7 replies to this topic

[SemiBizz]

That's one good reason these stocks are going to go nowhere... There was incredible speculation at the top especially just before the market crashed... there were insane premiums being paid on rumors... all that speculation is Over !!

[JAP]

That's one good reason these stocks are going to go nowhere... There was incredible speculation at the top especially just before the market crashed... there were insane premiums being paid on rumors... all that speculation is Over !!

No liquidity is right, but just wait until the LBOs start falling apart

[CNSZ]

That's one good reason these stocks are going to go nowhere... There was incredible speculation at the top especially just before the market crashed... there were insane premiums being paid on rumors... all that speculation is Over !!

No liquidity is right, but just wait until the LBOs start falling apart

That's what I am waiting for, I am also waiting for housing price to drop like a rock and consumer spending to go down. shorting the market 100% comfortably.

Edited by CNSZ, 20 August 2007 - 09:15 PM.

[tommyt]

the buyout mania has subsided, now we can just go up the norm, 9-10% year.

[pdx5]

Not only that but we are entering the worst seasonal period for markets, september & october, when historically markets have advanced the least on average. If you are long, keep your finger on the trigger.

[SandStorm]

There is one more potential negative reason even if one argues that liquidity is still there - "liquidity trap." Be on the lookout for extreme risk-aversion on the part of banks and investors. We had a small taste of that last week when only t-bill is considered cash-equivalent. Monetary policy is ineffective under this scenario.

[HoseB]

There is more than one kind of liquidity...

"Lots of dirt-cheap money, spreading it around willy-nilly, no worries".

"There's money around, but it's not dirt-cheap". ie, You can still get a jumbo loan if highly qualified, but the interest rate has gone up.

"There's money around, but nobody's willing to pay for what is potentially a CRAP asset that can't be valued properly." If this is what we have now in part of the mortgatge market, all the liquidity injections and rate cuts won't help the mortgage market much if at all. (However if they keep trying to liquify the system and cut rates, that money will find its way into other assets... like stocks. And if the stock market is going up, we'll dismiss the mortgage mess as "no big deal".)

[humble1]

this is a great thread, imho, with many important reminders. may i add this one: the graham-dodd p/e model - the classic way of valuing stocks - has the p/e ratio at 27 !!!!! 'nuf said.