Recovery or Dead Cat Bounce?

[Naked shorts]

I don't understand :homer:

1:48 is key

 

[wonderrman]

Does a "slowdown" in worsening economic data automatically mean everything is finally over and we will go back to a new, roaring bull market and expect 30% p.a. return???

G'day, yes I think this out cry regarding a global economic recovery by year end is quite staggering. People forget that the economy is not the stock market and just because we have gone up quite a bit over the past two months does not mean we have recovered economically. This thought is really quite stupid. The powers that be above us are very good at manipulating markets and the massive "stimuli" and money printing does not fix the root of the problem - that the world is indebted to the heavens. It is bewildering to me that people can think this crisis is over when this root cause is still there. We know one thing though - governments will never learn and they only prolong the problem by this money printing.

Just because our economy will not recover for a while doesn't mean asset markets cannot further rally. Bits and pieces of "not as bad" news will help this and we must remember that we were in a very oversold stage. We must also remember that governments are doing everything they can to go into capital deficits to print money to help asset markets appreciate. It is important to remember that this can cause a lot of volatility in asset markets, like we have seen over the past few weeks.

I always find the Buffett way of investing quite funny. Relying on someone else who has no care for you for 2, 3, 4, or 5 yrs does not make any sense to me. Predicting what the economy and investment environment is going to be like years out is arrogant. Good luck to the 1% of people who make money Buffett's way. I'm sure you can, but I don't have any patients for it.

W.

 

[Trembling Hand]

Good luck to the 1% of people who make money Buffett's way. I'm sure you can, but I don't have any patients for it.

But where are they??

A few people here trade full time punting away with TA and common sense and FA to varying degrees making 100s to many many 1000s of trades year in year out.

More getting good to great returns on a part time basis.

But where are the tested successful Buffettoligist??

hint - Survivorship bias :

 

[wonderrman]

A good book that highlights the damage that has been caused to our economies is Liars Poker by Michael Lewis and his most recent article, can't remember what it is called but it sitting on my desk somewhere. It is very good and explains what occurred in trading floors all around the globe for the past 20 or so years.

The fact that everyone thinks we can push higher and we are "out of trouble" worries me. When ever a thought makes it way to gospel, the greatest risk is in the opposite direction. Following the crowd is thought to be bad for ones wealth. This uptrend may continue to occur in the short-term, but as people pile in on the pull backs the inevitable contraction could be very painful.

W.

 

[wonderrman]

But where are the tested successful Buffettoligist??

Should I have said .01%? : I don't know where they are and don't really care to much. As they say, each to their own. W.

 

[Glen48]

What will Glen Stevens and DR Henry feel once they find out we will have 4.5% growth in 2010 only there will be - sign in front.

 

[RayG]

G'day, yes I think this out cry regarding a global economic recovery by year end is quite staggering. People forget that the economy is not the stock market and just because we have gone up quite a bit over the past two months does not mean we have recovered economically. This thought is really quite stupid. The powers that be above us are very good at manipulating markets and the massive "stimuli" and money printing does not fix the root of the problem - that the world is indebted to the heavens. It is bewildering to me that people can think this crisis is over when this root cause is still there. We know one thing though - governments will never learn and they only prolong the problem by this money printing.

Ummm.... not sure what you are getting at here, debt is not the issue, the issue is whether that debt is sustainable... The concept of state debt is quite different to personal debt. The ability of an individual to borrow is limited by the ability to repay the debt over time. For state debt that time is not constrained by the lifespan of an individual, borrowing can create wealth provided it is invested wisely, plant and equipment, infrastructure, education, health etc.. etc..

The prophet's of doom be they right or wrong seem to be on a crusade of almost religious intensity.

My counter argument is as follows..

The market is driven by sentiment, in it's simplest terms fear versus greed. The fear (hello bears) has abated in the last month or so and greed (hello bulls) has started to emerge again. In order for the markets to crash again, there needs to be a significant event that scares everybody once again... a few missed earnings and slightly lower than expected GDP ain't gonna do it. A war or major flu epidemic might be the trigger..

Just because our economy will not recover for a while doesn't mean asset markets cannot further rally. Bits and pieces of "not as bad" news will help this and we must remember that we were in a very oversold stage. We must also remember that governments are doing everything they can to go into capital deficits to print money to help asset markets appreciate. It is important to remember that this can cause a lot of volatility in asset markets, like we have seen over the past few weeks.

<snip>
W.

Here I agree with you, we were oversold, and now we are probably a little bit over bought, volatility has been decreasing however, not rising have a look at the VIX.

This I thought was pretty appropriate....
The cat came back... http://www.youtube.com/watch?v=8Kj1Fsf9a2U

Regards
Ray

 

[cutz]

G'Day RayG,

You touched on greed and fear but i think you may have it the wrong way round, my take is the bulls are being driven by the fear of missing out on the next bull market, in the mean time the bears driven by greed (no offence intended bears )are laying on the shorts in expectation of a quick buck.

I may or may not be correct, it's just the way i see it.

 

[drsmith]

Perhaps an interesting question here is what potential triggers could upset current trends in credit markets.

http://www.marketoracle.co.uk/index.php?name=News&file=article&sid=10750

 

[Real1ty]

The fact that everyone thinks we can push higher and we are "out of trouble" worries me.
W.

These are the sort of incorrect generalisations that really get my goat.

EVERYONE thinks we are out of trouble and can push higher do they?

Sorry but that is absolute BS.

Sure there is a more positive sentiment in the market atm but IMO for each person who thinks we MIGHT continue to push higher or that the news is less severe there are more people who will counter that with talk of a sucker rally and others that are still talking depression.

There is still a heap of money sitting on the sidelines.Is it FACT also that they think we will push higher and are out of trouble

 

[So_Cynical]

I reckon market sentiment turned in March....there no fear of holding over the weekend anymore...and its like buy anything, wait 2 weeks and take a profit....Well almost anything.

 

[nomore4s]

All off topic posts have been moved to this thread. You can continue your tiff over there.

 

[wonderrman]

I am very pissed off. I had just written a reply to all these posts and my internet crashed. I will have to rewrite tonight. Sorry but this computer is spastic.

wonder.

 

[Bafana]

My money's on the Dead Cat.

Still got local housing bust to go through yet and the construction indusrty is showing signs of slowing down. Government spend is up but only a few can feed at the table of infrastructure spend.

 

[wonderrman]

I’m sorry just got back to my computer now to have time to respond.

debt is not the issue, the issue is whether that debt is sustainable... The concept of state debt is quite different to personal debt.

I would suggest that debt has never been sustainable in economies (over the long-term). History tells us that when ever this un-natural beast has entered an economy and grows it must eventually be removed. I had a chart that shows this but can’t seem to find it. I don’t think anything has changed that has made debt sustainable in an economy. You could argue that the removal of the gold standard where money had to be connected to value has changed this. I will do some more reading and study into this and make a comment.

You comment on the difference between state and personal debt is taken on board. State debt is funded by the international capital flows of the world. When this dries up, which leads to change in the worlds “super power” – currently the US, it can cause great grief to the country and its debt. We must remember that the fate of any investment is in the hand of others, we must also remember that the stronger the currency, hence the availability for funding of state debt is a geopolitical issue. I don’t think troops will be landing on US soil for some time. When they do, and when the US is not a super power and because an unsound investment for the many countries around the world they will have problems with “state debt”. This is a very long-term issue though.

EVERYONE thinks we are out of trouble and can push higher do they?

Hello, well if you look at the McClellan Oscillator which is a momentum indicator it has turned negative. This can identify overbought and oversold stages and is very good. I would argue that the market usually feel very confident over nothing and this proves to end up bitting them on the bum. As I mentioned in a previous post yesterday this rally could continue due to “lesser bad news” and capital injections by the Federal Reserve’s of our world. I feel that money could continue to be put in the markets on perceived pull backs before we get some very poor news in Sep/Oct/Nov as this could prove to be the worst of the economic news. This could see a new down leg emerge. We must remember that the economy is not the stock market and I do not see us making new highs anytime soon with still such a poor economy.



People compare this period to the Great Depression. That period was a whole lot different economically but it lasted a lot longer on the stock market. I do not see this “bear market” over as yet because of the many reasons I have mentioned in previous posts and in this threads. I haven't even mentioned commercial property markets of this world either and the problems associated with tax hikes around the globe as governments try to replace previous income.

Wonder.

 

[Aussiejeff]

I haven't even mentioned commercial property markets of this world either and the problems associated with tax hikes around the globe as governments try to replace previous income.

Wonder.

No problem. Gum-mint$ have bailed out their buddies in the Big Bwank$ with uber-truckloads of yummy hoi-poloi ca$h.

So, surely those same indebted, loyal, now-ca$h-flu$h Bwank$ can now afford to bailout their buddies in the poor, bleeding Gum-mint$?

It's just a money-go-round, after all! La-la-la-la-laaaah! :bananasmi

 

[mazzatelli1000]

But where are the tested successful Buffettoligist??

hint - Survivorship bias :

Aren't they still waiting for the long term?
LOL

 

[Awesomandy]

Aren't they still waiting for the long term?
LOL

In any case, we probably won't hear from them until they turn 60.

For the time being, I say we should just let people think that there will be a recovery at the end of the year. Apart from the few of us who knows better, hope is the only left for most of the general public at this stage.

 

[MrBurns]

I think we're due for another large downturn, all the BS thats been going around doesnt fix real probelems.

 

[GumbyLearner]

No problem. Gum-mint$ have bailed out their buddies in the Big Bwank$ with uber-truckloads of yummy hoi-poloi ca$h.

So, surely those same indebted, loyal, now-ca$h-flu$h Bwank$ can now afford to bailout their buddies in the poor, bleeding Gum-mint$?

It's just a money-go-round, after all! La-la-la-la-laaaah! :bananasmi

As Oliver would say... "Please Sir, can I have some more."
Probably already factored into the market though


US Treasury injects $US7b more into GMAC
http://news.theage.com.au/breaking-...njects-us7b-more-into-gmac-20090522-bhjw.html