Recap of the 1974-1975 Bottom
#21
Posted 16 April 2009 - 05:45 PM
#22
Posted 16 April 2009 - 06:07 PM
We're not even close to that right now...not even close. In fact, we're above the mean of 15 any way you cut it.
If 666 was a multi-year bottom (I doubt it), it will be broken within 5 or 6 years, easily. It will be just like the 2003-2007 bull market, which was basically a result of devaluation of the dollar and creating the right environment for a housing and debt bubble. Ultimately, America is worse off than if it had just taken its medicine back in the early 2000s. Same thing will happen here if the bottom is really in.
Look at '66-82 bear market (basically sideways humps on a chart). We could very well have something similar brewing here, IMO (and it started back in 2000) assuming a bottom is in that won't be broken for at least a couple of years (I would say unlikely based on what I've seen).
Alternate scenario may be '38-42, which is Lousie Yamada's main comparison to now:
Again what we have from '38-42, as with '66-82, is sideways humps where we go up and down, making no new highs really (but still making new lows every several months)....until it ends
Edited by alysomji, 16 April 2009 - 06:13 PM.
-Scott O'Neil (son of William O'Neil), Portfolio Manager at O’Neil Data Systems, when asked where the Dow would go in the coming months
#23
Posted 16 April 2009 - 06:18 PM
#24
Posted 16 April 2009 - 07:09 PM
>>>Look at '66-82 bear market (basically sideways humps on a chart). <<<
There were lots of exploitable Dow/S&P cyclical bull markets in that secular bear. And the late 60s was one wild affair for stocks on the American Stock Exchange, akin to the NASDAQ blowoff in 99, - moblie home manufacturers, bowling alleys, etc. And then there was the Nifty 50 in the early 70s. And the bear ended for most stocks in 1974, only the large cap S&P and Dow went sideways till 82 while from late 74 to 80/81 the small caps had their best performance in history.
Funny isn't it Gary? People always refer to 69-82 period as a bear market. But frankly I never looked at it like that. As you mentioned, we had a wonderful bull market in small stocks after 1974. I recall the bull market for several years there in energy stocks. Houston Oil and Mineral (HOI) or Mesa Petroleum (MSA), Reserve Oil (RSO I think). Small computer stocks. Pertec sticks in my memory (PTC). Gambling stocks, Resorts International, Bally. Rival Manufacturing, the crock pot. Gold stocks had their move back then. I could go on and on. Don't let me forget Teledyne (TDY)...one of the best stocks of all time.
IT
#25
Posted 16 April 2009 - 07:14 PM
FWIW, I believe P/E reached under double digits in '74-75.
We're not even close to that right now...not even close. In fact, we're above the mean of 15 any way you cut it.
I don't remember what the overall PE ratio was back then. But I do remember lots of stocks at a single digit PE ratio. Of course, what you leave out is the level of interest rates. I recall 8% high quality municipal bonds for instance back in 1975. Or in the early '80s rates went to 20%. Obviously we don't have that either right now.
IT
#26
Posted 16 April 2009 - 07:39 PM
Bingo.Burns was the Fed chair, not Volcker. The Saudis ended their embargo of crude in the spring of 1975. Perhaps as a result of this, Burns started cutting interest rates and inflating the money supply about nine months before the market bottomed. In 1975, they had a 5% homeowner credit, tax rebate checks, increase in working persons tax credit, etc. Most families were single-earner before the great inflation of 1975. Wives went to work because of the inflation, and the higher household incomes contributed to housing recovery and higher inflation.
Worth noting is that the current troubles are credit induced -- which is a different animal so the jury's out as far as expecting a "typical" recovery -- or at least for the same reasons. Also worth noting is the inflationary monetary policies Burns implemented. They worked...and led to more troubles in a few years...which is probably the one comparison worth noting. Bernanke and Congress are making Burns etal. look like pikers in comparison. When anyone in officialdom is asked about potential future ramifications of the current spending orgy and unprecedented Fed actions, the answer is always a variation of the same theme -- "we'll worry about that when the time comes." That should make any thinking person very nervous. Assuming they blow it - and its likely they will - at least it'll be telegraphed well in advance.
As far as ogm's ideas on what he needs to be Bullish - I'd agree w/ what he states but caution that there may be a substantially lower bar set for everyone else to get Bullish. The train may very well be leaving the station w/ gears grinding and springs popping off - but it may leave the station nonetheless. How far it goes is another question. I can't help but suspect that the conductor of this train is a drunken Bankster who's quite likely to miss a switching signal and run the thing off the rails and into an abutment.
#27
Posted 16 April 2009 - 08:12 PM
#28
Posted 16 April 2009 - 08:33 PM
hey cheif ... i want to buy a small apartment in brooklyn right on the edge of manhatten. i have offspring going to work there and am told prices have tumbled. what do you think of that area?
gettit while its still cheep.....best investment ull ever make....