Could the Stock Market Crash in 2010? posted 5/14

[hvactec]

Posted on 05/14/10 at 10:09am by Charles Hugh Smith
The conventional view is that the U.S. economy is "growing again" and the market is "cheap." Sounds like the perfect setup for a crash in 2010.

U.S. GDP rose by 3%, corporate profits are leaping and stocks are cheap based on forward earnings. A stock market crash appears "impossible"--unless you look beneath the ginned-up numbers at the real economy.

A reasonably grounded place to start exploring the idea that the U.S. stock market could crash in 2010 is John Kenneth Galbraith's classic book, The Great Crash 1929.

Galbraith identified two primary causes for the crash and the subsequent Depression: 1) the euphoric confidence of the era, which blinded participants from seeing the fundamental weaknesses of the market and the economy, and 2) the fundamental weaknesses of the market and the economy.

As Galbraith noted, bullish enthusiasm had overcome previous dips:

"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the New York Times happily reported the return to reality. And then the market took flight again."

As the market recovered in late 1929, the bullish faith that the "market would always bounce back up" that had driven the market to new heights in 1929 remained firmly in place. Few participants in the 1929 crash anticipated a Depression; rather, most saw the market's quick recovery as clear evidence that the economy and market were both sound.

read full story
Could the Stock Market Crash in 2010? | Benzinga.com

 

[william the wie]

The Euro is crashing and China's one child law is catching up with it later this year so a definite possibility.

 

[hvactec]

this market looks fixed to me whats holding it up even.

 

[Terral]

Hi Hvac:

Could the Stock Market Crash in 2010?

Yes! See my "Economic Meltdown 2010" Topic here with Gerald Celente Video information. The markets were wired for implosion on September 18, 2008 (story) and the markets collapsed in March of 2009 (chart). The current fake recovery is financed by your children and grandchildren through all of the Stimulus/Bailout Trickery going on with the Banksters and the Obama Fascist Regime running the White House. However, rather than melting 'down,' the false flag recovery is actually causing the markets to 'melt up.'

[ame="http://www.youtube.com/watch?v=eb1n1X0Oqdw"]Melt Up (You Must See This Video)[/ame]

If anybody has doubt that the markets will "Melt Up," the do your own simple test by comparing the S&P to the price of gold:

10 Year Gold Chart

10 Year S&P Chart

S&P Versus Gold Chart

In 2000 the S&P stocks valued about 1500 dollars and gold was around 300 dollars, which means five (5) ounces of gold bought the entire S&P Index Stocks. Right now the S&P is valued at about 1120 dollars (thestreet.com) and gold is selling at 1226 dollars (goldprice.org). In other words, you can buy all the stocks on the S&P for 'less' then one (1) ounce of gold!

Somebody tell me what happens when the S&P goes to 500 dollars and the price of gold goes to 5000 dollars per ounce! The S&P must go to 5000 at that point to just stay even with gold and that is NOT going to happen. Do the math and get out of stocks and fiat currencies that are 'all' decreasing in value together.

GL,

Terral

 

[Zander]

We are heading for a 6 year bear market in stocks. We may have some secular bull moves, but the trend is DOWN.......WAY DOWN!!

 

[Toro]

It already crashed. It fell 1000 points in less than a day.

 

[Zander]

It already crashed. It fell 1000 points in less than a day.

Yes it did. The question is it a precursor of a far more devastating move down?? One that will make a 1000 point drop look like a picnic.......

 

[Toro]

It already crashed. It fell 1000 points in less than a day.

Yes it did. The question is it a precursor of a far more devastating move down?? One that will make a 1000 point drop look like a picnic.......

Maybe. I take a 1000 point drop in a few minutes extremely seriously. I had flattened out my book a few days beforehand and remain with no equity market exposure. It could have been a technical glitch OR it could portend something more serious to come. I'm willing to sacrifice a few points to the upside to protect my downside.

 

[Polk]

It already crashed. It fell 1000 points in less than a day.

Yes it did. The question is it a precursor of a far more devastating move down?? One that will make a 1000 point drop look like a picnic.......

Maybe. I take a 1000 point drop in a few minutes extremely seriously. I had flattened out my book a few days beforehand and remain with no equity market exposure. It could have been a technical glitch OR it could portend something more serious to come. I'm willing to sacrifice a few points to the upside to protect my downside.

Not could have been a technical glitch. It was a technical glitch, unless you really think a massive movement like that comes from a handful of stocks dropping to zero instantly and a few others (though not as many, obviously) skyrocketing.

 

[Polk]

And to answer the OP's question, sure, it's possible. Anything is possible. It's highly unlikely though.

 

[csbarry]

Posted on 05/14/10 at 10:09am by Charles Hugh Smith
The conventional view is that the U.S. economy is "growing again" and the market is "cheap." Sounds like the perfect setup for a crash in 2010.

U.S. GDP rose by 3%, corporate profits are leaping and stocks are cheap based on forward earnings. A stock market crash appears "impossible"--unless you look beneath the ginned-up numbers at the real economy.

A reasonably grounded place to start exploring the idea that the U.S. stock market could crash in 2010 is John Kenneth Galbraith's classic book, The Great Crash 1929.

Galbraith identified two primary causes for the crash and the subsequent Depression: 1) the euphoric confidence of the era, which blinded participants from seeing the fundamental weaknesses of the market and the economy, and 2) the fundamental weaknesses of the market and the economy.

As Galbraith noted, bullish enthusiasm had overcome previous dips:

"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the New York Times happily reported the return to reality. And then the market took flight again."

As the market recovered in late 1929, the bullish faith that the "market would always bounce back up" that had driven the market to new heights in 1929 remained firmly in place. Few participants in the 1929 crash anticipated a Depression; rather, most saw the market's quick recovery as clear evidence that the economy and market were both sound.

read full story
Could the Stock Market Crash in 2010? | Benzinga.com

It's never been a question of could it, but when ...

 

[Zander]

And to answer the OP's question, sure, it's possible. Anything is possible. It's highly unlikely though.

Really? it is already down 10% from the recent highs and after today it will be down 12% or more. The leading economic indicators are dropping as well. What do you think will hold stock prices up, magic?

 

[Toro]

This decline feels serious to me, but it is very common for stocks to drop 10%-20% in the course of a bull market. Just because stocks fall does not mean that it signals something bad.

The S&P 500 went up 75% from the lows in March, the Russell 2000 by 120%, yet there was nary a 10% correction in the market. THAT is unusual. A 12% decline is not.

However, like I said, it feels bad to me, though I don't know if that's because of the environment or if because of what we have gone through over the past three years. Sovereign debt crises are serious.

 

[Neubarth]

This decline feels serious to me, but it is very common for stocks to drop 10%-20% in the course of a bull market. Just because stocks fall does not mean that it signals something bad.

The S&P 500 went up 75% from the lows in March, the Russell 2000 by 120%, yet there was nary a 10% correction in the market. THAT is unusual. A 12% decline is not.

However, like I said, it feels bad to me, though I don't know if that's because of the environment or if because of what we have gone through over the past three years. Sovereign debt crises are serious.

It will go down as much as Goldman Sachs wants it to. When their positions have paid off, the market will go up again. Goldman Sachs runs the show.

 

[Polk]

And to answer the OP's question, sure, it's possible. Anything is possible. It's highly unlikely though.

Really? it is already down 10% from the recent highs and after today it will be down 12% or more. The leading economic indicators are dropping as well. What do you think will hold stock prices up, magic?

One bad report does not equal a collapse.

 

[saveliberty]

This decline feels serious to me, but it is very common for stocks to drop 10%-20% in the course of a bull market. Just because stocks fall does not mean that it signals something bad.

The S&P 500 went up 75% from the lows in March, the Russell 2000 by 120%, yet there was nary a 10% correction in the market. THAT is unusual. A 12% decline is not.

However, like I said, it feels bad to me, though I don't know if that's because of the environment or if because of what we have gone through over the past three years. Sovereign debt crises are serious.

Between the 200 MA, Greece and dare I say it, Spain or Portugal admitting their problems I think we are going to see some rough times. I am waiting for Spain or Portugal to hit the wall. I expect to be able to buy in at a DJI avg. of 8200 by July.

 

[Matt SF]

Absolutely! Another stock market crash in 2010 is a definite possibility.

Many hedge fund managers have "de-risked" their portfolios over the last month, some even moving 100% into cash to wait out the Greece fiasco and other Eurozone issues.

I'm not saying it will crash, but just saying don't be surprised if it happens. Therefore, you should take the appropriate actions you deem necessary to avoid getting creamed.

 

[william the wie]

The stock market runs on cash and cash is being pulled out of the market.

The only non-casino returns from the stock market are dividends, dividends suck at this price level.

Dividend growth is another fundamental value that too sucks.

Book value of net assets is another measure. Stocks are generally selling above book value/share that sucks

This list could be extended by four or five times so I think the proper question is what is keeping the stock market valuations up at these nose bleed levels?