Tuesday, October 27, 2009

Will we see continued weakness?

market about even this morning...


  1. I think the market is perfect right now. It is nearly fairly priced to future returns and the market refuses to take profit and give up potential returns. The market is more likely to go up then down but I like that the market is waiting for signs to continue. 2011 will be better than 2010 which will be better than 2009. I see the market preparing for 2010 now and by end of Q1 we will see the final leg up to fair value.

  2. anonymous - i will comment on your comment later when i have more time

  3. took amzn short off for $4 gain
    there is probably more downside here but i have enough short exposure through my index shorts and am happy to take the $4 gain and move on

  4. anonymous - I disagree with you that the market is priced perfect right now. Unless you mean priced for perfection!

    I think the market is out way ahead of fundamentals and we have some real economic pain still to get through. I think 2010 will be no better than 2009 especially if ANY stimulus is removed (which it should be anyway). I think you could see 11-12%+ reported unemployment, possibly 300+ banks fail, no consumer spending, and a lot of fear if the market pulls back as I expect as that will erode confidence.

    I would not be long this market here for the long term as I think you have much better entries within the next 6-12 months. S&P 950 or well below if things go as I actually think the may...

  5. if i were targeting a spot we might fall I'd say 870-900 before mid next year

  6. Do you agree that in the long term (we'll say 10+ years) America will recover? America is innovating faster than any other country. We are currently priced at 15x forward earnings for 2010. According to Roubini there is a 20% chance of V recovery, 60% chance of U recover (prolonged recovery), and 20% chance of double dip. He is by far one of the most conservative economists on America's future so we can use him.

    As we have seen, analysts have no idea where the economy is as a whole and have drastically under estimated the last two quarters net income. I don't see enough articles about earnings potential of the S&P. I imagine the earnings potential is incredible and we will probably reach a 2000 S&P by the next cyclical top (maybe 2015 or later; pointless to guess). I fear not being in more than a 10-20% pullback. History says do not bet against America. Although, I agree there is serious chance of a pullback (more than a 3-day sting) but I think the odds of S&P below 950 is about 20%. Waiting for this oppertunity would reap great rewards but the cost of missing a rally and watching estimates for 2011 soar is much higher. I will say I don't like a lot of domestically dependent companies and I see a "changing of the guard" in a lot of sectors where small or mid cap companies will become much more prominent. Fear is high and so is my long position...


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