S&P500 to 600

Discussion in 'Stock Market' started by Neubarth, Jan 6, 2009.

  1. Neubarth
    Offline

    Neubarth At the Ballpark July 30th

    Joined:
    Nov 8, 2008
    Messages:
    3,751
    Thanks Received:
    199
    Trophy Points:
    48
    Location:
    South Pacific
    Ratings:
    +199
    I was in a meeting with some Asian Men in the Bay Area today. They seemed to be in ageement that they expected the S&P500 to fall well below 600 in the next few months. They had all shorted the market. Smart men.

    We are talking about another strong stock market fall.

    Out of curiousity when I got to my apartment, I Googled S&P500 to 600, and had four hits. This is not a pretty picture following the Fed Gov saying that this Recession (Depression?) will last at least to Mid 2010.

    That was not 2009 (THIS YEAR), but Mid 2010 (NEXT YEAR!)

    Time to get out of the market or short it. This is getting uglier by the day.
     
  2. Neubarth
    Offline

    Neubarth At the Ballpark July 30th

    Joined:
    Nov 8, 2008
    Messages:
    3,751
    Thanks Received:
    199
    Trophy Points:
    48
    Location:
    South Pacific
    Ratings:
    +199
    • Fed Officials Saw `Substantial' Risk to Economy Last Month as Rate Slashed

    • U.S. Factory Orders Fall Twice as Much as Forecast as Companies Cut Costs

    • Pending Home Resales in U.S. Decline 4%, Worse Than Economists' Forecasts

    “A lot of businesses have been caught flat-footed by how deep and accelerated this recession has been,” Bill Taubman, chief operating officer of shopping-mall owner Taubman Centers Inc., said in a Dec. 26 interview on Bloomberg Television.

    Orders to U.S. factories fell 4.6 percent in November after a revised 6 percent decrease the prior month that was larger than initially estimated, the Commerce Department said. The back-to-back decline was the biggest since records began in 1992.
     
  3. Dr Grump
    Online

    Dr Grump Gold Member

    Joined:
    Apr 4, 2006
    Messages:
    19,301
    Thanks Received:
    3,062
    Trophy Points:
    245
    Location:
    From the Back of Beyond
    Ratings:
    +4,254
    Dontcha just love rampant capitalism!
     
  4. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,786
    Thanks Received:
    11,059
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,123
    Maybe, but I doubt it.

    The profit margin of the SP500 over the past 20+ years has averaged 6%. However, because the proportion of higher-margin intellectual capital companies - such as software companies - make up a much larger proportion of the economy, I think the normalized profit margin is 7%. Sales per share on the SP 500 is $1000. Thus, normalized earnings are about $70.

    At 600, the market would thus be trading at 8.5x earnings. Multiples have gotten that low before, but it is rare that they do. In fact, it is about as rare as the market trading at 25x-30x earnings, which is very high.

    Betting on stocks falling to 8x earnings or rising to 30x earnings is betting on an improbable bet. It might happen, but it usually does not.

    I own more stock than I ever have, but I expect to start selling another 5%-10% higher. However, the market may be putting in a serious bottom, though I am skeptical that it is.
     
    • Thank You! Thank You! x 1
  5. xsited1
    Offline

    xsited1 Agent P

    Joined:
    Sep 15, 2008
    Messages:
    17,750
    Thanks Received:
    5,300
    Trophy Points:
    198
    Location:
    Little Rock, AR
    Ratings:
    +5,307
    That is possible. Markets typically do about 3-4x worse with a Democratically-controlled Congress. They should rebound by 2011. Let's hope things remain at least steady until then.
     
  6. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    50,786
    Thanks Received:
    11,059
    Trophy Points:
    2,030
    Location:
    The Big Bend via Riderville
    Ratings:
    +25,123
    Well, not quite.

    Divided Government Is Best for the Market - WSJ.com

    I have all the daily data for the S&P 500 starting in 1928. I'm going to check this out.
     
  7. xsited1
    Offline

    xsited1 Agent P

    Joined:
    Sep 15, 2008
    Messages:
    17,750
    Thanks Received:
    5,300
    Trophy Points:
    198
    Location:
    Little Rock, AR
    Ratings:
    +5,307
    It would be useless to go back more than about 25 years since the Republicans and Democrats have changed so much over time. For example, George W. Bush is very similar to LBJ from the 60s. Look at the last 25 years and tell me what you get.
     
  8. Zoomie1980
    Offline

    Zoomie1980 Senior Member

    Joined:
    Jan 16, 2008
    Messages:
    1,658
    Thanks Received:
    128
    Trophy Points:
    48
    Ratings:
    +128
    Well, that would be nice if it did and if it lasted that long. Sounds like a great, long term, share accumulation period. Shorting this market is the dumbest move anyone could possibly make, unless you are a day trader (aka moron)
     
  9. xsited1
    Offline

    xsited1 Agent P

    Joined:
    Sep 15, 2008
    Messages:
    17,750
    Thanks Received:
    5,300
    Trophy Points:
    198
    Location:
    Little Rock, AR
    Ratings:
    +5,307
    Here's the information if anyone is interested:

    Taking Stock of the Parties
     
  10. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,618
    I'm inclined to think that until prospects on Main Street improve, Wall Street isn't going to improve.

    700,000 people lose their jobs, last month?

    That's a whole lot of consumers who aren't going to be doing much to improve profits for corporations.

    All those so-called losers some of you have expressed such contempt for? Apparently they must have had something to do with all the money your master class that many of you suck up to was making.

    Why this surprises any of you I cannot say.

    Hubris, I guess.
     

Share This Page