13 replies to this topic

[arbman]

no doubt. SPX 200 dma is right down there at 1450, let's see whether it stops there, but this decling is still just too fast...

[relax]

tuesday is exactly 20 weeks since the march 20 bottom - maybe we bottom out there But it surprises me that people are mentioning a bear market, you just don't go from all time highs to a bear market a trendline from july 2006 bottom gives support to Nas Composite at 2.520 on a daily chart German DAX was also just at all time highs, but still within the daily trend, which has support around 4 per cent lower but this move has been fierce and really on the basis of no news - not good

[ogm]

no doubt.

SPX 200 dma is right down there at 1450, let's see whether it stops there, but this decling is still just too fast...

Probably. But if you don't look at the indexes but at other stuff in the market. This is starting to present a great opportunity.

Forget the indexes. As I said the best investment in oil sector is double short oil fund DUG and had a big argument about it. its up 10% since then.

I'm really upbeat on corporate bonds, though. And dividend payers. This is a great time to pick them up.

After this round of panic is over the chase for returns will come back. The spreads have went through the roof.
But the reality is this isn't 2000.

And here is the main difference... in 2000 corporations were overloaded with debt. And now corporate balance sheets are clean. All that liquidity that was flowing into LBO debt and Mortgage debt will have to find a new place to go. There is no other way. Money managers have to invest money.

Stocks offer liquidity, reasonable valuation, that is getting better by the day, and dividends.
And Corporate high yields are now offering attractive risk/reward. Something that wasn't the case for the past couple years.

Once this panic is over.. stocks ( in particular cash flow cows and dividend payers) and high yield liquid debt will offer a nice investment option. I doubt you'll be able to sucker a lot of people to buy some shady CDO's again for a while. People will want liquidity and returns.

But the most important part.. stocks offer clean balance sheets. Fortunately most of the crap loans was absorbed either by the companies that went off the market into private hands, or by the banks/insurance companies/money mangers/ foreign investors.

Yes, this decline may go on longer. But if you look past the indexes and look at individual stocks and sectors, there is a lot of money to be made right here.

I only regret buying NDX calls today, that was a stupid impluse buy.. otherwise, everything I'm buying is paying either nice income or presents good value.

And you know what ? I'm starting to look at real estate income payers.
Even banks. Look at UBS for example.. 5.2% dividend after this drop. Yes, price to book still a little high. But the income is nice. and I don't think they are about to go out of business.

What is happening right now is just an EVENT without major long term implications. You think Chineese Solar pcompanies will stop growing because some sh*tty LBO outfit can't get 40 bil dollars to buy Crysler ? No f-ing way.

So I'm adding Cleantech on this decline too.

Basicaly my 2 main directions.. High income stuff for income and Cleantech for growth.

Edited by ogm, 27 July 2007 - 04:46 PM.

[Jnavin]

OGM: I had exactly the same thought today on corporate bonds. I didn't BUY any, but I found myself thinking about it.

[ogm]

OGM: I had exactly the same thought today on corporate bonds. I didn't BUY any, but I found myself thinking about it.

I think this is the right time. The crisis is over. There was a glut of deals and people weren't getting enough returns so they stopped buying them. And the market paniced. Now the risk/reward is priced much better.

But imagine yourself a big bank or other lender. You're scared sh*tless right now, frozen solid, credit market shut down.... But you HAVE TO LEND, you can't just sit on deposits and pay interest. So you tightened your lending standards and start looking for better deals.

And here you go.. corporate bond market is decimated... and instead of buying 4.75% treasuries you can start buying 8-9% stuff. That was yielding 5-6% just 2 month ago..... and the credit cycle begins again.

Edited by ogm, 27 July 2007 - 05:08 PM.

[arbman]

The last time the market went to a bear market from the highs, I don't know, maybe 1/4/1973... I am not predicting a bear market, I am predicting more declines...

[ogm]

The last time the market went to a bear market from the highs, I don't know, maybe 1/4/1973...


I am not predicting a bear market, I am predicting more declines...

I was just looking at that chart in relation to the new lows ... that is the only period in time when the number of new lows was very persistantly high for a long time. Not to say that that market didn't have rallies.

[rkd80]

if you want to see a collapse from new highs look no further than 1987. Took a few weeks to go from sheer euphoria to extreme fear. Granted it was not a bear market, but it took 2 years to get back to those levels.

The last time the market went to a bear market from the highs, I don't know, maybe 1/4/1973...


I am not predicting a bear market, I am predicting more declines...

I was just looking at that chart in relation to the new lows ... that is the only period in time when the number of new lows was very persistantly high for a long time. Not to say that that market didn't have rallies.

[ogm]

if you want to see a collapse from new highs look no further than 1987. Took a few weeks to go from sheer euphoria to extreme fear. Granted it was not a bear market, but it took 2 years to get back to those levels.

The last time the market went to a bear market from the highs, I don't know, maybe 1/4/1973...


I am not predicting a bear market, I am predicting more declines...

I was just looking at that chart in relation to the new lows ... that is the only period in time when the number of new lows was very persistantly high for a long time. Not to say that that market didn't have rallies.

Actually 1987 was not the same.. it was just an event. The market tanked for a couple days, generated spike extreme readings and moved on.

1974.. that was the real bear market that started with small consolidation, run to new highs, and then long and persistant decline. Thats the only possibility bulls should be afraid of. That market just rolled over and kept rolling. But it wasn't a swift carnage, just very persistant long term downtrend.

[arbman]

The only way such an outcome can occur is if the credit markets can not recover because the oil stays persistently high despite this decline and the USD remains very weak. Last summer when they pulled the market down, the oil collapsed with the market and fueled the rally as well, this time it didn't, so far...