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Historical Bull and Bear Markets for the Dow: 1900-Present
I suspect that the 2000-2003 bear will be short in comparison with this financial disaster since the basic financial system remained sound, world wide. Not so this time.
Now we have to recover with badly wounded banking system, looking over it's shoulders at regulators trying to make sure every loan is justified. Good thought, and necessary in view of the abuse in Congress and with powerful corruption caused by Acorn along with Feddie and Fannie.
Now, lenders are crippled with shortage of qualified employees to make loans, review appraisals and process the loans. Also, I cannot foresee a return to the securitization of mortgages any time soon, so lenders that make the loans will probably have to live with them for the duration. Maybe 10 years from now there may be something similar, but hopefully with strong regulation.
Global Liquidity Crisis: What Now?
Capitalization rates were two low, based on expected appreciation and low interest rates. They will begin to rise with the interest rates and added risk premium due to rising vacancy. Prices of commercial real estate will be falling, as will industrial property with rising unemployment.
This means, that while residential property values may bottom in 2010, there will be a longer delay before commercial real estate will show signs of recovery. New construction might be expected in a more normal recession sponsored by government, but with lower property taxes and failing state governments (CA and NY etc) there is no source of wealth to back up the economy. Then if you really want to get depressed, what will happen as social security tax revenues fall and the system breaks down sooner than expected?
A long bitter road is ahead, better tread carefully.
Might be a that WW III will be needed to end the mess. This could all happen much sooner than you expect. What happens if there is an Iran-Israel war between the time of the election and inaguration? Get right with GOD?
Analogies to the Great Depression
The only problem is that I own SRS and now I am not sure what the effect will be if they ban the mark-to-market rule. Just think, need some appreciation to support more debt, no problem!
Bailout Is Just the Beginning
TNH Terra Nitrogen Co.
EPS $13.95
PE 7.52
YIELD 14.24%
75% of the stock is held by insiders and there is very low trading volume. Yesterday was only 195,000 shares! I own the stock and recommend it.
Analogies to the Great Depression
Who will bail out the REITs?
There is just not enough money to bail out everyone, especially as unemployment begins to climb. Who in the world will we get to occupy all those offices formerly occupied by Wall Street?
Surely there has to be a better way than what Paulson and the democrats want.
Google "Community Reinvestment Act" and check out the discussion in Wikipedia for clear description of how the mess really started with Freddie and Fannie and who really ruined it for all of us.
Worst Dow June Since Depression
TAX, TAX,TAX
SPEND, SPEND, SPEND
DEBT, DEBT, DEBT, DEBT, DEBT
FORECLOSE, FORECLOSE, FORECLOSE,
o'BAMANIA!!! o'BAMANIA!!! o'BAMANIA!!! o'BAMANIA!!!
THE MARKETS WILL TRULY GO DOWN FOR THE KILL IF WE ELECT o'BAMANIA!!!
I AM NOT THRILLED WITH McCAN, BUT I SURE DO LIKE HIS PLAN TO DRILL OFFSHORE, FUND NUCLEAR AND OTHER ALTERNATE SOURCES OF ENERGY AND FORGET THIS ETHANOL SOLUTION. WE MUST INCREASE OIL SUPPLY NOW, WHILE WORKING ON ALTERNATIVE ENERGY. WE NEED TO ANNOUNCE THAT WE WILL USE ALL OF OUR STRATEGIC OIL SUPPLY STARTING TODAY. THAT INCREASE IN SUPPLY WILL DRIVE THE PRICE OF OIL BACK TO $50, THEN WE CAN REPLACE OUR OIL AT THE LOWER PRICE, RATHER THAN PAYING $140 NOW. HOW IS THAT FOR A PLAN?
I SURE WISH WE WOULD DRILL IN ANWAR. STUPID ENVIRONMENTALIST SAID 20 YEARS AGO THAT IF WE DRILLED THERE, THAT IT WOULD ONLY LOWER GASOLINE 1 PENNY! THAT WAS WHEN GAS WAS $1.29/GALLON. THEY HAVE NOT CHANGED THEIR THINKING WITH THE CHANGING TIMES. LOOKS LIKE THEY WOULD HAVE KNOWN THEN THAT THE PRICE OF OIL WAS GOING TO RISE OVER TIME, NOT STAY AT $1.29 WHERE A PENNY WOULD NOT JUSTIFY DRILLING.
NOW, WE ARE HEADED TOWARD $150 OIL AND $200 AS SOON AS OPEC CAN DO THE DEAL. OF COURSE THEY WOULD NOT LISTEN TO BUSH, HAT IN HAND PLEADING FOR MORE SUPPLY.
OIL PRICE IS SIMPLY SUPPLY AND DEMAND. OPEC HAS THE SUPPLY AND WE HAVE THE DEMAND... GUESS WHO WINS?
THE CRATS ARE STUCK ON STUPID AND THEY WILL DESTROY FREEDOM. YOU WOULD THINK THEY WERE WORKING FOR OPEC, SINCE OPEC WANTS OIL TO RISE AS HIGH AS POSSIBLE SO THEY WILL HAVE THE GOLD AND WE HAVE NOTHING. THEY ARE ALREADY BUYING OUR BANKS AND REAL ESTATE (REMEMBER THE NY PORT DEAL) AND TO FUND DEMOCRATS TO CARRY OUT THEIR EVIL PLAN. (REMEMBER CHINA AND MID EAST FUNDING CLINTON?)
THEY WANT THE FREE WORLD TO BECOME "ISLUM." THE NON-MUSLIM OPEC MEMBERS OF THE CARTEL ARE ALSO CRAT CO-CONSPIRATORS AND WILL BECOME FUTURE SLAVES OF "ISLUM." STUCK ON STUPID. THOSE WITH THE GOLD MAKE THE RULES. I HAVE LITTLE FAITH IN THE INTELLIGENCE OF THE AMERICAN PEOPLE AT THIS VITAL TIME IN HISTORY. BETTER DO SOME SERIOUS PRAYING FOLKS, EVERYONE IS ON HIS OWN! GET RIGHT WITH GOD, TIME IS RUNNING OUT.
7 Reasons March Was Not the Bottom
I come to that conclusion by analysis of the NASDAQ bubble in 2000. I used the chart in Scottrade to compare with several indexes that reveal the new bubbles that far exceed the NASDAQ of 2000. IYR, the Dow Jones Real estate index is higher than the high of the NASDAQ. The FXI (China) index is reached TWICE the level of the NASDAQ and EEM (emerging markets) reached an even higher high before all the indexes topped out in 2007.
Now, if you followed me on that exercise what next?
Well, follow the descending line of the NASDAQ as it bumped along many so called bottoms until late 2002. The extremes of the IYR will likely follow as similar path, IMO. The fact that the China and emerging markets are all sharply off their highs should give one pause. The fact that stock exchange all over the world, except for Mexico and South America are all trading below their 200 day moving average should really make one ditch the kool aid! When you take the chart and start drawing lines, of the likely outcome it is not hard to imagine a Dow 8000.
I was just reading in National Real Estate Investor that Capitalization Rates on New York real estate on property bought in 2006-2007 was only 3%-4%. (UK cap rates in this same time period were reported to be 4.56%) In my judgment, a cap rate of 6% would be the lowest reasonable rate justifiable for an all cash purchase. (If the cap rate doubles from 3% to 6%, assuming NOI remains constant means that the property value will be slashed by 50%.) In time, over the next 2 years, hedge funds needing cash and lenders trying to sell buildings taken in foreclosure, etc., and I would think the higher interest rates (junk bond rates)? and lending standards will force a potential buyers to sharply lower their offers.
There are many now projecting revaluation of overvalued prime real estate over the next 6 quarters, Chris Marshall et al.. I think that we will all be shocked at how long it will take to recover from the housing and commercial property bust. I read that the AIA has reported the architects have almost no new business, which is a 9 month leading indicator for commercial construction to begin. With no new construction in the pipe line, how can there be a recovery of jobs or consumer spending? With the lack of bank financing at attractive interest rates this is certainly reasonable.
You know, another factor no one seems to appreciate in the home lending business is that there are a huge number of mortgage companies have gone out of business and employment is down sharply. It will take a long time to rebuild the lending process so that each loan approval will be efficient. Just think, they may even require honest appraisals for both residential and commercial property again! The lenders have been forcing appraisers to make appraised values high or they get no appraisal work. I am sure that will change once the regulators get back to work! So, from the real estate side of the market, this will be a long painful process, perhaps many years to recover to the 2007 highs in real estate.
As for the "real economy" some like to talk about, I am not sure there is a difference. After, the real economy is really based on fairly valued real estate and is built on the consumer. With the enormous loss of wealth in markets all over the world there just is no credible wealth source to rebuild with except the sovereign wealth funds and I would not count on that to redeem us. Let's face it C, BAC, CFC, WM etc. have all shot their wad and now, so has the FED, they are now looking like OLE "One Bullet Barn" as Andy used to say.
How Now, Charles Dow?
That was a very good comparison, and so true. I think we are in deep voodoo!
Now it not just a recession" we are in...now they are talking "prolonged recession". What a difference a day makes with the crazy markets these days. UP one day and Down the next, for no real reason. I guess there are a lot of folks with money burning a hole in their pockets and they just don't know what to do? It is my opinion that you should either be short or put your money in a bank with 100,000 government insurance for each deposit. Now is not the time to worry about getting high yields. On the other hand, there is one stock I would recommend. Check out TNH, the only long position I like.
How Now, Charles Dow?
Everyone knows the cost of fuel has increased, making trucking very expensive compared with rail, and the index follows the rails. So, how reliable can a theory be that relies on such a distorted indicator? The rails are truly important for measuring industrial activity, but to compare it with current trends does not seem reliable. Please give me your thoughts.
Meredith Whitney Threatens Severe Deflation For Your Portfolio
So is there an answer to this question? What do each of you think the FED and Treasury should do at this point in the down cycle?
While I do not support Hillary, I wonder if she is may be right about putting a freeze on interest rates for home loans for the next 5 years so that the re-sets do not take an additional toll of home foreclosures? Let's face it, bankruptcy and foreclosure will hurt consumer spending for years to come as well as cause the break up of countless families. I suggest maybe a freeze should be retroactive to 1/2007. This may hurt the banks and their shareholders, but who better to pay the price for the fraud on the public in promoting loans they knew were designed to fail?
Maybe some of the j6p crowd might survive to continue paying their way for the lovely homes they could not have afforded at the time of their purchase. By the end of 5 years, hopefully we will have seen the bottom of the recession, and maybe Joe will still have a job and can keep his home during the next 5 years of recovery. I am looking at a 10 year recession-depression from where we are now. What do you think?
The Current Market according to the Dow Theory
The Current Market according to the Dow Theory
At present only the Dow transports are above the 200 day moving average. The industrials and utilities are still well below their moving average.
Did you know that only Mexico of the major stock exchange indexes around the globe is above it's 200 day moving average? That includes China, India, Brazil, England, Germany, Korea etc.
The Dow theory was developed at a time when USA was de-coupled, but for many years now our markets are directly tied to the success of all the world markets.
So, in my humble opinion, the rest of the world must be added to the basic theory to confirm an uptrend. Thus most of the world markets should be in an uptrend, not a down trend. There is nothing that I can see that supports the notion that we are even close to have reached a bottom.
Get real, the bull herd has not even been willing to even admit that we are in a "recession" yet. If we had a rally from here, it can only be considered a bear market rally since we or only at the beginning stage of the recession.
Lets face it we are in big trouble since Citigroup has lost $150 billion of market capitalization since the beginning of 2007, and is no longer the largest bank by assets in the country, and now it is Bank of America. Then consider how stupid it is that are now biggest bank has acquired the largest residential mortgage originator which really promoted the huge subprime mess. Then consider that the guys who made those terrible decisions are still running Countrywide and BAC has paid them huge salaries to continue their bad management.
So now we are told that both BAC and C are in trouble and will be cutting dividends, again.
Then add to the mix that even Goldman and Lehman are both on the edge of downgrades by S-P.
So hang on to your hat, we are still in a downturn that will not reach bottom until possibly 2010, if we are lucky!
Are Treasuries Safer than Cash?
Good Friday gives me a breather before facing the big test coming Monday. Buy or sell, that is the question everyone will be asking.
Dead cat bounce in a bear market? If so, how high and how long. No one knows. In my judgment, it may only be 1 or 2 days befoe the next shoe drops. The truth is the problems will not go away. This is a world wide bear market as evidenced by the fact that ALL the major stock exchanges are trading below their 200 day moving averages. You would never learn that from our "media". The markets anticipate the future, and what they are thinking and clearly saying is down, not up, and clearly not good economic times.
It is hard to imagine how much taxes will go up when I listen to liberal idiots in Congress trying to fix the Greenspan mess. Biggest tax increase in History is coming as long as the liberals rule Congress. I assume a liberal will win the White House because of the stupid actions my party has taken over the last 8 years. We claim to be conservative, but we allowed the securitization of the housing and commercial mortgage market to be inflated by lack of any true valuation standards and loan to value ratios to be required of banks that encouraged appraisal fraud while pretending everything would be fine now that real estate appraisers are licensed. Failure to follow good banking practices led to the depression. There are no standards for mortgages that were sold to Wall Street. You would have thought that we would have learned something from the mess that followed the S & L Crisis in the 80's.
For now, it seems the Commercial Real Estate Bubble is still just bubbling... no one wants to talk about the super crisis that awaits around the bend. We hear about all the job losses in our biggest banks and wall street firms, yet nothing is said about who will rent those huge expensive offices in NY and other financial centers. Just a matter of time till $100/sf rents start making the plunge back to $30/sf. Those super towers will plunge in value along with the hedge funds and REITs that invest in them and from what I hear of the firepower remaining with the Fed, there is no way to stop the massacre.
So what happens Monday? In my judgment, a bear trap awaits my good friends that will pour in the remains of their life savings because the stupid press has told them the crisis is over! So sad.
I am one of those stuck with a loss in gold for now. Perhaps I will be right in the long run.
Thursday Outlook: Where's the Big Fall?
With all the exchanges below their 200 day moving average and making new lows.... How can anyone be positive on this market? All of the emerging markets are included in this statement. In my opinion the market is in total denial when it continues to make a big case for a bottom here. More "dead cat bounces" are ahead!
Warning Signs of a Modern Depression: See 1990 Japan
So do you agree?
1. Gold back up again?
2. Oil up again?
3. Dollar down again?
4. Long and deep recession?
Thanks for your observations.