"ALL CAPS IN DEFENSE OF LIBERTY IS NO VICE."

Saturday, October 11, 2008

COMING TO A MARKET NEAR YOU: DOW 15,000!

THAT'S RIGHT: DOW 15,000. AND SOONER RATHER THAN LATER.

HERE'S WHY:
First, the strong dollar.

Second, plunging energy prices that will generate an economy-wide tax-cut effect.

And third, rapid money-supply growth after 18 months of flat money.

In fact, on this last point — which is
so important — it looks like the Fed has un-pegged its fed funds target rate and is instead focused on pouring cash into the liquidity-starved global banking system.

Meanwhile, the Treasury purchase plan for toxic assets will get off the ground
sooner, not later.
THAT'S PRETTY BASIC STUFF.

RIGHT NOW: STOCKS ARE CHEAP. THEY MIGHT GET CHEAPER, BUT NOT BY AS MUCH AS THEY HAVE ALREADY. MANY ARE DOWN 50%. OR MORE. THAT MEANS IT'S TIME TO BUY.

I PREDICTED WHEN OIL WOULD DROP AND BY HOW MUCH.

HERE'S MY PREDICTION: THE DOW WILL BE HIGHER IN APRIL THAN IT IS NOW - BY A LOT: ABOUT 20%.

OTHERS CONCUR:

Now some veteran investors, including G. Kenneth Heebner, a mutual fund manager who has one of the best long-term track records on Wall Street, say that the sell-off has gone much too far and stocks are poised to rally powerfully if the downturn is less severe than investors fear.

“The fact is, there are a lot of tremendous bargains out there,” said Mr. Heebner, who manages about $10 billion in several mutual funds. Indeed, by many measures stocks are as cheap as they have been in the last 25 years.

He pointed to Chesapeake Energy, a natural gas producer that he owns in his CGM Focus mutual fund. In July, Chesapeake traded for $63 a share. On Friday, it fell as low as $11.99.

... after falling 30 percent or more since early September, stocks in stalwart, profitable corporations like Nokia, Exxon Mobil and Boeing are trading at nine times their annual profits per share or less. Many smaller companies are even cheaper. Some of those stocks are trading at five times earnings or less.

Those ratios are historically low. Over all, the Standard & Poor’s 500-stock index is trading at about 13 times its expected profits for 2009, its lowest level in decades. In contrast, at the height of the technology bubble in early 2000, the stocks in the S.& P. traded at about 30 times earnings, the highest level ever. At the same time, the 10-year Treasury bond paid about 6 percent interest, compared with less than 4 percent today.

RTWT.

8 comments:

Always On Watch said...

I have very little in the stock market. But you can count on my not selling at these huge losses.

The idea of temporarily closing the exchange has been floated. GWB has said no, but I don't know if the SEC has other plans.

Pastorius said...

I don't understand why you are suddenly touting the strong dollar as a precondition for better economic times.

Reliapundit said...

I AM NOT. IT'S JUST THAT STRENGTHENING DOLLAR IN THESE HORRIBLE TIMES PROVES ONCE AGAIN THAT AMERICA RULES!

Reliapundit said...

OIL AND MONEY ARE CHEAP.

AND SO ARE STOCKS.

WE ARE PRIMED FOR ANOTHER BULL RUN TO 16000!

DavidCyrus said...

"I PREDICTED WHEN OIL WOULD DROP AND BY HOW MUCH."


Yes; well, you also predicted the massive oil drop to $80 would occur by August 1st, if I remember correctly.

Not that I shorted it based on your advice, but I'm glad that I didn't.

Reliapundit said...

wrong davey.

you're getting annoying again....

here:

The sub-prime financial fiasco is a manageable crisis - especially over the long haul, which is how one MUST look at real estate investment.

And despite today's gusher upward, the barrel price of oil will be steadily coming down over the new several weeks and few months - to about $65-$75.

http://astuteblogger.blogspot.com/2008/09/our-bi-polar-stock-markets.html

sept 17th


prior:

*******UPDATE #2: AT THIS RATE, OIL COULD BE $70 BY OCTOBER 1ST!

sept 11:

LIGHT SWEET OIL NEARS $100/BARREL - BRENT ALREADY $97
FACTS HERE - EXCERPT:

“It’s a bearish signal that oil is dropping at the base of a category 3, category 4 hurricane,” said Ben Dell, an analyst at Sanford C. Bernstein & Company. Last week, oil prices rose slightly on fears that Tropical Storm Hanna would disrupt refinery activity on the Gulf Coast.

BEARISH INDEED.

* REGULAR READERS OF THIS BLOG KNOW WE PREDICTED IT.
* AND WE PREDICT $80 BY THE END OF OCTOBER AND $60 BY NEW YEAR'S EVE.

http://astuteblogger.blogspot.com/2008/09/light-sweey-oil-nears-100barrel-brent.html

DavidCyrus said...

Not Wrong, Buddy!

All I am doing is pointing out an "annoying" truth.

Through September, you changed your prediction. No problem; by then it was clear where oil was headed.

But your May 30th post clearly states that you thought "Oil is definitely see-sawing down, to about $80, by August 1st."

Not too bad; you got it correct, except for the date. No sense in being annoyed about it.

BTW, check out that same post for some amusing predictions you made about the economy and the state of the GOP this Fall.

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