Regarding the current long range downtrend of the stock market, I am one person who does not buy into Elliott Wave Theorists' apocalyptic views of the market. Their views and analysis of the markets may not make sense. Never, never.
One such Elliott Wave Theorists is Robert Prechter Jr. In his book: You Can Survive and Prosper in a Deflationary Depression (John Wiley & Sons, 2002), Prechter is telling us to forget about the Dow Jones Industrial Average returning to 11,000 (the Dow Jones Industrial Average has currently traded below 7500).
Prechter is telling us to try Depression-era levels of less than 1,000 and not to flock to bonds for safety: Municipalities will default and corporate bonds will be wracked by downgrades. Even the U.S. government's credit status may sink low enough to make Treasury bills shaky. By the time this whole thing is over, you'll be able to buy your favorite neighborhood mansion from the bank at 10 cents on the dollar. These are Robert Prechter's gloomy prophecies that you can buy into or you can as well ignore them like me.
What do you think?
Oh My God! The Dow is today touching an intraday low of $6,804.39. The bears are having their best days in the stock market.
I think a sub-1000 Dow may be overstated to sell books. But I also think it will be a good long while before we see the Dow above 11,000 again. I think that over the coming months we could easily see it slip close to 5000 or even slightly below and stay down there for a year or two or more. The reason I think this is that Detroit can't really be saved---not with any amount of bailout money---and we still have no housing bottom in sight. So many industries are tied to Detroit that if it goes down--and I think it will--the Dow will follow.
It's foolhardy to get too carried away with doom and gloom and disaster because the fact is, no one has ever seen this combination of circumstances before. So we really don't know--and I mean we REALLY don't know. But it seems to me that if anything has been consistent it is the fact that we have been consistently underestimating the severity of this crisis. I don't think it's only a crisis of confidence. No, we have serious underlying problems with our financial system, our housing market, and our industrial base, and none of those can be fixed quickly or easily.
I look for lots of volatility in the Dow and in the prices of goods and services. We are very close to a deflationary spiral right now. It's alarming, but what can you do? Ride it out.
I agree with you Prundy. Such remarks of a sub-1000 Dow may be overstated to sell books.
It is interesting how the markets work. 11 months ago, nobody was talking about it. Every company was posting better than expected economic results. All of a sudden, its doom, gloom and disaster.
In the past, Prechter has been doing very well in long range predictions of the markets. He believes the current downtrend started in year 2000 which is not good to the public as they get too carried away with doom, gloom and disaster. The people want to be told what they want to hear. Its all about perception.
Naturally, when the market gets this low, we are told to go into market and buy at a bargain. I disagree with this as I would rather do what the markets are doing rather than try to tell the markets what they should do.
Yes, I think buying now is only for the young and strong of heart. If you have precognitive abilities, this might be a great time to snap up shares of some alternative-energy company or some other vital element of whatever will come next, but who can guess what that might be? Still, if you COULD guess, you could find yourself in the same position as people who bought Microsoft when it was young and IBM was turning their nose up at Gates and Jobs. I think changes of that magnitude are in the air.
But I sure don't know what to buy! If I did, I guess I wouldn't be goofing off here! LOL!
Sure Pgrundy, perhaps if you had a precognitive ability on where the market will move next, you would share with us.
Perhaps the stock brokers, investment advisers and securities analysts can help us here with their precognitive and prognostic abilities. But wait a minute. Their precognitive and prognostic abilities seem to be worthless. It’s difficult to impossible to talk to people in companies and look at balance sheets and make decisions about where a stock is going.
A company and its stock are two very different things. Most stock brokers, investment advisers and money managers are either oblivious and always bullish or immoral, merely giving the people what they want. It’s only a question of, is it this group of stocks or that exchange traded fund, this sector or that sector, and is it Asian, European or U.S. stocks?
I just read an article that a HubPages member sent to me that was written by a young guy who no longer works in investments and stocks, and he says the same thing you say here. His feeling was that most brokers were kind of detached from any reality at all beyond their own commissions. I know reputable brokers, they aren't all bad, but if you look at the mess we are in now it's clear that there's a lot of incompetence and recklessness.
Well, I'm done with stocks in any case. I'm going to wait and see how long it takes to put out this fire, and then try to figure out which way the wind is blowing from there.
I agree with most of pgrundy's remarks. My psychic cap says: low 6000, and we will bounce between 6 & 9 for a long time, perhaps a decade. I'm worried about the deficit and inflation after we muddle through. TIPS and gold are the ticket.
Hey cool! You have a psychic cap!
I think you should apply for a job on Obama's team with one of those kinds of caps on hand--it couldn't hurt!
Seriously, I think you are right. It will be a long low, with a scary inflationary period after and a huge national debt. But anything could happen. I'd say in general all bets are off at this point.
I was kind of joking about being done with stocks. I have no money for stocks. I'm lucky to be able to buy groceries and heat this place.
I'm moving into a house with 950 square feet, a wood-lot and a well.
I'm from Malaysia and we can already feel the "heat" from this global recession. Our central bank predicts that it's going to hit us hard in early 2009. I've lost quite a large amount of money in the stock market over the last few months (enough to last me for 6 months without pay). But from the looks of it, things will become worse...slowly. Better save up all the money now.
It looks like it's going to be bad, but it's hard to know how to prepare for something so hugely bad. Do you save money? Where? In a bank? Will money continue to hold value? If there is deflationary pressure, then I guess it will, but is the bank safe?
At some point, it just starts to make you nuts thinking about it.
Friends the market today is in a good condition and can show a nice position.
Monday, December 8th, 2008: Today's opening prices in the US stock market marked the end of the current stock market downtrend, at least for the shorter term of two to three months.
What do you think?
A slight upward blip based on the fact that Mr Obama promised to print yet another $1 trillion.
Short lived and will soon be wiped out when the true size of Citigroup's Toxic debts become public knowledge.
The stock market doesn't know whether to poop or go blind. Its ups and downs mean nothing--Well, almost nothing. The extreme volatility means we are so screwed. At some point we won't be able to print any more money and by then we'll be bumping along the bottom for a good long time. Japan was down 10 years when they had similar circumstances but this is more complicated and more severe. The worst part is just beginning--lots more job losses to come, TARP isn't working so well, and Detroit can be bailed out from here to doomsday but if no one is buying cars how does that help? At some point they have to sell a car, not just make one.
Interesting question. Nobody knows where the market will be tomorrow, next month or next year. 5-10 years from now, odds are it will be higher. How much higher, your guess is as good as mine, i.e., not very good.
US market does not rise in seven years. It is just 500 points or 6 % higher than the market after 9/11 !
Indian market is three and half times from that day though it slips from 21000 in January to 9200.
I do not see Indian market to be lowered any more. it is stable here since two months. Government is not yet announced any bail out package.
You may read my latest hub on the topic.
The Indian government just announced a $4 billion "stimulus package."
http://www.bloomberg.com/apps/news?pid= … refer=home
Not that you need it.......
I think you were wrong - the Bombay BSE Sensex is now down to about 8,500.
Speculators are just cannon fodder for the Wealthy, pay your many take your chances, there is a sucker born every minute. How did the common man get sucked into this thing called the stock market? What business do you have in there? There isn't enough equity for sell on there to amount to a hill of beans. Stock values are nothing but an Opinion. Only the Opinion of those who own enough shares to truly control the value of the market. The great con is in believing whatever news of the day that causes all the little speculators to run actually affects the market. Do the Math yourself; all the money in 401k's and IRA's cannot possible have any great statistical effect. Only large institutional investments can affect the percentage. Therefore, listening to the news and saying whatever report that has whatever bearing is a waste of time. Don't believe me I encourage each and everyone to do the math. It comes down to about 100 players decide for the whole world. That said, there are some sound strategies that can be used to preserve your wealth there, but you have to understand the underlying principles, and most people don’t take the time to do their homework.
Amen to that TMG
That said, I fully expect a Xmas/New Year rally (or rather dead cat bounce ) before markets start crashing further. Bounce into the area of 10-11K in Dow, 1100 in S&P, and 1900-2000 in NASDAQ composite.
Don't take my word for it, though - we all know surprises on the downside are likely in bear market
I don't play those games anymore anyway, but sometimes it is interesting to watch...
Ralph, I am ready to bet it will not be higher in 5-10 years, providing it will exist at all in a form comparable to nowadays
Right. Who in their right mind would invest in American industry now? I got my 401K pamphlet from my new job, and almost all the mutual funds show first year losses of between 28 and 51%--and and that's looking at the bright side. I'm putting my money under my mattress! lol!
Hard to know where to jump at the moment. No doubt in my mind at least that it is going to get a lot worse, and possibly fail altogether. Not sure I agree with Misha's total failure assessment, but there is no getting away from the fact that the governments are getting into the banking business and the only losers are the little people......
You may be right. We are in a deep hole, and we're still digging!
Come on Mark, normal minor correction after breakout on minor technical resistance level. Short term trend is up
Ummm, why not? If it goes above Monday high on Dow/today's high on Nasdaq, it will rally into the Xmas and possibly new year - this is the most probable path, even taking bear market into consideration
Where are you predicting for end of trading 19th December?
I will bet you 1,000 words of original text against 50 PR3 backlinks........
LOL I won't tell you the exact number Mark, I am not a guru
I made my forecast earlier in this thread, and this is as exact as I can get - providing it manages above this week high
It is not going to tank properly until Citi's toxic debts come out. I am going with $2 trillion. Next step will be Ukraine going properly broke. Followed by Romania, Bulgaria, Pakistan and India. This will cause the Euro-zone banks to be in the same position as Wall Street, because they are heavily exposed. I understand Switzerland is exposed by 50% GDP, and Austria 85%.....
Ecuador already defaulted on its government issued bonds. Looking forward to Dec 15th.
Gonna buy myself a farm
And on that farm.......
How is the new Ad supplier working out?
You mean instead of Adsense? I am not really replacing Adsense, I am leaving this infrastructure intact for now, and mostly working on different models like buying traffic and relaying it to ebay and such. Adsense still cranks out some money, in fact more than half of my total current internet income, and I don't have any plans to abolish it - I am amending and diversifying
I actually got some traffic pickup and sales on handbags stuff recently, so it might be not a lost case.
So you meant Yieldbuild! Well, it did not make wonders on my main site - but it definitely did not make things worse. When I look at eCPM, I see it now at pretty much the same level as when I started with yieldbuild, with the bottom being somewhere in between - so currently trend is up, albeit it is hardly identifiable
I got a huge effect however on my Russian site, mainly because of ad placement optimization. I am talking the order of 10 here, so it was definitely worth it
LOL you don't need a Russian site for that, just any site where you have more than 3 options for adsense placement
As for real estate - let's bring this offline, I don't think this is the proper place to discuss it
LOL It was just a poor attempt to promote yet another condescending hub
600, 300 something like that. That was somewhere around '68 or '69, the winter of the Hong Flu which I had.
Wow. I confess I've lost all sense of what any of this business with the DOW means, if anything. If it hits 300 though, there goes lots of folks' retirement plans.
I had the flu one year. I thought I was going to die. I didn't know people died of the flu until that happened. Scary.
the Obama budget will send the DOW to the 1000 point level -- inflation!!!!
add to that OPEC is going to keep cutting the output of oil until they achieve at least 55 dollars a barrel.
There is no safe place to put money because of inflation. Gold will eventually begin to slide because no one has cash that is worth anything.
As the old timers said during the great depression - buy land because they aren't making any more of it - but today pay in cash not credit. TAXES - big taxes are coming.
"The influenza pandemic of 1918-1919 killed more people than the Great War, known today as World War I (WWI), at somewhere between 20 and 40 million people."
Anyone buying stocks still? IMHO, it isn't worth bottom fishing in this market. It just keeps going down and down and --- well down!! And you still have folks out there advising people that this is the best time to buy stocks. Well - yeah - rite. Am just gonna sit back and wait - in no hurry at all to buy!!
In 1989 the DOW was at 775. I think the market could definitely fall A LOT more.
The other day Warren Buffett said he feels like a mosquito in a nudist camp. I assume that means he's optimistic about the value of some stocks at least. But you could well be right. My former Merrill Lynch broker has been telling me that the trend is still down and that I should not try to call the bottom bur rather to wait until an upward trend is established. I only wish I had some cash so that I could follow his advice.
Here's an interesting conversation with James Glassman who several years ago predicted the Dow would hit 36,000.
http://www.washingtonpost.com/wp-dyn/co … 02993.html
I think the stock markets moves in YoYo - YoYo.
I also think this Merrill Lynch broker should tell you the time frame of his downtrend, otherwise the moment you work with several time frames there will be some problems.
The Dow to hit 36,000? Yes, but not in the next ten years. But one thing that is almost certain is that the Dow will not hit zero.
That is an interesting interview, especially the part where he says that he'd get less flack if they'd named the book, "A Treatise on the Declining Equity Risk Premium." I haven't read the DOW 36,000 book, but it's interesting that he wrote it in 1999, just as the last of the regulatory structures put in place during the Depression (to control and isolate investment banks and speculators) were being kicked out and the whole financial industry starting mainlining leverage steroids.
In 1999, banks, investment firms, and insurance companies were finally able to jump into one bed again, and lots of people who worked in that industry were bullish to delusional degrees. But in the interview he denies that that frenzied optimism had anything to do with his own 36,000 prediction--even though he was a Merrill Lynch stock broker.
I don't know, without actually reading the book, I gotta say that sounds weak to me.
I do wish I could buy some GE stock though. $7? Get outta town!
The only place I feel safe right now is gold. I have money in physical gold, a gold mining stock fund, and just put some money into an energy fund because it looks like the oil prices will rise again. I also buy into China and India a bit each month, basically just so I watch them and will see when they start an upward trend so I can start buying more.
Aside from some of the mining stocks I have nothing in US dollars because I see a lot of imaginary dollars being printed.
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