S&P400 in six months?

[bushwacked]

this was the beginning of the government bailing them out.....there's only so much bailing out that can be done when things continue to get worse...

 

Except for almost every economic exppurt the last few months is harping on how all signs are pointing to a slow and sustained global economic recovery.

[Avernus]

Except for almost every economic exppurt the last few months is harping on how all signs are pointing to a slow and sustained global economic recovery.

 

 

except for people like Peter Schiff, Gerald celente and umm...Marc Faber who seem to be some of the few who make sense.....

[bushwacked]

except for people like Peter Schiff, Gerald celente and umm...Marc Faber who seem to be some of the few who make sense.....

 

You and Brentastic also, don't be modest.

[Avernus]

You and Brentastic also, don't be modest.

 

 

but I don't claim to be an expert by any means....I just see the situation for what it is....or try to anyways, because me and Brent have slightly different views while we both still see the chit hitting the proverbial fan....

[Brentastic]

Why is this baffling?

In short because GS is the primary culprit of everything that is corrupt and over-valued in our financial markets today (equities, mortgages, oil etc...) - sprinkle in some bad monetary policies by the Fed and America's flawed economic theory (Keynesian) and you have the recipe for a destructed economy and nation.

 

Check out these paragraphs from a great article written about GS and corruption it has sustained for nearly a century:

After the oil bubble collapsed last fall (2008), there was no new bubble to keep things humming - this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers - one of Goldman's last real competitors - collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed.

Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bankholding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding - most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs - and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman - New York Fed president William Dudley - is yet another former Goldmanite.

The collective message of all this - the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds - is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

That is what the firm paid in taxes in 2008, an effective tax rate of exactly one, read it, one percent. The bank paid out $10 billion in compensation and benefits that same year and made a profit of more than $2 billion - yet it paid the Treasury less than a third of what it forked over to CEO Lloyd Blankfein, who made $42.9 million last year.

How is this possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix." In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely hosed corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income. This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes. A GAO report, in fact, found that between 1998 and 2005, roughly two-thirds of all corporations operating in the U.S. paid no taxes at all.

This should be a pitchfork-level outrage - but somehow, when Goldman released its post-bailout tax profile, hardly anyone said a word. One of the few to remark on the obscenity was Rep. Lloyd Doggett, a Democrat from Texas who serves on the House Ways and Means Committee. "With the right hand out begging for bailout money," he said, "the left is hiding it offshore."

[cre8tiff]

In short because GS is the primary culprit of everything that is corrupt and over-valued in our financial markets today (equities, mortgages, oil etc...) - sprinkle in some bad monetary policies by the Fed and America's flawed economic theory (Keynesian) and you have the recipe for a destructed economy and nation.

 

Check out these paragraphs from a great article written about GS and corruption it has sustained for nearly a century:

 

WARNING: You are getting into an argument with weigie on Economics. Danger, danger Will Robinson!

[Brentastic]

WARNING: You are getting into an argument with weigie on Economics. Danger, danger Will Robinson!

Yeah but he follows the flawed Keynesian theory, I'm not worried

 

E2A: For the record, I don't claim to be an expert either. But I have worked as a trader and I subscribe to a financial market theory that goes against the efficient market theory. It's called the Elliott Wave Theory and it's more socionomics than economics. The theory shows that markets folllow specific patterns of growth and correction and are fractal (meaning they follow the same patterns at varying degrees of time). I'm only a beginner at this theory and get most of my analysis from a guy named Bob Prechter. The theory has it's opposers (as do all theories) - but of every approach I've read regarding financial markets, it makes the most sense to me. It's just very logical and correlates social mood with market behavior. According to this theory, we are entering the most severe wave of the current bear market. Again, it's not the most popular view but it makes the most sense to me. I encourage anybody who is at least interested in a different approach to google Elliott Wave Theory.

Edited January 18, 2010 by Brentastic

[wiegie]

In short because GS is the primary culprit of everything that is corrupt and over-valued in our financial markets today (equities, mortgages, oil etc...) - sprinkle in some bad monetary policies by the Fed and America's flawed economic theory (Keynesian) and you have the recipe for a destructed economy and nation.

 

Check out these paragraphs from a great article written about GS and corruption it has sustained for nearly a century:

Again, so why do you see GS high profits as "baffling". The evidence you provided suggests that the profits are anything but baffling. Additionally, why are high GS profits a leading indicator of a deflationary depression?

 

Please lay out your entire hypothesis.

[wiegie]

It's called the Elliott Wave Theory and it's more socionomics than economics. The theory shows that markets folllow specific patterns of growth and correction and are fractal (meaning they follow the same patterns at varying degrees of time). I'm only a beginner at this theory and get most of my analysis from a guy named Bob Prechter.

ouch

[Ursa Majoris]

ouch

We can safely ignore him based on his quarter-century record

[cre8tiff]

WARNING: You are getting into an argument with weigie on Economics. Danger, danger Will Robinson!

 

Yeah but he follows the flawed Keynesian theory, I'm not worried

 

 

ouch

 

Robbie the Robot was once again ignored, with predictable results.

Edited January 18, 2010 by cre8tiff

[Jackass]

 

Here's how Prechter's trading advice has done from 1/1/85 through 5/31/09 versus the broad U.S. stock market average (Wilshire 5000 index) according to Hulbert's analysis:

 

Annualized Return:

 

* Wilshire 5000 Index + 9.7 percent

* Prechter's Trading Advice -15.4 percent

 

 

Total Return:

 

* Wilshire 5000 Index + 857.1 percent

* Prechter's Trading Advice - 98.3 percent

 

 

The underperformance of Prechter's newsletter is nothing short of astonishing and stunning! On an annualized basis, Prechter has underperformed the broad U.S. stock market Wilshire 5000 index by a whopping 25 percent per year! Here's what Hulbert's analysis shows would have happened to $100,000 invested according to Prechter's investing trading advice versus the Wilshire 5000 U.S. stock market index:

 

$100,000 Invested (1/1/85-5/31/09):

 

* Wilshire 5000 Index $957,100

* Prechter's Trading Advice $1,700

[Brentastic]

ouch

First of all, Prechter does not give trading advice nor does he advocate any specific stock or mutual fund or any investment strategy - his newsletter has nothing to do with trading. The only items discussed are the technical details of the Elliott Wave Theory and how to read and count waves. The article you posted is very one-sided and doesn't accurately reflect anything regarding Bob Prechter. Prechter is constantly preaching that markets are probablistic and that every day brings additional data that could alter or enhance the current reading. He's never once claimed any market move with 100% certainty, only probabilities.

 

AND, the biggest missing point in regards to Prechter is his strategy first and foremost is to eliminate risk - so it's not shocking that his returns are lower than others. Those numbers are not validated in any way either. Like I said, he doesn't give advice, he only discusses the technical indicator of the wave theory. So I have a real hard time believing the 'numbers' posted in that article since Prechter does not give trading advice or picks.

 

Listen, I don't care if any of you listen to my point-of-view or believe in the Elliott Wave Theory. I'm just letting you know what I think and if you take a step back and just look at what's going on, I think it's clear. If you're listening to MSNBC and other popular media outlets - you're probably getting very bad info (similar to taking fantasy advice from the 'experts' at ESPN). Do your own homework - but the evidence is glaring and I think it's my duty to let you guys know to be careful.

[Puddy]

If you're listening to MSNBC and other popular media outlets - you're probably getting very bad info (similar to taking fantasy advice from the 'experts' at ESPN).

Well if Prechter is The Huddle...it appears he hasn't done very well in his expert leagues.

[Jackass]

AND, the biggest missing point in regards to Prechter is his strategy first and foremost is to eliminate risk - so it's not shocking that his returns are lower than others.

 

If his strategy's goal is to eliminate the risk of making money, he seems to have accomplished that.

[Brentastic]

Well if Prechter is The Huddle...it appears he hasn't done very well in his expert leagues.

I'd be wary that there is NO detail behind the 'numbers' posted in that article. Anybody can take any range of numbers to make any point - you should know that.

 

Again, he doesn't make stock picks, so those numbers are extremely 'fishy' to me - they also don't provide what capacity they reflect. I'll say this, I've been following his newsletter for a year now and his explanation of the EWT and what the EWT has predicted has been EXACTLY what has happened, including the bear market rally that started last March.

 

The other notable detail regarding the EWT is that the form of the waves is always correct but timing is less predictible. It's also extremely important to understand what kind of market reversal the EWT is predicting to sucessfully trade using the EWT. What's significant about our current market position is that, in EWT terms, the bull market peak that recently ended was of Grand-supercycle degree that lasted over 200 years. So the natural and predictible correction (although timing cannot be predicted) will be large and unprecedented.

 

Some of you should educate yourselves on the theory and THEN make a responsible decision on if it is sensible and logical rather than looking for articles from opposers to dis-credit this theory.

[Puddy]

Some of you should educate yourselves on the theory and THEN make a responsible decision on if it is sensible and logical rather than looking for articles from opposers to dis-credit this theory.

Meh...I just chimed in for the joke.

[Brentastic]

Meh...I just chimed in for the joke.

I know you're a jokester, my comment wasn't necessarily directed at you - so many people are quick to dismiss a theory if it goes against what's normal. Resume with your joke telling.

[Sugar Magnolia]

The EWT does back test very well. But we only have 82 years of history, so we only have 2-3 cycles of data (I'm counting the up cycle and down cycle as one cycle). Is this a fundamentally sound theory when you only have 2-3 data points of cycle info? I do believe the market is somewhat influenced by emotion, certainly in the very short term but, imo, what it all comes down to is, stock prices are dictated by earnings.

 

With that said, our comfort level is to have 60% of our portfolio in stocks--we are retired and in our early 50's). By virtue of the Dow being at 6500 last March, we found ourselves with just 40% in stocks. We discussed buying stocks with cash to put us back in balance at 60%. We didn't because we got scared. If we had, we'd be 150K richer than we are now. We did, for the short term, act on emotion. We tried really hard not to, trying to calm each other down and convincing ourselves it is the right move. but in the end....

[Brentastic]

The EWT does back test very well. But we only have 82 years of history, so we only have 2-3 cycles of data (I'm counting the up cycle and down cycle as one cycle). Is this a fundamentally sound theory when you only have 2-3 data points of cycle info? I do believe the market is somewhat influenced by emotion, certainly in the very short term but, imo, what it all comes down to is, stock prices are dictated by earnings.

 

With that said, our comfort level is to have 60% of our portfolio in stocks--we are retired and in our early 50's). By virtue of the Dow being at 6500 last March, we found ourselves with just 40% in stocks. We discussed buying stocks with cash to put us back in balance at 60%. We didn't because we got scared. If we had, we'd be 150K richer than we are now. We did, for the short term, act on emotion. We tried really hard not to, trying to calm each other down and convincing ourselves it is the right move. but in the end....

You bring up a very good point that I did not mention - what is your individual strategy when investing? IF your strategy is to grow your portfolio, then you might not be willing to go cash heavy regardless of the current economic conditions. Also, you must believe what you see (in my case, a HUGH market reversal) enough to make such a drastic move.

 

But, know this huddlers - I would not write posts like these (begging you to shift your investments into cash) if I thought the next reversal was going to be mild or relatively short-term. We all realize the market fluctuates up and down but it's the BIG moves down I try to avoid and they don't happen all that often (in the capacity I forsee) - and most investors don't have the tools or analytical skills to see the BIG moves coming. I feel like the EWT does allow these moves to be forecasted and therefore I wrote in this thread.

 

Again, good luck in the next year(s) - I hope you all make the most of your investments!

[bpwallace49]

Again, good luck in the next year(s) - I hope you all make the most of your investments!

 

Soo . . . invest in bullets, brita water purifiers and what else?

 

I am by no means a financial management guy . . but if the market falls to nothing, how does having a a lot of cash help? Would that lead to the money being basically worthless if our economy collapses? So tangible goods and the measn to protect it are worth more than paper money?

[Brentastic]

Soo . . . invest in bullets, brita water purifiers and what else?

 

I am by no means a financial management guy . . but if the market falls to nothing, how does having a a lot of cash help? Would that lead to the money being basically worthless if our economy collapses? So tangible goods and the measn to protect it are worth more than paper money?

Well, the market won't fall to nothing but it will fall dramatically enough where if you are invested in equities you will basically have nothing. At least cash will maintain it's current value vs a stock that will lose value. Plus, with deflation, your dollar will be able to buy more goods and services.

[Avernus]

Well if Prechter is The Huddle...it appears he hasn't done very well in his expert leagues.

Peter Schiff would be equivalent to the Huddle even just based off his comments over the past 4-5 years....and some of the names I mentioned about 2 posts ago as well....they are pretty accurate as of late...

 

but people paint these guys as "doom and gloom" based on what they have said, but what has happened in our country as of late.....isn't that about accurate?

[Avernus]

Soo . . . invest in bullets, brita water purifiers and what else?

 

I am by no means a financial management guy . . but if the market falls to nothing, how does having a a lot of cash help? Would that lead to the money being basically worthless if our economy collapses? So tangible goods and the measn to protect it are worth more than paper money?

 

water purifiers are horrible....water distillation systems would be the way to go so you get the fluoride out...

[Avernus]

Well, the market won't fall to nothing but it will fall dramatically enough where if you are invested in equities you will basically have nothing. At least cash will maintain it's current value vs a stock that will lose value. Plus, with deflation, your dollar will be able to buy more goods and services.

 

 

this is very sound....but I think we should prepare for the likelihood of hyper-inflation just as much as deflation....both pose as a serious threat and I personally think one is just as likely to happen as the other...

 

it's pretty much one or the other depending on how much money we continue to print....