2010: What next?

[Betram]

2010: What next? Well 2011, it just gets better and better! Let this overaged thread die a decent death, why do you keep prolonging its miserable life?

why don't u let us lesser mortals carry on with airing our views
n comments n perhaps u cud join the inner circles of the likes
of bernanke n geithner n spare us yr unnec pigmy-mentality
slight. Go drown in yr ego.

[to Octopus]

@completely irrelevant

if V gets a kick out of being a Paul (or Mani),the seer or oracle of all our futures,just let him be lah. Isnt that what we have forums like this for ?

anyway i do enjoy his posts, for what it is. but for 2010 i am gonna ignore his recommendation on gold and mortage my house on spain instead.

with anyone else I would agree 100%. But V has issues. What to you or me maybe an opinion to him is absolute fact - so whats the point of him starting threads?
Whether he's a Paul (accurate) or a Mani (inaccurate) is irrelevant. Whatever the outcome perceived or real he will declare victory , congratulate himself for being sooooo clever then shout out something child like such as "vulcan wins again".


ps. - he also really thinks he's a real vulcan encased in infallible logic. This is the delusion you can obtain via too much star trek.

[redacted]

ps. - he also really thinks he's a real vulcan encased in infallible logic. This is the delusion you can obtain via too much star trek.

In vulcans defense, he has stated before his name comes from his first bike. While vulcan may not play well with others, he is entitled to his opinion and the majority of the time, he does not descend into name calling.

[to redacted]

Yep he is generally polite.

His "vulcan wins" and locking threads is at best childlike.  He is a complete arse.

[Vulcanl]

"...His "vulcan wins" and locking threads is at best childlike..."

I don't agree.  Provided that I also own up to being wrong (which I do when I am) there is nothing wrong with declaring victory.  With regard to locking threads, I give ample heads-up prior to actually doing so, and in so doing ample opportunity for final comments (pro or con).  The 'Front Office' and 'Decoupling threads are my gift to humanity (however small they may be)...kind of like an artist holding up his fine work for all posterity to see....The 'lock' on these threads is like the frame on the paintings 

"...He is a complete arse...."

Now - insulting a total stranger on the internet - THAT is childlike!!!

[Vulcanl]

Octopus,

Good call on Spain - Well Done!

I hope they don't cook you now and you wind up as bits in someone's fried rice...

[Vulcanl]

Booomz,


"...The fact is intertwined businesses and investments are all driven on mainly borrowed capital gotten from institutions propped up by obscene stimulus packages in an unbelievably huge debt and deficit positions all around and let us not kid ourselves that all is well..."

I am with you on all of this - but not applicable to Asia

"...We are reaching the edge of the precipice. Austerity measures and belt tightening are the solutions. But can this be carried out?..."

Yes, it is possible to carry this out.....but unlikely due to the innate weakness of Western liberal Democracies to achieve consensus and quickly ACT for the good of all. 

My opinion is that the United States will NOT go for austerity but instead will print ever more dollars.  Confidence in my home country's currency will disappear and we will have a collapse, resulting in inflation.  That is the end game.  Tis why I LOVE Gold!! 

[Blooms]

Individuals and institutions are treating borrowed monies with
an air of ease, nonchalance and outright irresponsibility.
 The attitude is indifference and "who cares if the business or
investment fails". Bankruptcies and bailouts for individuals and
institutions are the happy way out till the next borrowing.
There is no sense of remorse or shame anymore. Thick
skinned and unabashed greed rules.     

[Bonkersssss]

Just not right mate.. Everyone n everything runs on borrowed
monies to support the manipulators ie the upper crust super
rich 5pc. The rest can battle out in the blogs exposing their
concerns and frustrations and anxieties. That 5 pc are enjoying
it to the fullest.

[gram]

Could we safely conclude that no major events will occur this year? The equity market corrections so far are not significant, within the context of the rally since the beginning of last year.
In order for something major to occur, such as the collapse of the USD, a lot of vested interests would have to run out of options. There are many powerful stakeholders interested in maintaining the value of the USD.
In future, if something large were to occur, it would have to be really large, signalling the powerlessness of previously powerful interests. Something suggests that there won't be any middle ground.

[Blooms]

The financial thrust and parry played out by the super rich has
got the middle class jumping and fretting on the hot tin roof.
The poor has more sanity as they have accepted and adjusted
and resigned themselves to whatever comes their way. The
super rich will still maintain and enjoy their lifestyles whatever
happens. The middle class are noisily searching their levels. They
 still suffer n continue to aspire to join the ranks of the rich.
This will never end.
The dollars and cents has dominated this forum. Our
idiosyncrasies and shades and habits and foibles and
greed and ego are exposed.   
     

[Vulcanl]

Gram,

"...Could we safely conclude that no major events will occur this year? The equity market corrections so far are not significant, within the context of the rally since the beginning of last year..."

I think that you have your answer now.  For me that answer is that the Western equity markets will see massive declines from now to year end.  The Dow/S&P500 may end the year at levels 50% lower than what they are now

"...In order for something major to occur, such as the collapse of the USD, a lot of vested interests would have to run out of options. There are many powerful stakeholders interested in maintaining the value of the USD..."

Indeed, the Fed has now run out of options and its back is against the wall.  More money printing is the order of the day, as midterm elections are looming and the pressure will be intense to 'do' something.  China (and other central banks I would imagine) is moving away from the USD by buying Japanese JGBs and quietly amassing a horde of Gold (among other activities)

"...In future, if something large were to occur, it would have to be really large, signalling the powerlessness of previously powerful interests. Something suggests that there won't be any middle ground..."

Indeed!!  There will be NO middle ground.  As you know I have been waiting for an outright collapse of the USD for a while now (defined as a decline of 20% or more). 

I am long Gold and other precious metals (both in physical form and ETFs).  Other good options at this time are to go long EM currencies.  I would buy Chinese equities (they've been the worst performers this year).  I wouldn't buy ANY kind of debt at this time.  The most practical thing that we (Singapore residents) could do is to simply keep our money in SGD Cash from now to year end (for those of us who are risk-averse).


***NONE OF THE ABOVE IS TO BE CONSTRUED AS FINANCIAL ADVICE.  THIS IS FOR 'FUN' ONLY AND YOU SHOULD SEEK OUT THE OPINION OF QUALIFIED PROFESSIONALS FOR THAT PURPOSE*** 

[gram]

Gram,

"...Could we safely conclude that no major events will occur this year? The equity market corrections so far are not significant, within the context of the rally since the beginning of last year..."

"I think that you have your answer now.  For me that answer is that the Western equity markets will see massive declines from now to year end.  The Dow/S&P500 may end the year at levels 50% lower than what they are now"

It's hard to say, there should still be some major volatility this quarter and then a powerful rally towards the year-end, that would be the most likely scenario. The US has not yet run out of firepower and also the fact that China is not going to go under this year will provide firm support.

"...In order for something major to occur, such as the collapse of the USD, a lot of vested interests would have to run out of options. There are many powerful stakeholders interested in maintaining the value of the USD..."

"Indeed, the Fed has now run out of options and its back is against the wall.  More money printing is the order of the day, as midterm elections are looming and the pressure will be intense to 'do' something.  China (and other central banks I would imagine) is moving away from the USD by buying Japanese JGBs and quietly amassing a horde of Gold (among other activities)"

The decline of the USD I see as a long-term story, due to vested interests. China will diversify but not quickly and it will be something that takes a few years to play out.

"...In future, if something large were to occur, it would have to be really large, signalling the powerlessness of previously powerful interests. Something suggests that there won't be any middle ground..."

Indeed!!  There will be NO middle ground.  As you know I have been waiting for an outright collapse of the USD for a while now (defined as a decline of 20% or more). 

I am long Gold and other precious metals (both in physical form and ETFs).  Other good options at this time are to go long EM currencies.  I would buy Chinese equities (they've been the worst performers this year).  I wouldn't buy ANY kind of debt at this time.  The most practical thing that we (Singapore residents) could do is to simply keep our money in SGD Cash from now to year end (for those of us who are risk-averse).


***NONE OF THE ABOVE IS TO BE CONSTRUED AS FINANCIAL ADVICE.  THIS IS FOR 'FUN' ONLY AND YOU SHOULD SEEK OUT THE OPINION OF QUALIFIED PROFESSIONALS FOR THAT PURPOSE*** 

[Vulcanl]

We are 31.5 days away from the end of Q3 and since September is usually an interesting month in the market, I thought now would be a good time to start looking at the home stretch situation.

US Banks are in terrible shape (Citigroup in particular).  They will be the catalyst for the coming 45-50% decline in US equity levels from now to year end.

The below story inexplicably ignores the great example of history.  After the great crash of 1929 the P/E of US stocks as they scraped bottom was 5-7.  The Finance bubble of this era (that has been transferred from the private sector to the Government) was the largest in recorded history.  Seems to me as a result stocks should do at least as bad....

Key gauge says stocks are dirt cheap now
Should you buy? After drop, stocks may be as cheap as a year ago -- if you believe Wall Street

Bernard Condon, AP Business Writer, On Sunday August 29, 2010, 2:23 pm EDT

NEW YORK (AP) -- With the market down three weeks in a row, investors are understandably grim. But there is a silver lining: Stocks are looking almost as cheap as last year when prices hit 12-year lows -- at least according to Wall Street analysts.

It was easy to miss the development amid news of falling home sales, a drooping dollar and sluggish orders for big-ticket goods. But stocks in the Standard & Poor's 500 index now trade at just 11.7 times analyst estimates of operating earnings for the coming year. That is one of the lowest -- read cheapest -- levels for this key figure.

In fact, this so-called price-earnings multiple is roughly back where it stood at the end of March 2009 just as the market was starting an 80 percent surge.

A lot of investors are kicking themselves for having missed that run-up. The question now: Should they jump in now to not to miss another?

Though it's a rough measure of a stock's value, the earnings multiple holds a certain logic. Before buying the corner pizzeria, you would want to know how many years it would take selling pies and sodas to earn your money back. You can do that by dividing the price you'd have to pay for the business by the profit it generates over a year.

So too with stocks. The earnings multiple divides stock prices by annual earnings to tell you, in a sense, the number of years it might take to be made whole on your investment. The nearly 12 years that analysts say it would take if you bought stocks now compares with an average of maybe 15 over the past two decades.

But the faster clip assumes actual profits won't fall short of the projected ones, and some longtime market observers are worried about that.

"Some analysts are projecting earnings will hit an all-time high in a year," says Howard Silverblatt, senior index analyst at Standard & Poor's. "That would be nice but I wouldn't bet on it."

History suggests he's right to be skeptical.

An April study by McKinsey & Co. of analyst projections over 25 years showed they are almost always too optimistic. On average, analysts estimated that profits would grow at 10 percent to 12 percent annually -- almost twice as much as they actually did.

The two periods when analysts lowballed profit growth were in the early '90s and early '00s when the U.S. was coming out of recession as it is today.

Mason Hawkins, CEO of Southeastern Asset Management, has trounced the market by buying stocks when others are selling, and he's been buying lately. His flagship Longleaf Partners Fund returned 4.9 percent annually in the past ten years versus a 1.6 percent decline in the S&P 500.

To get a sense of whether stocks are cheap, the 62-year-old Hawkins looks at how much of your investment you get back in earnings in a year. Based on analyst estimates, if you bought every Dow stock at Friday's 10,150.65 close, you'd get 11 percent back. Though you're not actually pocketing any cash, that's still a big return. After all, some relatively safe investment-grade corporate bonds are throwing off annual interest of 5.3 percent what you pay for them now. That means you'd get nearly six extra percentage points by holding stocks. Since 1932, the difference in yields between bonds and stocks following big drops in the stock market has been 2.8 percent, Hawkins says.

Translation: You're getting rewarded for the extra risk of investing in stocks.

The catch is that the analysts may be wrong. Despite the onslaught of negative economic news this summer, they have barely reduced their estimates. The current forecast for the S&P 500 is an increase of 46 percent this year, then 14 percent on top of that in 2011. Such jumps would mean profits rising above their all-time high in 2006 during the boom.

Not surprisingly, analysts are equally bullish on individual stocks. There are 9,936 analyst recommendations on stocks in the S&P. More than half, or 5,277, are recommendations to buy the stocks, according to Thomson Reuters.

There are just 508 recommendations to sell.

Of course, you can forget what analysts say and compare stock prices to what companies have actually earned.

A widely respected measure, championed by Yale economist Robert Shiller, is a cyclically adjusted earnings multiple. This multiple recognizes that any one year's earnings may be higher or lower than usual because of the economy, and so it averages them over ten years.

Alas, this paints a darker picture. S&P 500 stocks are trading at 20 times cyclical earnings versus an average 16 going back a century. To get to that average, stocks would have fall another 15 percent. 

[to vulcan]

Please explain why price earning ration matters for western stocks but magically not when you look at chiese ones.