Dow below 12,000 -- do I hear 11,000? Yes I do!

Posted Mar 7th 2008 3:02PM by Sheldon Liber
Filed under: Rants and Raves, General Electric (GE), Diageo plc (DEO), Tiffany and Co (TIF), Reliance Steel and Aluminum (RS), Under Armour'A' (UA), Valero Energy (VLO), Anadarko Petroleum (APC), Wells Fargo (WFC), Anglo American (AAUKY), USG Corp (USG), Stocks to Buy, Intuitive Surgical Inc (ISRG), Raytheon Company (RTN), Bunge Ltd. (BG), Recession

Earlier in the week I posted about finding the market bottom using that age-old handheld calculator, a white paper napkin. So, unfortunately it looks like I may be right again. Not exactly something I was hoping for, but if it has to be, it has to be. I wonder if my old napkin can outperform Wall Street super computers?

Is this an auction to the bottom? Are investors bidding things down instead of up? Looks like it from all the negative sentiment. Consumer sentiment is down, and short sellers are all excited, increasing their negative positions to new highs every day.

And here is the all-telling sign of capitulation: the ever-lying overly optimistic government is starting to admit how bad things are and throwing hundreds of billions of dollars at the problem. When does the turnaround come?

That's easy: when President Bush reverses his position from last week and states that yes, we may be in recession; followed by the least experienced investors stomachs churning while they bail out totally.

So let's look on the good side. This means all you true value investors should have your watch lists in hand as "my pal Warren" and I do (and Dan and Greg and Mr. Noital) because the bargains are going to come fast and furious as we approach the Dow at 11,000. Let's also not forget about stimulating production, as I've already written about in Serious Money.

Oh, by the way, this morning's short-lived uptick was just a few bottom fishers getting excited...but there is more to come.

A few things from my watch list:

Many of these are already bargains, but they will go lower. There are many more quality companies out there, and the lower the market drops, the easier it is to find them. Surprising as it may seem, when the market gets oversold, almost everything is a bargain. That being the case, load up on companies that pay dividends with quality products, good cash flow, low debt and of course...quality management.

Final Update: the DJIA closed at 11,893.69 -146.70 (-1.22%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I currently own shares in APC, AAUK, ISRG, MRK, and VLO.

...and for a special treat: Ode to TECH-bubbles: YouTube at its best!

Tags: AAUK, Anadarko Petroleum, AnadarkoPetroleum, Anglo American, AngloAmerican, APC, BG, Bunge Ltd., BungeLtd., DEO, Diageo, DJIA, featured, GE, General Electric, GeneralElectric, inthenews, Intuitive Surgical, IntuitiveSurgical, ISRG, Raytheon Company, RaytheonCompany, Recession, RTN, TIF, Tiffany and Co, TiffanyAndCo, UA, Under Armour'A', UnderArmour'a', Valero Energy, ValeroEnergy, VLO, Wells Fargo, WellsFargo, WFC

Print this

Reader Comments (Page 1 of 1)

3-07-2008 @ 7:39PM

bigrich said...

The foreign oil barons, are destroying our economy. There's no shortage, just greed . If the price is too low, lets cut back production. Sinking US dollar, OPEC IS DESTROYING THE WORLD. $106 A BARREL, get real America we need to unite & fight back, NOW...

3-07-2008 @ 6:05PM

Rjohn61 said...

If you have a stock and you don't sell it, you have bought it at that day's price.

In my opinion, I have bought a lot of bargains today.

3-07-2008 @ 6:18PM

william lindblad said...

Dow will go below 10,000 - in near future. It is just getting to the point that the general public is losing their optimisim. 1st we had the speculators in housing and now they have move into the commodity market. Some will make money, but most will not and the whole ecomony will be in chaos for quite a while. The price of oil,gas,corn & wheat are all being driven by speculation to heights that will drown the consumer in debt.

3-07-2008 @ 6:22PM

Beltway Greg said...

Sheldon, at 11,000 the world will be on sale. I can't agree though. The daily rolls have tightened up a bit recently. Citi at $20 is a screaming buy. GS at $160 likewise. If we can't save them then.....

Beltway Greg.

3-07-2008 @ 6:52PM

Sheldon L said...

Whoa Bill,

To see 10,000 your thinking Bush never capitulates...pretty darn pessimistic! But we agree things will get worse before they better.

Greg,

I agree there are lots of bargains now, but I contend that bargains or not many stocks will be available at a lower number because the downswing is not done.

3-07-2008 @ 9:07PM

claude said...

the market is inflated stockholders are over paid.when a company goes public they have to charge more so they can make more money to pay the corprate swine that has ruined this country.its sad when a corparation pays its employees 12.00 an hour and the ceo gets 17,000. to 18,000 per hour remember the employees make the company my payroll for my businuess is a 3 rd of my gross income i guess my staff is over paid at 15 to 25 per hr.fire all the corprate swine and america will get back on its feet

3-08-2008 @ 8:12AM

cerner1 said...

i would like to see the market crash back to 8000 this would be a good thing so the rich people jump out the windows and the little people can make some money

3-12-2008 @ 1:27AM

cerner1 said...

the only buys your gonna get are the ones the big guys want you to have because they are in the same ones and when its time to pull the rug look out my opinion dow 8000 is on its way so lookout below

3-09-2008 @ 5:30AM

constantin lefter said...

I write from Romania so my english has some bugs.

In may view djia is heading lower than 11k. 9k is not an imposibility.
The recovery will be difficult and slow.
In a global economy everybody will pay. But the american economy is stong and US will remanin the leading power.
I am inerested in your 5 years forecast on OIL an GOLD.

3-09-2008 @ 6:42AM

Sheldon L said...

"5 years forecast on OIL an GOLD."

I think they will both be a lot higher...

3-09-2008 @ 6:09AM

lefter006 said...

I am from Romania so my writing in english could have some bugs. But my ideas are strong.

djia can go down to 9k and teh recovery will be long and difficult.
Even so the american economy is and remains the leading economy.

3-09-2008 @ 9:16AM

Jason said...

3-07-2008 @ 7:39PM
bigrich said...

The foreign oil barons, are destroying our economy. There's no shortage, just greed . If the price is too low, lets cut back production. Sinking US dollar, OPEC IS DESTROYING THE WORLD. $106 A BARREL, get real America we need to unite & fight back, NOW...

=============================

LOL, OPEC destroying the world. Such ignorance. Of course it's got nothing to do with the fact that you all drive around in gas guzzlers and squeal at the thought of $4/gallon petrol...erm, sorry, gasoline.

Get used to it. My my reckoning in the UK and Netherlands we are paying c$10/gallon. If you had to do the same then you might find you used a little less of the stuff.

Maybe you can invade another Arab oil fiefdom to get your cheap(er) oil; the last one worked really well, didn't it?