Monday, October 27, 2008

Mondays market is hard to face,

Tuesdays market is full of disgrace,

Wednesdays market is full of woe,

Thursdays market has no gains to show,

Fridays market is tanking not giving,

Saturdays market steals much of your living,

And the market that is open on the Sabbath day

Is volatile and wild, and full of dismay.

Everything seems to be about markets. This is not because markets are either news or of immediate importance but rather because it is easy to report. The fourth estate is lazy and ill equipped to discern what is important never mind present events appropriately. Will we settle "down" as futures indicate around 8200 or will we "recover" to circa 8800? Doesn't much matter, either one is a temporary stop over. At this point the cheerleaders want a definitive bottom so they can "back up the truck." Of course by that they mean sell you stocks that somebody (they) have for sale. S'okay for them, they get a commission in both directions making their positions naturally advantaged. That's the same reason the best housing deals go to realitters. There won't be a bottom until everyone knows you don't want to own real estate... errr... I mean stocks. I mean both. And the longer this plays out the longer it will persist (another reason they push to definitive bottom meme). There's a wave of imminent retirees from the Boomer Generation and at 7000 instead of 14,000 they'll be selling twice as much to pay for their lifestyle.

62 comments:

Aaron said...

first and only 8 days until this horrid election is over!

Jean ValJean said...

And only 9 days until we start campaigning for 2012.

Aaron said...

one thing that I have done is had my wife increase the amount she can put into her 401k to the max. Sucks for those that are near retirement but for those that have 30 plus years...it is a good time to get stock. We haven't bottomed but no one will know the exact bottom. GLTA. This market was created for the savers. Those that maxed out their credit and now need to pull money out of their 401k to pay bills. sucks for them. they are helping drive this market down. A friend of mine has worked for the same firm since college(managing large public institutions assets) said that this delevering process now underway will take several years to unwind. He said that Asia is in better shape for this prolonged unwinding as they are not in debt like us. Those saying back up the truck...I hope those backing it up realize that there won't be a recovery in the market this year, next year or even the year after. If you can back up the truck and then put it in park and pull the keys out you'll be fine!

Jean ValJean said...

How bad is it going to get?

According to WSJ, pretty dang bad: worst post-WWII recession.

Aaron said...

I think most of us here already realized this would be the worst since the depression.

Jean ValJean said...

Very true, but even as recently as a few weeks ago, you could still see the mainstream newscasts that would even question whether we would even BE in a recession.

Aaron said...

Jean,
I know. I find it amazing that they kept trumpeting what this administration has said about the economic crisis. What else are they going to say? The government cannot come out and say 'we're headed for the worst recession since WWII'. If we could do some digging into the government's talk before each of the prior recessions I'm sure we will find that they never stated we were headed for a recession. It really goes far to demonstrate that the media is really a very inept bunch which demonstrates further why blogs such as CR, etc are so great to visit in this day and age.

Peripheral Visionary said...

I'm not considering "backing up the truck", but I am, for the first time in years, considering increasing my exposure to securities. Of course, I had the same thought a month ago, and moved some funds into Japanese stocks, and promptly got badly burned. Only a small fraction of my portfolio, but lesson learned: if the markets haven't settled down, it's not a bottom.

Going forward, I'll likely leave my existing cash positions, and continue to put most of my withholding toward cash, but start putting a small amount of my withholding toward international stocks. At some point you have to take a chance; it's not called risk versus reward for nothing.

Jean ValJean said...

I have finally decided where I'll be investing:

I'm paying off all my credit card debt (not a lot, but still in the low 1000's), and buying off my girlfriend's CC debt (also in the low 1000's) as well, which she'll repay me at 6%.

Thoughts?

Peripheral Visionary said...

JvJ: The one reason my interest has started turning toward the markets is because my previous investments have all dried up. Paying off my student loans was delivering a solid, perfectly reliable 6% return, but as my loans are nearly paid off, there is no more sweet™ guaranteed return left to be had.

Paying off consumer credit is a very solid return--for your own credit cards, anyway. But with all due respect to what I am sure is a fine upstanding woman, the repayment of 6% from your girlfriend is far from guaranteed. My own standing policy is to consider any money that changes hands from myself to a member of my family to be a gift, regardless of any stated intentions on their part to pay it back. Stick with paying off your own debts, and if you have extra left over, any that goes to your girlfriend can be considered an act of charity which may or may not be returned in the future.

Mr. Outspoken said...

I was trying to balance my portfolio to percentages. I was investing more and more each month, but the crash kept getting worse, so I never caught up. Finally I analyzed how far off I was, and realized I could be getting into safety money in only a few months at that pace.
Now all my new money goes to stocks, but my "safe" money will only shift out at a pace to leave me my "minimum" amount in 10/2010.

Mr. Outspoken said...

Where's Casey? What happened to his strategies and schemes to pay off his debt? Is he figuratively curled into a ball on the hotel floor? Literally?!?

Jean ValJean said...

PV:

Thanks for your concern. I certainly lend only amounts that I'm prepared to lose.

And I have no doubt whatsoever that I will be repayed on my gf's CC investment, but, again, this is money that I can afford to "lose". This will come AFTER I have repaid my credit cards, so I'll be doing it with what I'd consider my "play money." I was intending to use it for a play on the market, but this is a move I'm more comfortable with.

And about KC, wouldn't his 30-day rental at his hotel be ending pretty soon?

Rob Dawg said...

Jezz, the blog host is one of the stupidest in the room. Thanks for all the excellent observations. When my HELOC was 6.5% it made sense to pay it down but at 4.5% and headed towards 4.00% perhaps as early as Wednesday I'll shrink that to the minimum and boost anything I've got with favorable tax treatment. PV is right about other sources of reliable returns drying up.

Apple is a $200 company trading half that only because people correctly recognize it could go to $60 in the short term.

IMO regardless of how sharp the math may appear there is great value in reducing to eliminate any personal debt that does not enjoy deductibility.

Next market sector to break down; telecoms. Why? Because they lack pricing power and growth both of which are built into their prices.

Lost Cause said...

It is apparently all about interest rate cuts.

Telecoms? Are you joking? They can't get any lower! They have been beaten down for years and years.

Peripheral Visionary said...

Next market sector to break down is, apparently, Europe. Actually, Europe has been breaking down for weeks now, but the deterioration over the weekend is extremely severe. Mish has the story, and it is very, very ugly. I suspect that the U.S. markets are staying afloat primarily because they have become safe havens for money fleeing from Europe, Asia, and the Middle East.

Lost Cause said...

This chick has almost a million bucks in credit card lines. She works it very hard, and does not pay any interest on over $200,000 of credit card debt. Do not try this at home.

My Dollar Plan

Rob Dawg said...

Telecoms? Are you joking? They can't get any lower! They have been beaten down for years and years.

Just now, noon PST, Cramer called Verizon a buy buy buy!

I think that seals the deal.

Rob Dawg said...

For the record;
I have a few arbitrage credit cards. The most egregious at the horrible 2.99% rate. A little debt at low rates is not a sin. I've also used money to lend to friends with a suspended disbelief as to whether it will get repaid. Patience is a virtue.

I think Europe is headed to a depression. They are worse by every measure and they have the problem that their "unification" efforts resulted in porous borders.

robyn said...

JvJ - Regarding your girlfriend - at least put the loan - and the terms of the loan - in writing - and have her sign the document. You'll need at least that to write off the loan if it isn't repaid.

Jean ValJean said...

Cliff dive at the close of the market today! I wonder why that was?


and about the putting it in writing: yeah, we're going to do that. Thanks for all the advice.

Rob Dawg said...

Looks like 8200 is the new 8800. Thanks guys.

Property Flopper said...

OT but fun... Sen. Stevens got convicted on all charges. Gee, ya think someone doing all those renovations on your house for free ins't a bribe? I mean, I'll buy Sevens isn't the brightest, but nobody is going to believe he had no idea what was going on.

Akubi said...

Even though I pay it off every month, I'm now getting more cashback from one of my credit cards than my ING savings account these days. The more I feel "encouraged" to consume a bunch of crap I don't need to keep "the economy afloat" the less I want to.

Pleather Murse said...

If asked, I will tell a friend that while I won't *lend* him money I will *give* him some money which he won't have to pay back. For some reason people always take umbrage at this offer. "No, man, it's okay, just give me a loan I'll pay it back." These always seem to be the ones who *don't* pay back loans.

Akubi said...

2759 NOW!
Woohoo!

nades said...

nades writes:
March 31st 1983. Spent hours getting my motorcycle ready for spring. Next morning awoke and couldn't find it. Buried in a snowdrift against the house in Worcester, Ma. I couldn't finish my thesis fast enough.
Rob Dawg


To the Dawg,

I thought you were a Bostonian Collegate! I went to WPI and i'm willing to be a dollar you did too...


I remember busting your balls on your blog a few years ago. We did basically the same exact trip 20 years apart. Except you hit LA and went right I went left. I gave you a hard time about choosing the wrong direction!

Cheers!

~n

As posted late night on CR. Get better so we can share a glass of red on the west coast CR circuit.

Lost Cause said...

Sen Stevens, down the toobz.

Rob Dawg said...

Next market sector to break down; telecoms. Why? Because they lack pricing power and growth both of which are built into their prices.

See Cisco?

Sun said...

Rob,
Agree on the telcos. One question (cliff) to consider. What will WiMax do? Hopefully lower my excessive internet tax.

Lost Cause said...

You are about 10 years too late with that call, Rob. They have never recovered from the glut of capacity after the dot bomb. However, Verizon went up 10% today -- but look at all the debt that they have. I don't think that you know what you are talking about here, Rob. These companies and stocks have been langishing for a long time. You can't go down when you have been on the bottom for five years.

Rob Dawg said...

There ruinous last mile wars going on cable versus phone companies as if that distinction still existed. Like I said they lack pricing power in the teeth of a bad recession and the debt, my god the crushing debt. Here's a two year overlay KBHomes and Verizon. Play with it and tell me what you see.

http://finance.yahoo.com/echarts?s=VZ#chart1:symbol=vz;range=1y;compare=kbh;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

WiMax is ultimately a pervasive technology and will likely become public or at best a regulated utility with no margins.

Peripheral Visionary said...

Lost Cause: in the markets, "well at least it can't go any lower" are famous last words.

Sweet Cashback said...

Another SOB story about a bank outrageously wanting (some) of their money back!!!

Jean ValJean said...

I'll cut her a deal: she can stay in the house when she pays the loan to which she agreed. Talk about fair! Can't get any fairer than that!

Property Flopper said...

Casey has a new post about the end of the world coming "it's all been foretold!". Very little from him, just some "truther" video's I'm not going to waste my time watching. It's lazy even for Casey.

I can see why he wants the whole structure to come crashing down - he's screwed things up so badly, a complete reset is his only chance.

Fits with the gullible trend he's had going - the "end of the world" nuts are his new "get rich quick" distraction.

What a loser. Isn't it time for someone to lock him up? Either the cops (who have shown no inclination to do so) or his parents (to keep him from hurting himself or others). At least until he grows up some...

Lost Cause said...

Yes, the end is near. In one week, we will chase the bums out, and Casey will end up sitting on the curb. What a whacko.

Peripheral Visionary said...

I think that the most common error made by the "end of the world is near" types is that they never seem to realize that, while they may be right, the end of their world is a lot nearer than the end of the world.

w said...

Casey should spend a little time with someone who is dying young to see what he is wasting.

serinitis said...

@Sun

WiMax is not going to do anything about your Internet costs. Its primary target market is licensed frequency connections to cell phone towers. It is being used by some Independant Internet Service Providers to provide Internet, but its biggest advantages over 802.11b are in cities because it handles bounced signals and channel switching better.

Property Flopper said...

W - You are one cruel bastard. Dying young is hard enough, for you to wish Casey on them... well, that's just heartless. :)

Seriously, it MIGHT do him some good, but only if he took it to heart. More likely, the next scam would come along and he'd be off and running... he'd talk about how his friend inspired him to try this.

He uses God to justify all the crap he's pulled to this point, do you think he'd hesitate throwing a dying person under the bus?

w said...

Good point PF!

OT - Does anyone know why there is a maximum amount of power you are allowed to sell back to utilities when you have a solar setup? Is this logical?

Peripheral Visionary said...

w, I suspect the reason is that they don't want you becoming an unregulated power provider. You may not like the cutoff for that provision, but we would probably agree that an unregulated power industry is a Bad Thing.

Pleather Murse said...

GSPG down 16% today back to the .0155 level ...

Rob Dawg said...

w said...
Does anyone know why there is a maximum amount of power you are allowed to sell back to utilities when you have a solar setup? Is this logical?


Makes sense to the utilities. But just wait until the small point generating sources (rooftops) wise up and stop feeding the net once they stop getting paid. Interesting Mexican Standoff situation.

Property Flopper said...

Here's one to throw out there, what are people's thoughts on Berkshire Hathaway? I've always thought it would be fun to own a share and it's at a 52 week low right now - not much over $100k.

Underlying companies are strong, but I'm not sure why it's been dropping so much lately - yes, the market as a whole has been dropping, but enough people are looking for a safe place to stash cash, I'd have thought it would have held up better.

Aaron said...

remember that they are invested around the world as well. Everything is down a bunch and so are they. That's a lot of coin to drop all at once. It's not like you can average into it at 100k a pop!

Mike said...

GSPG 0.0145

DJI up over 650 points

Sorry RobDawg to bring up Casey, but have any of you guys listened to his "web 2.0 podcasts"? I think the kid has finally lost it. He's talking about faith healing (he witnessed people being cured) and positive energy, living in the wilderness etc. He sounds like one of those loveline DJ's. And what is he going to do? He thinks he's going to make a living working for Goldspring or being a paid blogger for someone else. Again sorry for posting about him, but with TC basically shut down, DHCS having closed up shop, and being one of the many banned from CH this is the only place I thought to post. This will be my last regarding Casey unless RobDawg brings it up.

Peripheral Visionary said...

I see it as a blessing in disguise that the cost/benefit for solar panels is not there yet. If it were, and if you could sell an unlimited amount of electricity back to the grid, we would see people cutting down every form of vegetation on their property in order to cram as many solar panels on their lot as possible. The environmental activists would cheer, but the rest of us who live in the real world would be severely annoyed at having to live next to the House of Mirrors.

I realize that the "off the grid" people see these restrictions as being part of the nefarious power industry's efforts at maintaining its monopoly, but you can go ahead and consider me to be in cahoots with the monopolists. I don't want to live next door to a power plant, whether it's coal, gas, nuclear, hydroelectric, or solar. A few rooftop panels is not a big deal, but as soon as people start tearing out trees and bushes to put in panels and reflectors, you're going to run into serious complaints. Ditto for wind, a small windmill on a large property is a very different thing from cramming as many fifty-foot towers as will fit on a lot.

Mr. Outspoken said...

I'm sure the solar restrictions are in place to assure a smoother demand cycle for the utilities. If the utilities are required to buy all available solar power, then they are incentivized to reduce regular power production at those peak production times. This might lead to a lack of capital spending on on-demand power sources, potentially destabilizing the grid.

Pleather Murse said...

For Berkshire-Hathaway you can try BRKB (not BRKA), the nonvoting and cheaper shares which are around $3500/share. Or, research their holdings and you can simply duplicate them with a basket of stocks (some of them anyway.)

http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway

Sun said...

@serinitis

well I am more in the Rob camp. Likely to be very pervasive and a non-perfect substitute for existing Internet (lack of dedicated public facing IP etc). I live downtown DC, they will not lay FIOS here. DC is supposed to be one of Sprint's WiMax test locations; I believe you can already get it in Baltimore (legitimately). Will be interesting to see what happens.

Sun said...

@Mike,
Broke, divorced, nearly homeless, no prospects, reduced to mumbling conspiracy theories, clear signs of drug problem....indeed, a slight deviation from the Millionaire by Christmas (of 2007...) initiative.

I am just a looser W2'r though. What do I know?

serinitis said...

@Sun

If you are in a downtown area, WiMax may be very good for you. Most people that have Internet issues are in boondocks and WiMax does not help them much

Lost Cause said...

There is a guy on YouTube who says that you get 3-5 year payback on installed solar if you have an electric car.

live oil free

Lost Cause said...

Recall how these cycles of extreme volitility always end: a massive crash.

Property Flopper said...

@Pleather - Several of the companies in BER-A are held privately. 100% owned and not available as a separate stock.

@Aaron - Definitely not averaging anything on BER-A, I'd get ONE share and one only. My net worth isn't high enough to buy more than one without seriously unbalancing my holdings.

Just think it would be fun to own one and it seems to be a fairly safe place to park money. Currently, I'm sitting in CD's mostly. Not the best place, but with stocks tanking, at least I'm not losing (sorry loosing) anything.

Lost Cause said...

I think that WiMax will give rise to a whole new category of devices.

Rob Dawg said...

Lost Cause said...
I think that WiMax will give rise to a whole new category of devices.


Yeah, we could call them Macbook Air and iPhone.

Pleather Murse said...

Interesting email I got ...

28-10-2008 06:59:40 Attention: My name is Nick Hinds, funds Manager of Fidelity investment International. The world largest fund management company with over 1.2 trillion Pounds capital investment funds........Fidelity is one of the UK's largest investment fund managers with over 660,000 customers in the UK. We look after assets worth more than £125 billion and are dedicated to achieving the best possible returns for our investors..... Nevertheless, as Fidelity portfolio Manager, I handle all our Investors direct capital funds and secretly extract 3.2% excess Maximum returns capital profit (EMRCP) per annum on every of the investors Magellan capital fund. As an expert, I have made over 44.4 M GBP from The investors EMRCP and hereby looking for someone to trust who Will stand as an investor to receive the funds as an annual Investment proceeds from Fidelity Magellan capital funds. All Confirmable documents to back up the claims will be made available to you prior to your acceptance. Meanwhile, I have worked out the strategies and technicalities Whereby the FUND can be claimed in any of our 6 houses without any Hitch. Our sharing ratio will be 60-40.if you are interested you are advised to forward me your direct phone number nickhinds07uk@live.com for discussion of this transaction in further details. Yours faithfully, Mr. Nick Hinds Fidelity Investment International.

Lab Dog™ said...

Roubini has vulvas on his walls!
In other news, Paris Hilton for prez.
And WALNUTS is storing other stuff.

Lab Dog™ said...

Branch baby branch!