10/10/2008

Chart of the Day

This market is number one when it comes to the magnitude of ‘correction’ in the first year.

Today’s Chart of the Day:

 

Posted: 9:35 am

8 Comments »

  1. I know everybody and every expierence with the market states we should get a huge reflex rally. However I take the opposite position. The stock market has had a Wile E. Coyote moment. the last 10 years the market ran off the cliff but never looked down. Now it has been forced to and guess what- there is nothing there and it won’t stop till at realistic levels. The increase in earning has been by financial engineering – not real growth. Years ago anaylsts would talk about the quality of earning – now it’s all ok even if garbage. How much earning growth was by the decrease in the dollar. No one ever questioned that- it was all ok because it helped to pump up stocks. How much earning per share was increased by selling bonds and buying back over priced stock to reduce the float,to goose the earning per share. These things have not even been discussed, now it’s just the deleveraging, which was also a phoney source of growth. We have a long way to go.

    Comment by John — 10/10/2008 @ 9:52 am

  2. And you’re probably right – we may very well go lower from here before this is over. But sometime, somewhere – and probably in the not-too-distant future – the sellers will get exhausted, and we’ll see some sort of bounce or pause in the move down. Considering the magnitude of this latest move down, that bounce could be rather sizable.

    I know some don’t believe it will happen, and it’s hard to believe it looking at the state of things at the moment, but it will. Eventually. But once that bounce/consolidation ends, we could very easily move to new lows again. Making a TRUE bottom in this bear market will be a long process, not a single event.

    Remember how the bear market psychology works…

    Comment by BMB — 10/10/2008 @ 9:59 am

  3. I’m with you, John. I think there’s a little too much anticipation yet. And even when we get it, I have a bad feeling that the 70s are going to play out again–lots of jerking around, flat, sideways, no real uptrend for a long, long time.

    Comment by Maria — 10/10/2008 @ 11:04 am

  4. The chart is just part of the story. During the crash of 1929 the Dow dropped just short of 50% in a few months only to recover a bit by the 1 year mark before eventually losing 80% of its value. I’d still rate 1929 as a worse initial decline than the past 12 months. Just depends on what is used as starting and ending points of the comparison.

    Comment by Bruce from Flagstaff — 10/10/2008 @ 4:39 pm

  5. The other wild card in this mess is the Commercial Paper lockup and the problems starting to show up in Lines of Credit. If this doesn’t get fixed immediately, earnings are going to go off a cliff across all sectors of the market. People are smart enough to see the possibility of that and that alone may be enough to prevent a rally.

    Comment by EDN — 10/11/2008 @ 1:36 pm

  6. That’s why the Fed said they were going to start buying commercial paper.

    Comment by BMB — 10/11/2008 @ 2:58 pm

  7. Yeah… But they don’t have enough money to take over that market. My guess is they will have to be very picky and strategic about who they help.

    Comment by EDN — 10/11/2008 @ 7:46 pm

  8. Oh, of course they don’t. They don’t have near enough money to save all the things they’re trying to save. But that doesn’t stop them from trying.

    Comment by BMB — 10/11/2008 @ 7:48 pm

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