point right now.
NONE of this has even shown up on the radar screens of the average fund managers. The numbers still stink. I know you do things COMPLETELY contrary to this method and you are making a very good living on Wall Street, that ALONE says volumes about your abilities, so I’m not arguing here. But this method has worked for me in the past so often that it’s undeniable. In fact it has worked everytime (just with car companies).
- Identify a struggling car maker or makers.
- They must have NEW management in place
- NEW models MUST be receiving GREAT reviews (malibu/fusion)
- Wait for recession to BURY the stock price
- BUY & HOLD until recession is over and people start buying cars.
Quick run down of Automakers stock prices during recession of 1991 and then after (1994/95)
Chrysler 1991 $9/share
Chrysler 1994 $60/share
Ford 1991 $15/share
Ford 1995 $50/share
GM 1991 $18/share
GM 1995 $55/share
AND THE GRAND DADDY of them ALL???
P O R S C H E 1991 $30/share
2007 $1800/share!!! (in euros)
2008 NUMBERS
GM TODAY $23/share
Ford TODAY $ 6/share
Taking avantage of these price over reactions can make you A LOT OF MONEY!!! I’ve done it. I’m not bragging, just giving you guy’s a little heads up here. At least WATCH them. That’s all I’m saying.
fdjake…
Great observations on the cycles of these automaker stocks.
I read one of Lynch’s books and he described it in similar fashion…how people forego the purchase of a new car and do patchwork in the interim…then…bam!..skies clear and it’s a mad dash.
Only thing that bothers me about Ford right now is not knowing who they owe…and how much. In the little that I’ve read, a major task that Mullally was first handed was obtaining funds outside of the market…much like what banks have had to do in recent months to shore up their huge losses.
To the extent that these creditors are first in line…how does this play into the timeline where recession is over…skies have cleared…but who gets paid first? The timeline for getting one’s money back.
Do you have any thoughts on this?
Thanks.
-Mike
Great point Mike,
Ford had to borrow heavily inorder to finance their turnaround. They basically mortgaged everything.
Here’s how I see things playing out…
First off if your worried about Ford going out of business and losing your investment then buy the warrants that Ford is selling. These can be converted to stock at a later date but the holders of the warrants are the FIRST to get paid should Ford go bankrupt.
Second… (why I don’t think bankruptcy is in Ford’s future)
In 2009 we’ll have a new president. Which one of these guy’s (regardless of party) do you think is going to let an American Icon like Ford go under on his watch??? Car companies live and die on financing. Twice in this country, CHRYSLER was in such bad financial shape that NO BANK would make loans to them. They WERE DONE!! When it became apparent that the U.S. was going to lose one of the big 3, Uncle Sam stepped in and GUARANTEED (co-signed) for those loans. As soon as the banks knew they weren’t going to lose by loaning Chrysler money THE FLOOD GATES OPENED!! We all know how that story ends. Iaccoca brings Chrysler roaring back with the Minivan. Stock goes up 20 times in value. NO way in hell is the U.S. goverment going to let FORD, our NUMBER 2 automaker go out of business after saving CHRYSLER TWICE!!! Cripes, I think Michigan would leave the U.S. and become part of Canada if that happened.
Ford has it a little easier than Chrysler did IHMO. Ford is now finishing up the sale of Jaguar and Land Rover to Tata Motors (India) for and estimated $2 Billion. Add that to the $1 billion they got for Aston Martin. Now for the surprise…Ford will put VOLVO on the block this summer. Volvo, Jaguar & Land Rover have not made A SINGLE PENNY PROFIT for Ford in the entire time they have owned them. It’s estimated that VOLVO will bring in $6 Billion to Ford. Ford is saying they aren’t going to sell Volvo, but my family has some VERY close ties at Ford and it IS going to be sold.
That will mean Ford has raised about $9 billion in 2 years AND they got rid of the biggest LOSERS in their stable.
But the best part is yet to come…
For years Ford chased SALES NUMBERS… They sold cars to rental companies for next to nothing just to keep their numbers ahead of the competition. THEY LOST MONEY DOING THIS. It has completely stopped now. Mullaly has said numerous times that Ford will shrink to meet demand. THAT statement is revolutionary!! What Ford is planning is simple. The WILL make a profit SELLING FEWER cars!! It amazes me it took this long for Detroit to figure this out. I could care less how many cars Ford sells a year. P O R S C H E is THE most profitable car company in the WORLD and they sell a 300 times fewer cars than Ford. (but make more money than ANY car company on earth)
Next Google…2008 Ford Mondeo, check out the EUROPEAN version of the FOCUS, Take a look at the Ford europe’s S MAXX. EVERY single one of these cars IS A NUMBER 1 SELLER in europe. Let me put that in context. That means they out sell the Accord, the Camry, and EVERYTHING else in that market. Mullay’s plan is to bring these cars to the U.S. Subaru used the same strategy a few years ago. they built a car for Japan and Europe ONLY. It was a HUGE hit in these markets but the bean counters told them it wouldn’t sell in the U.S. Automotive journalists were screaming for this car in the U.S. (like they are now for Ford europe lineup) So Subaru takes a shot and brings the WRX to the U.S. It is STILL on back order 10 years later!!! They sell EVERYONE they can build for FULL MSRP+++!
THAT is how Ford turns into a profitable company. Selling cars people WANT! It ain’t rocket science folks.
Thanks for the add’l info on the warrants. I’d like to look into that.
About the unloading of the sales to Hertz and the like…yes, I read about that.
Looks like he’s doing an across the board house cleaning.
-Mike
I realize the banks are in trouble (a glorious buying opportunity) but what about all the mortgage companies who insured all these sub prime loans. What are some of the fundamentally sound companies that will be able to weather this storm?
I’m Canadian so… Citigroup and Citibank is in fact the same company, correct? They are the largest bank in the US? The stock looks ripe for the buying. An opinion if the stock has hit the bottom?
I’m betting on DOW 7,700 for the bottom. That would make sense for a significant recession. Let’s face it, the stock market and the real estate market hasn’t takes a REALLY big hit yet. Housing prices in most areas are down some, but not big and the stock market is only 15% or so off the recent HIGHS. BIG DEAL! The real drops haven’t occurred yet and I don’t yet know if they will occur now or if the FED and the government will throw in enough cheap money after this mess to stall it a little longer.
Mike
Are we making predictions? Put me down for 8,000 (is this a pool?)
So Mike amd I are close in predictions.
I don’t think it will go under 8,000, though. Those computer investors will have 8,000 as a floor and start buying when it hits 8,000. That should stop it from going lower.
Are we making predictions? Put me down for 8,000 (is this a pool?)
from 14,000 to 8,000 is a %40 drop…Thats pretty steep but anything can happen…What most need to know is that it often takes years for market corrections to play out…I remember when the nasdaq went from 5,000 to 3,500 and people were pouring money into the markets (thinking it was a bargain) only for the nasdaq to go to 1300…Cash is king for a long time to come…
What most need to know is that it often takes years for market corrections to play out..I remember when the nasdaq went from 5,000 to 3,500 and people were pouring money into the markets (thinking it was a bargain) only for the nasdaq to go to 1300...Cash is king for a long time to come..
Good advice…Thanks.
As my banker friend says:
Pigs squeal....Hogs get slaughtered.
-Mike
I can’t even venture a guess as to how low this market will go. I really don’t care. What I like to do is WAIT…
Let’s take home builders as an example. IMO these stocks aren’t even close to where they will eventually end up. NOT one of the major builders has done bankrupt… YET. One of them WILL go under, when that happens watch what the market does to this sector. IT’LL GET KILLED.
People will wash their hands of ANYTHING home building related. At that exact moment open your wallet!!! Make no mistake, this wash out is going to take awhile to run it’s coarse. PATIENCE however, will be GREATLY rewarded.
I’ve noticed a few guy’s here like Vader and Jbaldwin seem to think I’m too negative. That’s OK, they have every right to voice their opinions and in a lot of ways it’s good to be reminded to lighten it up a little. But the thing I find funny about their observations is in reality I’m VERY optimistic about the coming opportunities we will ALL have as a result of this cycle.
It’s all about recognizing these patterns. I find that most people actually do the complete opposite of what they should do in these situations. The economy stinks…So they sell their stock in Ford, GM, Toll Brothers, Centex, ect. at the EXACT time they should be at LEAST preparing to BUY these very companies. I bring up the negatives…no doubt about it. But I think most here would agree, I have laid out my strategy for investing through this in great detail. PILES and PILES of money will be made because of this correction in the next 5 to 10 years. The people who see this for what it REALLY is (a great BLOW OUT SALE) will make enouigh money to literally change their lives.
Maybe it’s just me, but THAT is very good news!! The warnings will keep coming from me. I won’t take offense to any comments made by Vader, jbaldwin or anyione else. But on the other hand, if I see ANYTHING I think the users of this forum can benefit from good or bad, it’s going up on these boards!!
I’ll try not to ARGUE with people who don’t agree with my opinions. I’ll be the first to admit I NEVER get it all right. But I do have over 20+ years experience investing and I really enjoy seeing other people “GET IT.” What does that mean you ask???
Getting it…means you finally see the reality of a situation.
RookieNYC just posted something on this subject that IMMEDIATELY changed my opinion of him. (not that it was bad to begin with) but he recently mentioned that while in college he asked his business professor how many companies he had started and ran. The professors answer was NONE. He stated that a that VERY MOMENT his opinion of College went down the toilet.
THAT’S GETTING IT!!! He knew right then that what he was going to get there was just an overview. HE would have to do the REAL learning in the REAL world… And he obviously has :beer
Monday January 21st overseas markets down sharply.
Hold on tight…tomorrow is going to be bumpy day…
I understand the markets are closed in the US today. Here in Canada the TSX dropped like a ton of bricks today. I suspect tomorrows trading in the US is going to be a very ugly day for some. I think Buffet and other like minded value investors are going to be smiling for some time to come.
I think Buffet and other like minded value investors are going to be smiling for some time to come.
30 days from tomorrow I guarantee to read about what stocks Warren Buffet bought…He is definitely going to do some buying…
Be fearful when others are greedy and greedy when others are fearful…Warren Buffet…
You can bet the fear is in the streets…Futures are currently down %4-%5 right now…Tomorrow’s open will be interesting…Unless Bernake lowers interest rates before the open…I wouldn’t be surprised and if does it will be the trade of the year…I will be long as much as I can buy for the day…But I honestly dont think Bernake lowers tomorrow…It’s too close to the fed meeting at the end January…It will look like he is throwing a life raft to the market again…He has to lower .75 or more to do anything…Would be interesting if he does it pre-market tomorrow…The rally would be insane…Short covering squeeze like no other…
Ethanol plants need the corn to produce their biodiesel.
Low cost bulk freight carriers like BNI bring transport of products such as this at a ratio of 1 ton of freight moved 423 miles for every gallon of fuel consumed.
Bernake’s further lowering of Fed fund rate will excacerbate the already gloomy longer term inflation outlook.
A low cost provider such as this will benefit as suppliers move more and more to rail.
My prediction is Buffett will accumulate more of this rail line.
-Mike