Massive string of lies moves the market up.

Discussion in 'Stock Market' started by Neubarth, Mar 17, 2009.

  1. Neubarth
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    Neubarth At the Ballpark July 30th

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    I liked Obama better when he was putting his foot in his mouth in January and February. Now, to try to counter that, he is telling outrageous lies that are causing foolish investors to but into the market thinking that the recession is almost over.

    Take todays references to the 22% rise in housing starts. Once that was announced and ballyhooed, the market took off.

    I keep on telling you guys that there are no data to indicate that the degree of the fall in the economy is abating. In fact, it appears to be getting worse. I warn people that the DOW might see numbers below 4000 in just a few months. I feel sorry for those who are buying in on this suckers rally spured by the Obama administration.

    Here is the truth from a news article on the "rise in housing starts."

    "But despite February's gain, housing starts are down 47% from a year ago, and are down 74% from the peak in early 2006. Permits are down 44% in the past year."
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    Here are some numbers to look over. The norm is about 1.1 MILLION housing starts every month. In 2007, we were seeing reports of 1,300,000 housing starts in October or thereabouts.

    Well, the economy started to fall and here are the numbers for mid 2008 to the present.

    Housing Starts:
    June 1,066,000
    July 965,000
    Aug 895,000
    Sep 828,000
    Oct 791,000
    Nov 625,000
    Feb 583,000

    The overall trend is strongly down. A momentary blip from one month to another is insignificant, especially when the degree of accuracy is plus or minus 14% which is the case in housing starts.
     
  2. Neubarth
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    Neubarth At the Ballpark July 30th

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    This is not just a minor recession that we are "now" climbing out of. Everything is still falling and falling and falling.

    Obama the other day was trying to get mileage from the retail sales number. It was only down -.1%. That -.1% was misleading because sales included the sales of Gasoline and the price of Gasoline went up in February and raised the retail sales from -.5% to -.1.

    Minus .5 is a frightening prospect and would result in massive layoffs in retail sales if compounded month over month.

    Well, guess what, it is compounding, and people everywhere are being laid off in retail sales.

    Obama mislead the nation and he needs to stop that. We've got him maniuplating the market almost every day now and the pain he is causing to people who are seeing their nest egg for retirement disappear is immense. It is hard for me to convince people to get out of the market before the next leg of the collapse in stock prices to P/E's of 6 or 7 on present profitability. If that happens across the board, you will see a DOW 3000.
     
  3. manu1959
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    manu1959 Left Coast Isolationist

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    his agenda has been passed....the media will only report "good news" now.......
     
  4. Midnight Marauder
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    Midnight Marauder BANNED

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    And I'm the other side of that pancake, constantly since September telling anyone who will listen that the sky is NOT falling. And it's not.

    Partisanship will always lead one to extreme opinions. Fair minded folks see this all for what it is, a cycle. One we will get out of. It's not a depression, it is a deep recession. It's curable.

    We got through the late 70s, we'll get through this. Meanwhile? I'm cleaning up right now buying and trading.
     
  5. DavidS
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    DavidS Anti-Tea Party Member

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    Of course housing is down since 2006, you idiot! We were in a bubble in 2006! We're never going to be in 2006 levels. That's like saying in 2001 that there are 40% less dot com IPOs than there were in 1999.

    And if you would actually bother looking at the chart, the market didn't take off until after 12:30. We were down most of the morning.
     
  6. wimpy77
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    wimpy77 Member

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    you would be best to do what i have learned to do with neubarth posts, ignore them. he doesnt know what the heck he's talk about. once we get a positive gdp number he will be OMG POSITIVE GDP GROWTH. i dont think he understands what he read sometimes. i personally think the this market rally will probably go to 8,000.
     
    Last edited: Mar 17, 2009
  7. Toro
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    Toro Diamond Member

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    Got caught short, eh Neubarth?

    You may be correct that the Dow will hit 4000. However, you are betting on an extreme event. Extreme events do happen, but they are rare.

    I do not invest on extreme events. Rather, I scale into and out of positions as we approach extreme events. Why? Because nobody has any idea if the extreme event will occur.

    For example, Nasdaq 5000 was an extreme event, but it did happen. The problem is that those who were predicting it did not tell you to get out. They told you to keep buying because Nasdaq 5000 became Nasdaq 7000 or Nasdaq 10,000.

    When the SP500 hit 666 - Satan covered at that level - the median price/earnings (PE) ratio on the Russell 2000 was 5.8x trailing earnings. That is an extreme valuation. Your average PE over time is 15x. Rare is it that the PE ever gets below 8x, let alone 6x. Thus, the extreme event has already occurred. It may get even more extreme, as you are predicting, but I would never advise anyone to bet on such an extreme event.

    And just like the uber-bulls of Nasdaq 5000, the uber-bears today will overplay their hand.

    This is important - the market will start rising long before the economy bottoms! For example, an additional 1.5 million people were thrown out of work after the market bottomed in 1974. That will certainly happen again when the market ultimately does bottom.

    There are signs that the economy is stabilizing, or at least descending at a much slower rate. For example, retail sales have been rising. Home sales are accelerating at the lower end in California and Florida. Consumer spending is rising. PC sales are beginning to pick up a bit. Corporate bond issuance has been the heaviest in two years.

    The market has not been going up because of any "lies." The market has been going up because pessimism was at its maximum level and the news has turned out to be less bad than feared. There is a belief that the government is going to do something about mark-to-market accounting and stop the death spiral the banks have been in, and the big banks have been making hand over fist in their spread business. That's why the market has been rocketing higher.

    I am sure we will go back and re-test the lows at some time. However, bear markets are often accompanied by vicious rallies. For example, during the Depression, stocks rose nearly 50% from November 1929 to April 1930. Stocks had rallies of 20%-30% several times until the bottom in 1932. Similarly, the Nasdaq rallied 25%-50% several times from 2001 to 2003. I am assuming this is one of these vicious rallies.
     
  8. wimpy77
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    wimpy77 Member

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    i was reading a watching today. the reason i said 8,000 was because of some a read where Q1 earnings will come starting next month and a gdp number for Q1. those numbers aren't going to be pretty. but the same article believes that if banks can get accounting relief soon it won't be as bad as people think. FASB had their meeting monday and i haven't heard anything about what they decided.
     
  9. editec
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    editec Mr. Forgot-it-All

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    I think betting the farm based on what the economy is going to do, when there is so much government intervention happening -- government intervention which is by fiat and not really predictable -- is an act that is fraught with peril.

    I'm not an investor, so I don't have a dog in this fight, but this is not your normal "free" market.

    I wouldn't count too awful much on the standard metrics that one uses to evaluate a normal market.
     
  10. wimpy77
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    wimpy77 Member

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    edit could you imagine what would happen if the government sat on their hands and did nothing. i would guarantee you that it would be a hell of alot worse.
     

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