Holy Camoley

global wealth is being destroyed. you're absolutely right on with the final shoe. nyc real estate wealth will be destroyed as well. 50% price reduction sounds a little on the high side with the market about to tank.

I hope someone got their sales contract signed, sealed and delivered yesterday because it's going to be far more difficult to do so, starting today.

i wonder how many people will be forced to sell their homes because they lost their shirts in stocks. Lets be honest here, equities are on their way to down 50% from peak levels last year. WIth many trading on margin, we know the losses are amplified.

This "limit down" is a new thing, what's that all about? (I know, just trying to be cheerful).

UD, I hope you got out of gold.

"equities are on their way to down 50% from peak levels last year"

They may be, but it won't last. What is forgotten here is the vast amount of liquidity that is being pumped into the system. We're getting toward the end of this, and the stock market is a leading indicator. Right now you're seeing growth companies trading at 4x (reduced) forward earnings. These are forced redemptions.

Even when stocks come back again - which will take 6 months to a year - what is dead is the housing market. If the government manages to stop prices from falling (I doubt it) it will just delay the necessary correction because prices are not in line with incomes or rents.

real estate...does that mean someone who paid $700k for a two bedroom back when...wants to sell it for $1.5m is going to reduce their price to $1.3m...real estate is never going to go back to the late '90's. And yes that's a reality check. It's still too high and will remain so.

julia, what's the basis for your prediction? Where's the money going to come from to make monthly payments on existing mortgages? Where's the money going to come from to get a new mortgage at those levels and make the payments on it?

Why is it inconceivable that the two bedroom will once again sell for near $700K ?

limit down is NOT NEW! Its a circuit breaker to attempt to calm things down when there is panic selling.

Steve - I disclosed on this board my trades. I have gold from mid last year and a position from low 600s. I sold a portion of gold between 875-925 (like 25%), not the top but who can pick perfect tops, and I have DEC $71 PUTS GLD, to protect against deleveraging. Dont worry about me. I'm looking to refill my position around here, and I'll probably lighten up on puts if we hit 650..I hope you sold your copper and silver and any other stocks you may have been bottom hunting on. Im still up about 8% since this time last year, but that is down about 14% in past 4 weeks as I did have some index funds and dabbled with FCX around 8700 DOW levels. I made my money on shorts (SKF, EEV, SRS) and disclosed that here as well, but I messed up by selling those ultrashorts way way way too early at Dow 11,200. I just started getting long late last week when spreads started to come in. Oh well.

julia a 1.5 million 2 br is going to sell for a lot less than 1.3 - under a mill I bet

julia, don't know about late 90s. but i can tell you that it's going to overcorrect on the downside. just like global stock markets, etc. the only person who could be a buyer in this market is:

1) someone who is employed
2) and has employment stability
3) and who doesn't have a significant portion of income in YE bonus (which will be limited)
4) and who doesn't have a place to sell themselves
5) and who has a lot liquidity (at least 30-40% of purchase price in cash - between down payment and liqduidity"
6) and who has not taken a bloodbath in the markets
7) and who is not using foreign currency to make a purchase
8) and who has great credit
9) AND perhaps most importantly, who hasn't read any paper, website, or watched TV to see that things are horrible and manhattan real estate is going down.

So how big do you think that buyer population is vs. the ever increasing levels of inventory we are seeing?

Where's that dow 8000 thread?
They will halt trading if it hits 7591.

"I hope you sold your copper and silver and any other stocks you may have been bottom hunting on."

I sold commodities in May, thanks, and got out of everything except China as this fiasco unfolded. Still I've taken a beating on China but I also fully deleveraged, so I don't care what happens in the short-term.

"and who has not taken a bloodbath in the markets"

I only know of one person who sold out entirely last year. Unfortunately, it wasn't me.

"Where's that dow 8000 thread?"

I started that one.

Most people actually DON'T "have a significant portion of income in YE bonus". But for the many who do, this will have an impact for sure.

That said, I still believe there are people out there w money/prepared to buy who are waiting for the market to dip. Once that happens you'll see activity pick up.

Point is, NYC RE will come back eventually.

It is pathetic how badly some people want the NYC real estate market to crash.

steve - where do i start. You have to fine tune your 'stock market is a leading indicator' statement. Come on now Steve!

STOCK MARKETS ATTEMPT TO BE A LEADING INDICATOR BUT IT IS REALLY A DISCOUNT MECHANISM!!

How do you know what the 'E' in 'P/E' will be! Clearly earnings estimates need to come way down, and who knows how long the slowdown in the real world lasts for.

Liquidity is not as bad a problem as solvency/confidence is, the fed is providing so much liquidity the credit markets are choking on it! Its a solvency/trust/confidence/leverage issue! Bad investments are being purged.

I hear you, when markets panic and selloff on deleveraging, I get very interested. I started getting long at 8700 levels, little by little. It falls more Ill dabble more. But someones may not have traded this way and may be long from much higher levels and forced to sell when Mr. Margin calls! Or they jsut cant take it anymore! Or if they need the cash. They may not be able to weather the storm. That is reality.

Steve - good for you that you got out. These forums are hard to trust when it comes to trading. I know what I did, and I know what I say here, but why would you believe me. I was up 23-25% exactly 1 month ago. But I didnt sell my gold, and didnt have shorts except my protective gold puts, and I started getting long a bit early and messed with some calls that didnt work on this fierce selloff. So I gave back some.

Lets keep conversations constructive and not stab each other on our trades. I dont want anyone to lose money, but when stocks fall 40%, its hard for that to come true..lets just admit that right now, we know we have negative GDP upcoming, and big time rising unemployemnt.

Question is, how much is priced in, and how will fed/treasury actions and programs help. They are trying to fix credit market now, and rebuild financial system. This will not prevent real economic data and main street from suffering for years. Data is set to be worse for the next 3-5 quarters at least. How will stocks trade on this news? Will it rally because its priced in? Will it fall because news is suprisingly worse? No one knows. All we know is that its coming and the world is deflating. And the new world will NEVER be the same, leverage will never be used like it used to, and credit will never get as parabolic as it did the past 5-7 years in the next decade at least. How much growth are we really talking here, and honestly, why are we even talking growth!

We should be focusing on how bad it gets because that is where we are now. We are at now now.

"Even when stocks come back again - which will take 6 months to a year - what is dead is the housing market. If the government manages to stop prices from falling (I doubt it) it will just delay the necessary correction because prices are not in line with incomes or rents."

Historically, how long does it take for a recover to pre-bubble levels? I thought it was on the order of several years to decades for stocks. This is going to have an enormous cost on the retiring generation, who really bought into the market for retirement. That will lead to enormous social and economic drag on governments and the children of retirees who will often be forced to support their parents, leaving the younger generation in even more precarious financial straits.

Nice point type 3. I am waiting for the dow to break through 8k before adding to any existing positions and or building new ones. What we have is a perfect storm, panic/need selling occurring at what is near the beginning of what may well be a prolonged and deep recession.
I am glad to hear the UD is adopting the strategy of us value investors. I started building positions around three and a half weeks ago, and I am hoping for a nice late day capitulation to add to some positions and start new ones. I bought FCX at 31, and I will add more if it cracks 20, but only as a growth play. I was saying a while ago that I would consider looking at gold once it cracked 700, but the more I think about it, the less I like it.
In terms of valuations, it is hard to get a handle on that in the best environment, to do so in this one is even more challenging. That being said, the massive panic selling is having an impact on stock prices that have nothing to do with valuations, and that is where the opportunity comes in. No one can time a bottom, and I said I was giving myself a 12-18 month period to build positions. Things are happening a little quicker than I thought, so I am forcing myself to be disciplined when I buy, because I must admit that I love the prices.
Stocks are once again becoming what they were always meant to be- "I like your company and will invest in the expectation that in the future (5, 10 years..whatever) you will grow the business and my share will be worth more money. In the interim, you will pay me a dividend for use of my money" I like that formula and for the first time in almost six years I am willing to invest in equities.
DD,DOW,AA,FCX,MSFT,V,FDX,BAC,NWL,MHP,GE,CAT...I am now looking at some pharmas, but they are tough due to their massive exposure to government regulation.

Special_K, you nail it!

althouth you left out trust fund babies that can pay with cash. people that inherited their money tend to be more clueless than those that made it, which help them when it comes to satisfying your requirement number 9.

that said, requirement 9 and requirements (5&6) are totally incompatible. sorry for the math geekness here: 9 intersection (5 intersection 6) = empty set.

"It is pathetic how badly some people want the NYC real estate market to crash."

LOL this reminds me of those that say "it is pathetic how badly some people want the USA to lose in Irak"

"Data is set to be worse for the next 3-5 quarters at least."

I don't know that. This is the first time ever that there has been a downturn in such an interrelated global economy, with multiple growth foci. I believe it will be the Chinese who lead us out of this, by stoking domestic demand.

I have a lot of cash & will have more since I decided to sell my place on Fire Island. I will start to reinvest in the stock market when the lows start to get higher, which may start in a few weeks to months. Usually I would think that a Democrat would cause the stock market to fall, but this time I think it will be a sense of relief to know that the financial markets will be restructured under an Obama administration, because that's what needs to happen. We need to throw out free-market economics for the time being.

One advantage of having realized losses this year is that when I recapture them in the future, they will be at the higher capital gains rate that will surely be instituted. I have to stay positive. :)

"I only know of one person who sold out entirely last year. Unfortunately, it wasn't me."

steve, now you know two. Out since March.

As usual Steve, I agree with you and particularly your point on Obama. I won't bore anyone with my own political views, but I do think that there will be relief when he wins, and it will serve to rebrand the USA, similar to say Arnold Palmer endorsing Goodyear. Tough to pick a bottom in any market, but I have deicded to start building positions in PFE, MRK, and LILLY if this things drops below 8k, or if we start to firm up around 8700 for a few weeks.
My only concern, is some type of crazy rally above 10k, based upon euphoria over Obama, or whatever. If that happens, I will have to sell everything and then start over, because that is more volatility to the upside than I can handle. I am ready to ride this thing down to 7, deliberately building and adding along the way, but a screaming rally to the upside would push me out.

"Usually I would think that a Democrat would cause the stock market to fall, but this time I think it will be a sense of relief to know that the financial markets will be restructured under an Obama administration"

I agree with this!

at least from a market perception standpoint. Nobody talks about the idea that maybe part of the reason of this sellof is due to a democrat about to win office. Hmmmmm. Why not? Sell the rumor, buy the news.

"Usually I would think that a Democrat would cause the stock market to fall, but this time I think it will be a sense of relief to know that the financial markets will be restructured under an Obama administration, because that's what needs to happen. We need to throw out free-market economics for the time being."

Historically, a Dem getting into office would argue for investing in stocks:

"Since 1929, Republicans and Democrats have each controlled the presidency for nearly 40 years. So which party has been better for American pocketbooks and capitalism as a whole? Well, here’s an experiment: imagine that during these years you had to invest exclusively under either Democratic or Republican administrations. How would you have fared?

As of Friday, a $10,000 investment in the S.& P. stock market index* would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover’s presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years."

http://www.nytimes.com/interactive/2008/10/14/opinion/20081014_OPCHART.html

http://finance.yahoo.com/expert/article/futureinvest/3022
http://www.usatoday.com/money/perfi/columnist/krantz/2005-12-02-presidents_x.htm

I couldn't resist starting positions in PFE and LLY today. I only bought a fraction of what I plan on buying, but when I hear Bill Gross talking about a Bull Run coming, I need to at least get started. That being said, it is definitely a time to be deliberate, active and patient.

Special_K, you are right, it's time to open sub-office in China...

type3, that doesn't seem to factor in what happens up to the new presidency.
Perhaps stock markets decline in anticipation of democratic presidencies, leading to the increased performance once they are in...

Real estate excess was far ahead of anything in the stock market, because it was far more levered. The stock market barely kissed its 2000 high before it crashed. Buy stock, if it goes down, flip it into a down payment in 2 yrs on a 50c on the peak dollar apartment.

"type3, that doesn't seem to factor in what happens up to the new presidency.
Perhaps stock markets decline in anticipation of democratic presidencies, leading to the increased performance once they are in..."

I wasn't looking at causality, just that it makes sense, if you play historical odds, to buy now if you think Obama will win.

Secretion, anyone who this President dictate stock markets is reaching. So did the market tank in anticipation of Reagan? Of course not, Reagan it to credit for the recovery (really Volker and the business cycle) and the demise of the Soviet Union (actually the collapse of oil prices)...but who cares really.

HI Rhino, the stats are the stats. Markets have performed significantly better under Democratic presidents. Frankly, I don't know why this is. One can spin many ideas. But, if history is any guide, an Obama Presidency means it's time to invest.

There are also stats that show the winner of the Super Bowl (AFC or NFC) impacts the performance of the economy. Type3, please understand that stats are never just the stats. I mean in my lifetime we have had a boom under Reagan, under Clinton, a bust under Carter and under Ford. Your stats are meaningless. Honestly, I think it is the time to buy stock, assuming the world will not end, and with a 5+ year time horizon. The biggest problem is if the world is ending, you will need that cash. There is never a good play for the end of the world, so I go with the former for now, in measured steps for every 10% point move in the S&P.

everybody on this board is living a fantasy...we will reach bottom when everyone here stops trying to catch a falling knife. As I predicted several weeks ago this market will continue to trend downward...there will be no relief rally of any kind whe the election is settled.

The market will just focus on earnings (which will be horrendous in the 4th quarter) and continue to go straight down. All the speculators who jumped into the market 3 weeks ago will likely get torched...then you will have your precious bottom.

Its not catching a knife to say the market is a good investment. Get a clue.

Hope is not a sound investment strategy

No what is sound is to look at the valuation. Then look at the performance of the market over the 10 years following prior periods when the valuation was similar to what it is today. Read a book or two.

I just read Slash's autobiography. Its great.

Rhino86: another newbie here to tell everyone how to invest. You'll be gone like the other ones in a week or so.

...why don't you tell us how long it took for the market to recover after the 1930 bear market and 1970s... then tell us why your money magazine and kiplingers article as well as all the other people who completely missed this downturn are telling you why this is different form those bear markets

By the way I dont need to buy a clue...I already have one newbie...I've been in cash since November...and I hve been on this board for over a year predicting this downturn...where have you been...diligently putting money in your index fund that is 40% down?

oh no ...let me guess...you've been in cash since last year right newbie

You're the one who needs a clue...

You're a dope. There's no sense arguing with a fool. And there's no believing how anyone says they have been positioned in the past on a blog. Good luck with your cash strategy. You are right, the stock market has been cut in half and still nothing is attractive.

rhino86 just learned the word valuation in his fast money class...and want to impress us with how astute an investor he is...that is so cute

Rhino86 : all you did was insult me...where are your cogent arguments for why I'm wrong...instead of throwing around words like valuation ... and name calling how about trying an intelligent discussion...don't you realize that you damage your credibility when you resort childless namecalling instead of facts...

You are the fool...based on your lack of intelligent discourse...newbie...I suggest you stop insults if you want people to take you seriously and come up with cogent arguments

I sold all my stock on October 9, 2007. I've been 100% cash since then.

Really.

Rhino has a point... this is what bottoms look like. If folks didn't think it could get worse, then it would be up already. Times like this are when fortunes are made...

Which is why I need to keep talking the stock market down. I'm right there with you flmd.

Or did I just sell my position last week and need it to go down further to look smart?

Which one is it?

You guys can be the judges.

Times like these are when fortunes are lost.

Its just that you, nor I, nor anyone has ever seen times like these before. The thing that separates now from the Great Depression is that they didn't have the leverage in the Great Depression that we have right now.

> Times like these are when fortunes are lost.

The fortunes were already lost. Figure if there is any more fortune to be lost, we'll have no country anyway. At that point, what would the money be worth?

nyc10022: I don't think anybody can predict what a bottom looks like...I'm sorry there are to many people out there calling a bottom...I have too many clients and friends who want to get back in the market...that just isn't a good sign

The delveraging in hedge funds will continue...and the layoffs will continue...these three things point to more pain.

I aggree that stocks are cheap but that doesn't mean they can't get 25% cheaper. Real Bear markets absolutley destroy investor interest in stocks

It won't be worth anything.

> nyc10022: I don't think anybody can predict what a bottom looks like

I'm not predicting what a bottom will look like, I'm saying what bottoms generally look like. I've been threw a few, and know that even at the absolute bottoms, there are still folks saying "its gonna get worse". That happens with every bubble.

> I have too many clients and friends who want to get back in the market...that just isn't a good sign

How is that not a good sign? Generall those folks miss the bottoms, and buy in after substantial increases. Outflows usually peak right before runs.

> I aggree that stocks are cheap but that doesn't mean they can't get 25% cheaper. Real Bear markets
> absolutley destroy investor interest in stocks

I don't disagree with that. But, look around, not a whole lot of folks with interest. If they're not in, they're not that interested... they're waiting for something to happen. If 50% of drops didn't make 'em buy, they're clearly waiting for the 15% increase to buy...

> That happens with every bubble.

This isn't every bubble.

> How is that not a good sign? Generall those folks miss the bottoms, and buy in after substantial increases. Outflows usually peak right before runs.

You don't get it. At all.

> I don't disagree with that. But, look around, not a whole lot of folks with interest. If they're not in, they're not that interested... they're waiting for something to happen. If 50% of drops didn't make 'em buy, they're clearly waiting for the 15% increase to buy...

You really don't get it.

nyc10022: uh oh, you're turning into a Steve disciple by breaking up comments and responding to them : )

it is always a contararian sign when my clients want to do anythig en masse. When they want to invest I can be sure that something is going to lose value...it never fails...they are the classic contraian indicator. The last thing they all wanted was commodoties 5 months ago.

The fact they all think this is a bottom is not a good sign believe me

"it is always a contararian sign when my clients want to do anythig en masse. When they want to invest I can be sure that something is going to lose value...it never fails...they are the classic contraian indicator"

Is this simply because your clients in particular happen to be fucking idiots? Just trying to understand where you're coming from.

Flmd, never has more truthful post been posted.

If they think its a bottom, why aren't they in?

My 3 brokers pals have all said they're got the majority of their clients running the other way... we also have more mutual fund outflows than we've had in years.

> This isn't every bubble.

But it is a bubble.

> You don't get it. At all.

Great logic. You have me sold.

Last 3 bubbles, I remember someone saying something like that at the bottom too. "Just wait... you don't know... falling knife".

You couldn't have a bottom without it.

Julia my dear 700k is about right for the city. Remember you need good paying jobs to support these outrageous real estate prices it was based on smoke and mirros in the form of CDO's, SIV's etc....leverage on top of leverage all created by the crooks on Wall St. You can't grow an economy based on debt as an engine when you outsourced good paying jobs. Japan's banking system collapsed in the 90's due to leverage and housing followed suit to 1980 levels and never came back even as of today.

The government is pumping liquidity into the banking system so that banks can lend money on credit which creates more debt in order pull themselves out of this crisis.....isn't this what got us into this mess in the first place? With rising unemployment how in hell is creating more debt a way out of this mess?
Problem is Wall Street created an economy based on credit and debt that enabled them to pocket $63 billion dollars in bonuses alone in 2006 not including salaries, scary they just took this up front for years and now the collateral damage is evident...smoke and mirrors. which is now biting us in the ass. Yes there will be a fire sale in real estate there is no way around it. No foreigners to buy up this excess anymore because they are losing their shirts too now with the world economy imploding and the strength of the dollar during this crisis rising making real estate more expensive for them anyway.

Five million more unemployed?
Posted Oct 24 2008, 06:39 AM by Douglas McIntyre Rating: Filed under: Lehman Bros, banking, Citigroup, GM, JPMorgan, Wachovia, Wells Fargo, credit crisis
No matter where economists look there is no evidence that a recession in the US, EU, and Asia is doing anything but deepening. The stock markets are the least of it. Some of the indexes in the largest countries are off 40% from their peaks reached a year ago. Banks are failing. In cases where the government has not stepped in some have disappeared and others have been merged into more healthy institutions. Healthy for now, that is.

The financial sector could easily lose several hundred thousand jobs in the US. New York City expects employment in the banking and brokerage sector to fall by 150,000. Marriages like the ones between Bear Stearns and JP Morgan and Wachovia (WB) and Wells Fargo will clearly put tens of thousands of people out of jobs. Goldman Sachs apparently will let 10% of its workers go.

The trouble has spread well beyond banks. Merck, Xerox, GM, and Chrysler just said they will push more poor souls out the door. Even a successful tech company such as Hewlett-Packard has taken significant numbers of people out of its workforce.

So, how many people, how many people in total could lose their employment over the next year?
In the recession which started in 1973, unemployment hit about 9%. As of last month, the comparable figure was at 6.1%. With a national labor force in the US of about 145 million people, that means 4.5 million more people could be out of work relatively soon. That does not take into account the “shadow” army of unemployed, the people the government says are no longer looking for jobs.

Economists, particularly those with a dark view of the world, are concerned that 9% may not be the end of it. As people lose work, retail spending drops which can lead to more layoffs. The housing crisis could get worse and foreclosures may rise. More people with mortgages could find themselves “underwater”, a term which lacks the power of describing the dilemma. Credit is rarely given to those with such substantial leverage, although it was common in 2005 and 2006.

The press and those in despair almost always turn to the government for answers to the most perplexing questions. But, in this case they will not get an answer. Short of what was done in the 1930s. there are no ready solutions and even a series of actions like those taken by Roosevelt might do no good.

Put bluntly, it is hard to imagine that at least another five million people will not lose their jobs over the next twelve months. No matter how much money is pumped into the banking and mortgage systems, the carnage cannot be prevented. It will be left to private enterprise to take advantage of the situation, a process which is fueled by opportunistic thinking and greed. Bottom fishing will become an art. Finding opportunities in the rubble will make some people rich. At that point, the economy will start to drive back up again. The rich willing to take risks almost always sense a bottom.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

Related articles:

> Julia my dear 700k is about right for the city

$700k apartment usually means $200k salary needed. With old wall street gone, that sounds more like the realm of possibility. Non-finance middle manager jobs will likely top out around there for the next few years...

by the way I still haven't received a reason as to why this bear market will be any differnt from that of the 1930s or 1970s

Also we aren't that far from the lows of 2002. If that happens that will mean that the years of 2003-2007 were the biggest and longest bear market rally in history.

For those who are confused that means we have been in a secular bear market since spring 2000...although if true that is actually a reason for optimism and belief that we have reached a bottom of sorts

> by the way I still haven't received a reason as to why this bear market will be any differnt from
> that of the 1930s or 1970s

Well, 30s, we don't have a government responding with counter-productive measures. They tightened money supply and raised trade barriers. Now, we're working in the opposite direction.

70s... we had killer inflation. We seem to have the opposite these days.

beatyerputz: all clients are idiots...the natura human tendency is to buy high and sell low. It is common with everyone. They are not idiots they are human.

It is common knowledge that the great makority of investors have not enjoyed the mythical 10% rate of return from markets. They always make the wrong decisions and get killed.

read a little on "contrarian indicators"

I agree, you want to be on the opposite side of the masses. But we have major net outflows from mutual funds, and hedge fund redemptions. People have been on the way OUT for some time. Even your "interested" clients don't seem to actually be in the market...

Sounds like the idiots are on the sidelines now...

nyc10022: you make some inconsistent statements

you use both investor interest and investor disinterest as signs that we are at a bottom. you cannot have it both ways.

also it has been well established that true bottoms have been hit when there is complete apathy toward the markets...based on interest from my clients I don't think it has been reached

"They always make the wrong decisions and get killed."

But the only decision that's been made in the past two months is the decision to sell. And pretty much everybody made it, if they hadn't already. Including SAC and just about every other hedge fund, whether or not by choice.

I'm not saying that the market has bottomed. None of us know that. But your "instinct" and "contrarian indicators" were more indicative of a drop back in October 2007 than they are now. Everyone I know who did not have the stomach for the market is out of it now. How would you read that?

> you use both investor interest and investor disinterest as signs that we are at a bottom. you
> cannot have it both ways.

No, I'm saying your claims of "investor interest" are just backward.

You are ignoring the outflows (which is documented) and the one anecdote you give is a bunch of folks who apparently *aren't* in stocks.

I'm not having it both ways.... both ways just happen to say investors aren't very interested...

> also it has been well established that true bottoms have been hit when there is complete apathy
> toward the markets...

I don't know how that is "well established", because it is not actually accurate. Pick a bottom, and there are ALWAYS folks saying it can get worse. If there weren't, it wouldn't have gotten to the bottom in the first place. Its not well established, its actually backward.

beatyerputz is right.... folks lost their stomachs quite some time ago. That its not 100% of folks losing their stomachs is how it works. You never get 100% capitulation. That idea is just wrong...

Here is a very easy way to think about it... at any market bottom, somebody sold... and somebody had to have bought for that to occur.

The idea of 100% capitulation is just wrong...

these "idiots" on the sidelines you refer too have managed to avoid 30%-50% declines.

me and the other idiots will sit out the big upcoming rally thanks

I know some of you are fond of "the early bird gets the worm" but in my business we like to follow "the second mouse gets the cheese"

be very careful

> these "idiots" on the sidelines you refer too have managed to avoid 30%-50% declines.

And I'm sure they all rode the last rally all the way up to 14,280 and sold right there at exactly that moment...

BTW, idiots was your call... "all clients are idiots..."

In case any of you people think this is sour grapes on my part my inheritance along with my brothers which is old money in real estate has been deleveraged from a high of about 2.5 million to around 1.5 million today by my estimates, property is in Astoria. But my parents never took out helocs or equity, we broke our ass fixing and repairing ourselves. I was offered over three million a couple of years ago but I run a small business from a storefront and didn't want to put people out of work who needed me. Plus I never thought this property was worth this much and frankly I live within my means and I don't give a shit.

I did not call my clients idiots...it was a respnse to a ridiculous betyerputz who called "my clients" idiots.

I was explaining to him that all clients everywhere are idiots if you follow his train of thinking.

I'm sorry to burst your bubble but there are people who listen to people like Roubini, Grantham , Grant the lsit is really endless and did the right thing by either getting our of the market or at least increasing their exposure to bonds to 50% - 60% of their portfolio.

No one gets out at the high or gets in the bottom...but there is a way to limit your losses. most of my clients are down anywhere from 0% - 20%.

My 20% down clients and I are having a discussion as to how much more downside risk they can handle

BTW the way I brought new equipment 5 years ago I saved then went out and brought it with cash and did it in phases. No debt no leverage, the way things should be.

> I'm sorry to burst your bubble but there are people who listen to people like Roubini, Grantham ,
> Grant the lsit is really endless

And at every bottom there has been an "endless" list of folk saying it can go lower...
thats the point...

The biggest gloom is at the bottom. And the biggest outflows are at the bottom.

If there was LESS gloom, it wouldn't be a bottom.

> No one gets out at the high or gets in the bottom...

Which makes the claim of folks "avoiding 50% losses" disingenuous...

no it is not disingenuous...the losses you refer to are looking at an index. There are people who are invested with active managers that have lost way more than the index. No only that there are people who have invested their entire portfolios in emerging market countries like India, Russia or BRIC

they are down more than 50%

> There are people who are invested with active managers that have lost way more than the index.

Which means by definition there are folks who made way more...

I didn't "avoid a loss" because some other guy lost in blackjack.

nyc10022: we're going to have to call you stevejr. you selectively pick things out of peoples statements to make points (I said 30%-50% don't just focus on 50% to make an irrelevant point ) and you're traveling to different threads and adding comments all over the place

flmd - you were the one who said that your clients are contrarian indicators. Who are your clients - funds? high net worth individuals? average joes?

Please clarify a couple of things:

1. "increasing their exposure to bonds to 50% - 60% of their portfolio"
I sure hope you mean treasuries and not corporates/municipals, which have gotten killed.

2. When you say down 0-20%, I assume you mean on a broad portfolio basis (i.e., on a liquid net worth basis, effectively including treasuries and cash). In other words, those down 0% include people who are 100% in cash.

3. On an aggregate liquid net worth basis (cash, equities, bonds, marketable securities, commodities, etc.), how much would you say your average client is down from the peak/this year?

yes they are contrarian indicators...not idiots. its my job to moderate their impulses. and over time I just notice that they are very good contrarian indicators

1. predominantly treasuries but we also go into munis. yes muni funds have gotten killed but we normally recomend that our clients purchase a laddered muni bond portfolio. The values went down when people were selling but there was a huge rally this week when people realized the opportunites.

as long as you stick to a diversified high quality muni bond portfolio you'll be fine. That also assumes you don't need to sell anytime soon.

2. yes, we look at overall prtfolios. actually the 0% people are clients in hedge funds...some of them are having good years. I do not have any clients that are 100% cash

3) on an aggregate basis I would say that cleints are down 15% from the highs. Diversification across broad asset classes saved my ass.

"There are also stats that show the winner of the Super Bowl (AFC or NFC) impacts the performance of the economy. Type3, please understand that stats are never just the stats"

Rhino, you're missing my point again. From your example, if there were as reproducible a performance between Superbowls and stocks as there is between political party in the White House and stocks, it would be worth considering.

My point isn't about causality. It is about coupling. Democratic administrations are strongly coupled to much better stock performance that Repuiblican admins. It is only information. You can use it as you like.

" I mean in my lifetime we have had a boom under Reagan, under Clinton, a bust under Carter and under Ford. Your stats are meaningless. "

Meaning has many aspects. But if you look at average performance, the stats point strongly in one direction. Is it predictive? I don't know. That's why I say "if history is any guide." Perhaps it isn't. Perhaps it is. Risk/reward in the ambiguity of historical performance. Take it as you will.

flmd, no one on this board has called a bottom. What I, and Bill Gross, and Warren Buffet, and Mohammed Al Arian (In case you don't know, these are really smart guys who know a great dea about investing) have said is that now may be a good time to start slowly and deliberately building positions in quality companies that have dominant market share, great balance sheets and that offer dividends (which I know full well can be cut or eliminated). I myself have said that I have decided to spend the next 12-18 months slowly and deliberately building positions. It is you who argues for the most flawed option, which is going all in at a given moment. No real players do that. Real players know that, since they can't time a bottom (and neither can you) all they can do is decide what companies are attractive and to start building positions in them in the expectation/hope that they will go down so that you can add more. If your time frame is, like mine, AT LEAST five years out, you don't care at all what happens over the next two to three years, except as it pertains to adding to or building new positions.
Please tell me you don't advise your clients to ever jump all in into a stock if they have a multi-year time frame. I have been out of stocks since 2002, which is when I got into real estate. I finished selling all of my real estate in Feb 08, except for my new home and one commercial investment, and have been in treasuries since 2003. About three weeks ago equities started to look interesting to me, and since then I have started to build and add to on the dips (Understand again that I like dips because they enable me to buy more stock in a company that I already liked at a higher price, but did not go all in on in the hope for cheaper prices. Understand also that since guys like Buffet and I can't time a bottom, we commonly add to positions on the dips, e.g. the way Buffet has slowly built his position in Burlington Northern). These are my companies thus far: DOW,DD,FCX,AA,NWL,MSFT,MHP,NWL,V,GE,BAC,FDX,PFE,LLY,CAT. Please, tell me something brilliant like these companies will be bankrupt in say seven years, or that they won't be trading at a higher price than I paid for them (of course being mindful of the dividends, which I always reinvest). If MSFT and DOW are bust, we will have much bigger problems than the value of equities, which means that the "trade" is end of the world or growth. Class dismissed.

Wow, mh23, it's nice to see there is someone else who can actually even frame the discussion in the proper way. Like you, I never said I was all in stock at this level. I said after being way underweight stocks it's time to start building back to a more reasonable allocation for someone my age. Meanwhile an apparent stock broker like fmld wants to school us all, when it's well known brokers of all kinds are rarely the experts of anything, or they would be investors, developers, etc. Mh23 you have something else dead right as well. Stocks vs. real estate in Manhattan are not even in the same ballpark in terms of attractiveness. Congrats on selling your property well.

mh23: go take a pill...all I have said is that I think stocks are likely to fall. Prevously you have said you can handle an addl downturn of 20% from these levels. I have agreed with everything you have said on this board...don't be so damn defensive. I stated that a lot of people are calling bottoms and that is true

I do recomend however easing up on comparing yourself with Warren Buffet. "Investors like me and Warren Buffet" easy

Rhino - stop trying to jump on mh23's coattails...you are still a foulmouthed newbie who when challenged resorts to name calling. Never in your response to me did you say..."flmd you may be right I am simply building a position"

You don't know me...I am not a stockbroker...I recommend

how does a strong dollar affect real estate in ny?

julia: if this is a long term phenomenen the biggest thing it would do is make real estate extremely exspensive for foreigners.

part of the reason you saw so many tourists is that when they exchanged their euros, pounds, yen for dollars they were able to get and buy more for their money...hence the reason why foreigners would purchase ny real estate. If the dollar continues to appreciate against those currencies no more foreign purchase od real estate. You may even see Foreigners who have purchased have to liquidate at fire sale prices due to the dramatic and unexpected rise of the dollar.

Thanks Rhino. I have always believed that, in order to give yourself the best chance of making money in an investment, you need to make time your ally. This means, among other things, that you can only invest money, in anything, that you don't need for a protracted period of time, in my case years. If, for some inexplicable reason, stocks were to shoot to say 11,000 in the next few months (which I hope and believe they won't, because that would not be reflective of a healthy market) I would probably sell all of my positions because the profits that would be realized in so short a period of time would be to attractive not to take. However, what is more likely is that I will have to be even more patient with my positions, so that instead of maybe 5-6 years, I might have to wait 7-9 years to achieve my objective, but that is the value of having time be an ally rather than a foe, which is what gamblers and day trader make of time.
The main point is that now is as good a time as we have seen in years to slowly and deliberately build positions in companies with dominant market share, great balance sheets, nice dividends and that can be reinvested as a hedge against a prolonged sideways market.

mh23 - I agree. I also assume you're buying with cash (no margin). Nothing makes time your enemy like margin.

I agree 100% with that comment, Faustus.

Oh I'd be a fast seller at 11,000. In the end, you shouldn't buy anything with less than 5 yrs objective. Why I find this interesting is that for the first time since I graduated college (1995), there is actually a long term investment in stock to be made sensibly. Sure you could make money by buying in 2002, but that was the cheap credit which unless you sold well, you gave back. The same can be said of real estate. On a strict price to rent ratio, we crossed through a sensible investment level when, say 2003-2004? Sure a flipper made money, but 5-year returns on real estate for any purchase after 2004 are likely to stink... 2004 is likely to stink... purchases in may be flat as of 2010. Which may be fine for people, as their monthly payments will have likely been much lower than rent equivalence with all the attendant personal decorative perks.

Rhino86 zzzzzz