We've been on the phone a lot with investors over the past few weeks. I don't know about you but from where we sit, there is a lot of fear in the market. Investors are worried: worried about what's going to be, how low the markets can go, how the dollar will continue to drop, inflation, etc. There's what to worry about.But, there is a counter-Chicken Little story setting up behind the backdrop of fear. Bloomberg has an interesting piece out this morning entitled "Buy Signals Abound in U.S. Stocks Shadowed by 1970s". Bloomberg reporters draw comparisons with the almost 20% drop in the S&P 500 (Amex: SPY) we've seen since the October highs.
So, are things any different this time?
Well, for one, Bloomberg claims companies in the S&P 500 are trading at their cheapest levels in more than 18 years to forecasted profits. That means investors believe that forecasted profits are going to fall way short of projections. If the world doesn't come to an end, Bloomberg thinks there may be an opportunity here.
Secondly, valuations versus 10 year Treasuries are also lowest in at least two decades.
Investors don't want to hold stocks. I can't blame them. Anyone who's been trying to pick up some value has probably seen their trades go against them.
But, let's look at things from a historical perspective. According to Bespoke Investment Group, minus the one-day smackdown on Oct. 19, 1987, and the last time every industry fell as equities entered a bear market was more than 40 years ago, when Lyndon Johnson was president and U.S. troops were fighting the Vietnam War.
From this perch, I'm sure there is more bad news to come. But reading articles like this one from Bloomberg are actually encouraging. EVERYONE is short this market. Just look at the most popular ETFs -- they're all Ultrashort funds. When the market can string together some positive news, this market has the potential of snapping back.
And when it does, it may be hard.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
3-18-2008 @ 9:42AM
Dave said...
The eBay(Paypal) charge card data base is being used Illegally...Either By the Company to generate emergency funds or by hackers that have compromised the system. I just had My credit card company notify Me that the card that We used ONLY to verify Our Paypal account was being canceled because of obviously fraudulent charges and They were issuing Us a new account number...Looks like eBay(Paypal) may be in some Real Trouble!!!
3-28-2008 @ 1:23AM
Recession Stock Trading said...
This blog contains some useful information related to stock and investment and I am adding some more information related to it.
What is 'Recession Proof'?
You can almost hear the wallets snapping shut. Folks are cutting back on their spending every way they can.
According to those who know, we are either in a recession, or are about to be. I would hate to be trying to sell real estate or new cars right now. Talk about hitting your head against the wall. Ouch!
That got me to thinking of what businesses make sense during a recession. Certainly health care does. Baby boomers are going to need every kind of health care imaginable. For all I know, economic bad times makes people sick too.
Other types of businesses that should be recession proof include vital home repairs, like plumbing, electrical, and roofing. Folks can't put off fixing a clogged toilet or a leaking roof just because they're a little short on cash.
And you know what they say about death and t.ax.es. A well-run funeral home or a tax consulting business shouldn't be hurt by an economic downturn.
But all these jobs require training, and even certification. And that takes time. By the time you've learned one of these trades, the recession may well be over. That got me to thinking about one business that's truly recession-proof, and you can get started almost immediately: Day Trading.
Day Trading refers to the buying and selling of stocks within the same trading day. I know what you're thinking: how can a day trader be successful when the stock market is down, day after day? Well, day traders profit from
volatility - when there are big swings in stock prices, there is money to be made.
It used to be that Day Trading was only done by financial institutions with access to technology and information. Now, almost anyone with Internet access can become a day trader, if they know what to do.
Manny Backus
P.S. Learn a 'sleazy' trading technique used by a select group of traders to bank lucrative, net stock returns of $223.00, $476.10, $790.25 or more -- not in days or weeks -- but in one easy hour or less! Click here:
http://www.firsthourtrading.com/