Dire Predictions for the Stock Market

#1
lumberjack4

lumberjack4

My Facts > Your Facts
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#1
Wanted to ask some of the financial gurus on this board what they think about the coming months for the market. Was reading some doom and gloom stories and am not sure how much of it to believe.

Dow Faces Bouncy Ride to 5,000 - CNBC

Hindenburg Omen Tripped Again - WSJ

I find a hard time believing that the market will make any significant gains due to the abysmal state of unemployment in the country. But realistically how big of a loss are we looking at over the next 6 months to a year? Will it be a lot of sideways movement, or will we lose a thousand points?

I'm currently in a few inverted ETFs and see no reason to get out of them now, just wondering how long the ride will last.
 
#2
#2
i've been short for 6 months now and bearish for longer than that. but as long as interest rates are this low people will be searching for returns elsewhere and the market will be fine. the bearishness of the retail investor is also very bullish. personally i just can't see unemployment going anywhere but up and that is why i still have my shorts on. can't say i feel too great about it though.
 
#3
#3
pretty much what Dorski said.

on those inverted ETFs, you have to take profits on them, when you have them. I just made a quick 1.5% on BGZ in 5 minutes. Get in, prove your point and get out.

The yield on a US 10yr T Bond is at 2.5% right now, so people are going to start looking for yield and some Large Cap blue chip stocks have them. Phillip Morris, Kraft, and Southern Company (just to name a few) are all paying good dividends and have held up well in this "Summer of Recovery" market.

1050 on the SP500 seems to be a good short-term support level, and profits should be taken when over 1120 on SP500
 
#4
#4
droski said:
i've been short for 6 months now and bearish for longer than that. but as long as interest rates are this low people will be searching for returns elsewhere and the market will be fine. the bearishness of the retail investor is also very bullish. personally i just can't see unemployment going anywhere but up and that is why i still have my shorts on. can't say i feel too great about it though.
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Until pro-recovery legislation hits I just don't see unemployment going up. Maybe if the R's take the house, but I doubt they get anything meaningful through the Senate or President. The best case I foresee is a sideways market, but when the tax hikes come into play next year I don't think the market can continue to take it on the chin. I would think that some kind of drop in the market is coming.
 
#5
#5
private employment will likely rise, but because of the massive budget deficits in counties, cities, and states across the country we are going to see tens (if not hundreds) of thousands of public workers get laid off (just look at how many layoffs have already been announced in the past 3 months). i'm not sure the private sector can grow quickly enough to make up that difference.
 
#6
#6
I don't expect this kind of "guts" from politicians.... but the new Congress needs to announce they will freeze total spending in real dollars for three years then limit budget growth to 70% of inflation until the budget is balanced. The savings could come from headcount, benefit cuts, or efficiency... but the federal gov't needs to come to a real understanding of what a "budget" is and means.
 
#7
#7
lumberjack4 said:
Until pro-recovery legislation hits I just don't see unemployment going up. Maybe if the R's take the house, but I doubt they get anything meaningful through the Senate or President. The best case I foresee is a sideways market, but when the tax hikes come into play next year I don't think the market can continue to take it on the chin. I would think that some kind of drop in the market is coming.
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In my lifetime the market overall has done well in two situations. One, when the GOP was in charge and answering a recession with progrowth tax and regulatory policies. The other time is when we had a power split between the Dems and GOP- the opposition party in charge of the House, Senate, or Presidency.

As much as it pains me to admit it, our best years in the last 30 have been Reagan/Moynihan and Clinton/Gingrich.

The GOP had a real opportunity in the early 00's but blew it by trying to spend like Dems.
 
#8
#8
sjt18 said:
I don't expect this kind of "guts" from politicians.... but the new Congress needs to announce they will freeze total spending in real dollars for three years then limit budget growth to 70% of inflation until the budget is balanced. The savings could come from headcount, benefit cuts, or efficiency... but the federal gov't needs to come to a real understanding of what a "budget" is and means.
Click to expand...


the federal govt will undoubtably not cut jobs. the states and cities generally have balanced budget amendments and have no such liberties.
 
#9
#9
sjt18 said:
In my lifetime the market overall has done well in two situations. One, when the GOP was in charge and answering a recession with progrowth tax and regulatory policies. The other time is when we had a power split between the Dems and GOP- the opposition party in charge of the House, Senate, or Presidency.

As much as it pains me to admit it, our best years in the last 30 have been Reagan/Moynihan and Clinton/Gingrich.

The GOP had a real opportunity in the early 00's but blew it by trying to spend like Dems.
Click to expand...

what gets ignored with clinton is that his job growth came from the greatest job bubble in american history. it's kind of like calling your brother in a law a great investor because he made a killing flipping houses during hte housing boom and ignoring what happened after the collapse.
 
#10
#10
droski said:
the federal govt will undoubtably not cut jobs. the states and cities generally have balanced budget amendments and have no such liberties.
Click to expand...

I actually believe if either party had the nerve/will to do it they would get great support from the American people. I am absolutely certain that a majority of Americans do not believe federal workers should be making more than their private sector counterparts.

"I believe federal pay should be brought into line with their private sector counterparts while our gov't continues to inefficiently waste tax dollars and run up debt" would SELL to the voters.
 
#11
#11
agreed the american voters would probably be in favor of it. but going into an election it would kill the jobs numbers and likely hurt the stock market short term. also lets not forget that most of the politicians are int he pockets of the federal labor unions.
 
#12
#12
droski said:
what gets ignored with clinton is that his job growth came from the greatest job bubble in american history. it's kind of like calling your brother in a law a great investor because he made a killing flipping houses during hte housing boom and ignoring what happened after the collapse.
Click to expand...

I agree with that... but he did have the good sense not to kill the golden goose. His strong dollar policy was a good move and amounted to a tax break for investors, importers, and consumers of imported goods.

He also left Bush a time bomb called Y2K. I worked for Ace Hardware at the time. They spent a good portion of 2-4 years worth of project capital replacing systems and preparing for Y2K. They went "austere" on capital investments for a couple or three years after. Companies spent so much money leading up to Y2K incidentally making Clinton look good that they had nothing for the 2000-2001 budgets.
 
#14
#14
droski said:
agreed the american voters would probably be in favor of it. but going into an election it would kill the jobs numbers and likely hurt the stock market short term. also lets not forget that most of the politicians are int he pockets of the federal labor unions.
Click to expand...

I wouldn't actually take the layoff approach... at least not in a large lump. I would limit pay increases severely and let attrition take care of itself.
 
#15
#15
yup. that lack of spending on IT continued until well into the 2007. the productivity gains during hte clinton years just couldn't be matched just because the leap in technology from the 80s to the late 90s was a lot greater than from the late 90s to today.
 
#16
#16
sjt18 said:
I wouldn't actually take the layoff approach... at least not in a large lump. I would limit pay increases severely and let attrition take care of itself.
Click to expand...

once they suck on that guberment tite....not many will ever let go on their own
 
#17
#17
droski said:
agreed the american voters would probably be in favor of it. but going into an election it would kill the jobs numbers and likely hurt the stock market short term. also lets not forget that most of the politicians are int he pockets of the federal labor unions.
Click to expand...

I disagree. Voters would be in favor of it until they found out that a balanced budget amendment would cut into their government cheese.
 
#18
#18
sjt18 said:
I wouldn't actually take the layoff approach... at least not in a large lump. I would limit pay increases severely and let attrition take care of itself.
Click to expand...

that's was arnold is trying to do here in california with very limited success.
 
#19
#19
lumberjack4 said:
I disagree. Voters would be in favor of it until they found out that a balanced budget amendment would cut into their government cheese.
Click to expand...

You'd have to be savvy enough to cut it the way it was grown... a little bit at a time starting with unpopular programs and ones that have little impact on people's lives. Things like Public Broadcasting, NEA, obscure research grants, etc. You would also have to target the administrative and mgt levels first and push responsibilities down. Market pressures have made businesses do this for awhile now... there are many experts in how to make it happen.
 
#20
#20
really crummy Durable Goods # reported this morning 1050 on the SP500 has broken so look for a possible move down to 1030, then 1010, then ultimately a move to 960 as a bottom sometime in September. US 10 yr T-Bond is at 2.44% Once the market figures out who will win in November, the market should start to move higher in October.

Keep in mind that long weekends can bring market reversals, so a rally could start as early as the week after Labor day
 
#24
#24
You obviously let him get your panties in a wad though. He clearly has some effect on you. Again, amazing how the 'insignificant' have such a hold on people. Taking the time to quote the guy? Come on. Admit it. You're a closet fan.
 
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