Stocks Are Still Sad

Monday’s brief hope of a better week for stocks was exactly that as the market continued its downward spiral through Friday and international indexes suffered body blows. [WSJ]

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  1. chipslave says:

    Now is the perfect opportunity to use the Mike Tyson’s Punch Out graphics you have been waiting on… :)

  2. Ein2015 says:

    I still can’t figure out what that picture is.

    Ben, some help please? :(

  3. Goatweed says:

    looks like an eyeball to me.

  4. Notsewfast says:

    So here’s what I think is going to happen:

    The Dow will hit 7700 (the low from 2003 and 1998), and one of 2 things will occur.

    1) We see an immediate surge after brokers and talking heads call it a bottom, and then everyone realizes its not over and we bounce around in the 8000-9000 range for a few months before recovering early to mid next year.

    2) More bad news hits and we go below 7700, brokers and talking heads start calling it a ‘mega bear market’ and panic selling ensues. From there we have 2 stops, 2002’s 7500 or 1997’s 6300. It’s hard to imagine anything lower than that, but if it does, hold on to your hat.

    I think that #1 is more likely, but the problem so far has been that we don’t know what we don’t know, so #2 may happen if consumer credit falls apart or there is a major shock to the economy.

    **Insert legal disclaimer about this not constituting advice and that all investments may lose value here**

  5. sir_eccles says:

    Is it a spiral or a realistic adjustment to where it ought to be.

    Go look at any long term graph of the DJI like this one [finance.yahoo.com] .

    Smooth off the dot com boom and bust of the 2000 era and project the line from around 1995 in a gentle smooth increase and you get to roughly where we are now.

    Much more realistic expectation of growth.

    • Notsewfast says:

      @sir_eccles:

      “Much more realistic expectation of growth”

      If you have a rationale for this, I’d like to see it, but simply stating that drawing a line from 1995 today and saying ‘that looks fair’ is the reason that individual investors tend to lose money in the long run.

      • sir_eccles says:

        @Secret Agent Man: Not a mathematical justification just a gut feeling that as with the dot com boom and bust there were unrealistic almost vertical expectations of growth that were unsustainable.

        A weak analogy might be with Moore’s law. Eventually chip fabrication comes up against the physical limits of silicon and electron flow and we can’t pack in any more transistors on the chip, so you look to more exotic materials and the like.

        With the economy, a gradual considered growth wasn’t considered good enough so they turned to more exotic stocks with unproven returns (dotcom) or made up new laws of economics that created wealth seemingly out of nothing (funny subprime instruments).

        I guess my conclusion is that if we had been more sensible and carried on as we had around 1995 we might have avoided the two big crashes in between and pretty much ended up with the stock market at the level they are now.

        • Notsewfast says:

          @sir_eccles:

          I think your argument is valid to point. There was a lot of over-valuation in the late 90’s, no argument there. The major difference since 1995 is the scope of the financial markets today. Whereas 15 years ago, a vast majority of companies sold goods and services only to customers in their own country, the rise of computers, the internet and more sophisticated ways of issuing debt and equity have allowed companies to compete globally.

          Knowing nothing about microchips, I’ll use your analogy. The solution to the problem you presented was creating processors with more cores, correct? You have to think of the economy as ‘stepping up’ in a similar manner. I think that there will be a more reasonable growth rate, but that rate will take place at a higher level because there us so much more capital to invest.

  6. snoop-blog says:

    It’s like my broker told me…

    “You only lose money if you sell your stocks.”

    Yeah ok. Now I feel all warm and fuzzy again.

  7. LittleCupcakes says:

    It’s like the more Obama’s poll numbers rise, the lower the Dow goes.

    Maybe those Nobel Economic Laureates were right after all…

  8. SecureLocation says:

    Photo is either “HAL” from 2001 or a bug under a glass dome…either way a bad choice