http://www.dailyreckoning.com.au/they-say-the-stock-market-looks-ahead/2009/04/23/ An independent perspective on the Australian and global investment markets Thu, 11 Mar 2010 13:27:12 -0600 http://wordpress.org/?v=2.8 hourly 1 http://www.dailyreckoning.com.au/they-say-the-stock-market-looks-ahead/2009/04/23/comment-page-1/#comment-77444 Fertility Based Ponzi Scheme « RedSt8r Mon, 11 May 2009 20:36:31 +0000 http://www.dailyreckoning.com.au/?p=5729#comment-77444 [...] recent post on The Daily Reckoning Australia , “They Say the Stock Market ‘Looks Ahead’” included a brief overview of the current state of the U.S. economy.  The basic formula that [...] [...] recent post on The Daily Reckoning Australia , “They Say the Stock Market ‘Looks Ahead’” included a brief overview of the current state of the U.S. economy.  The basic formula that [...]

]]> http://www.dailyreckoning.com.au/they-say-the-stock-market-looks-ahead/2009/04/23/comment-page-1/#comment-75551 Edwin Matiuk Fri, 24 Apr 2009 10:47:49 +0000 http://www.dailyreckoning.com.au/?p=5729#comment-75551 Bill's comments concerninig are probably close to the mark. We can study the behaviour of the previous eight bear markets and come up with average figures like: the share markets bottom 16 months before corporate earnings do, they also bottom eight months before GDPs do, share markets rise eight months before corporate earnings do, and share markets have bottomed four months before consumer confidence has bottomed. These are actual averages of the last eight recessions. If we apply them to the lowest point in the markets in Oct. 2008, coporate earnings will be lowest in Feb. 2010, and the bottom of the market should therefore be in July, 2009. This experience suggests we should re-enter the market in July this year or a little bit earlier. There are only two problems with this historical analysis of averages. The four months average rise before consumer confidence index is based on anything from one to nine months. So we're going to drown in a river of average depth of three feet. The second problem is that in none of the last eight recessions did people loose a lot of real money; it usually was paper losses. This time the world is loosing trillions, not just the investors, every tax payer is part of the loss. What we have here on our hands is an unknown. The last time investors were facing a real unknown situation was in the '30s. No experience existed to guide you. There were six uplifts of more than 20% on the way down to a total drop of 89%. Many investors, who avoided the initial drop, lost their money follwing some of the bear rallies. While in those days there was consumer exuberance, too, and very unaccustomed expansion of bank credit, the measures taken by authorities happened much later than today and were not as extensive. More than 10,000 banks vanished in the US alone before any assistance arrived. This meant that surviving banks emerged faster and healthier. This time round there is no real advantage to be a survivor, most banks are being "saved". It's probably fair to say that there is nobody living anywhere today, who can tell us what's in store for us this time 'round. Bill's comments concerninig are probably close to the mark. We can study the behaviour of the previous eight bear markets and come up with average figures like: the share markets bottom 16 months before corporate earnings do, they also bottom eight months before GDPs do, share markets rise eight months before corporate earnings do, and share markets have bottomed four months before consumer confidence has bottomed. These are actual averages of the last eight recessions. If we apply them to the lowest point in the markets in Oct. 2008, coporate earnings will be lowest in Feb. 2010, and the bottom of the market should therefore be in July, 2009. This experience suggests we should re-enter the market in July this year or a little bit earlier.
There are only two problems with this historical analysis of averages. The four months average rise before consumer confidence index is based on anything from one to nine months. So we're going to drown in a river of average depth of three feet. The second problem is that in none of the last eight recessions did people loose a lot of real money; it usually was paper losses. This time the world is loosing trillions, not just the investors, every tax payer is part of the loss. What we have here on our hands is an unknown. The last time investors were facing a real unknown situation was in the '30s. No experience existed to guide you. There were six uplifts of more than 20% on the way down to a total drop of 89%. Many investors, who avoided the initial drop, lost their money follwing some of the bear rallies. While in those days there was consumer exuberance, too, and very unaccustomed expansion of bank credit, the measures taken by authorities happened much later than today and were not as extensive. More than 10,000 banks vanished in the US alone before any assistance arrived. This meant that surviving banks emerged faster and healthier. This time round there is no real advantage to be a survivor, most banks are being "saved".
It's probably fair to say that there is nobody living anywhere today, who can tell us what's in store for us this time 'round.

]]> http://www.dailyreckoning.com.au/they-say-the-stock-market-looks-ahead/2009/04/23/comment-page-1/#comment-75485 Laurie Fri, 24 Apr 2009 00:05:39 +0000 http://www.dailyreckoning.com.au/?p=5729#comment-75485 Jeez Bill I was feeling pretty good this morning but I think after reading your piece I'll just go back to bed. Trouble is I probably wont live long enuff' to see a return to 'the good ol' days'. .......Laurie Jeez Bill I was feeling pretty good this morning but I think after reading your piece I'll just go back to bed. Trouble is I probably wont live long enuff' to see a return to 'the good ol' days'.
.......Laurie

]]>