Is the market getting you down? You want it to go up, right? Well, you better settle in and brace yourself for even harder times as an individual investor. That is, if some pundits are correct about the direction of share prices. According to this CNBC page, a Dow of 8,000 is now in play, and gold might be set to strap a rocket on its back and propel itself up to $1,500 per ounce over time. I'm not sure about the gold, but a Dow of 8,000 almost feels like a logical rest stop at this point (but that might be emotion talking). In the end, none of us can tell the future.
I can, however, share with you a wish. And it isn't just my wish. I'm sure there are others out there who have already said this. And, yes, this wish is coming from someone who owns The Walt Disney Corporation (NYSE: DIS), The Coca-Cola Company (NYSE: KO), and General Electric (NYSE: GE). I own them for the long term (except for a separate trading position in GE which completely failed and may turn into another long-term asset), so maybe this wish isn't so mysterious. I want to go back to that "happy" time of October of '87. I want to see the Dow drop over 20% in one day. Preferably, I'd like to see it drop 25%, on Cloverfield-monster-sized volume. How many points would that be? As of this writing, it would be roughly 2,670 points.
What, am I insane? About as insane as the idiots who decided to become risk sponges, I suppose. In all seriousness, we need a crash. We need a reset, a reboot. We need a lot of panic on the street, and a spiking VIX ($VIX.X), to at least begin a bottom formation. If you think we're going to form a bottom without pain, you're wrong. And if you think, at this point, that we can form a bottom without a crash, well then, I won't say you're completely wrong on that count, but I will say that a crash would be better.
If we get another Black Monday/Tuesday/Wednesday/whatever in October (and I'm hoping it happens on Halloween, because that would be cool), it'll scare the pants off everyone, mostly retail investors. Weak hands will be taken out, and incredibly inefficiently-priced bargains will be waiting for everyone. It also will accomplish something else -- it will highlight the ludicrous environment which allowed us to get in this mess in the first place, and it will send a clear message to the presidential candidates that they had better start focusing on matters of finance and forget about goofy things such as shaking hands and signing autographs (check out Peter Cohan's recent take on John McCain).
Of course, I'm not kidding myself. No one ever learns from history. Here's the real truth: there are bubble times, and there are depressed times. It's nothing more than a cycle. In this context, I'm sure you'll understand my desire for a one-day sell-off of incredible magnitude. The planet won't stop spinning, we'll come out of it, and for those who bought wisely on the way down (this thought goes especially to the younger people out there), you can rest assured that you'll be happy years from now. I'll define "wisely" as maybe looking at stocks such as Kraft Foods Inc. (NYSE: KFT), PepsiCo (NYSE: PEP), Procter & Gamble (NYSE: PG), and Johnson & Johnson (NYSE: JNJ). And, if you're in a more speculative/risky mood, you may want to look at companies like Goldman Sachs Group, Inc. (NYSE: GS), Apple, Inc. (NASDAQ: AAPL), and Citigroup, Inc. (NYSE: C). When we make it to the other side of the current trade, I think some of these equities will look, in hindsight, as great buys. (Remember: Do your due diligence before buying anything now!)
But, that might not be for a while. We have the current volatility to deal with. We have the fact that the DXD (AMEX: DXD) is probably a better buy these days (particularly on up days) than just about any other instrument out there. I can't say with certainty where the market is heading, but I think there can be no argument against "lower" being the best guess. And if we're going to go lower, I'd rather get there in a hurry with one apocalyptic down day. If you believe the bull is eventually coming back, then you should be wishing, along with me, for a horrifying sequel to Black Monday.
Disclosure: I own Disney, Coke, and GE; positions can change at any time.











Reader Comments (Page 1 of 1)
9-18-2008 @ 5:19PM
Lar said...
we all need the dow price levels to "realign", I agree 100%.
As the housing bubble was full of deniars/liars about how overpriced the situation REALLY was, and is now seeking it's REAL(read that sustainable) market $level....the Dow this past year has been WAAAAAAY overpriced considering the economic time bomb/woes of thei COUNTRY as well as this ECONOMY.
Consider that the DOW has been within 10% or 20% of its alltime HIGH!!! all this year...WHAT?? Read the newpapers, this econmy is cloer to DEPRESSION that too all time highs....what's wrong with this nuts picture?? The DOW has been on the bubble for a year...considering the real fundamentals ,crap Fannie and Freddie going broke...our whole banking/credit system on verge of 1929, and the DOW is still within 15-20% of it's all time HIGH!??? It would make sense if it was within 10% of its record LOW.
This stock market, just like housing market, like any business owner-has to take its losses so it can get on..
If the DOW would just fall to 6000 and housing fall another 15% we'd have investors starting to buy again..for $prices would make some sense again.
I told all my contacts to get out of stock market last winter.
Stupidly high prices do not warrant investing now.
9-19-2008 @ 1:22PM
M PRICE said...
SO YOU WANT A CRASH WELL WHAT OF US WHO ARE RETIRED OR SOON WILL BE?
IT'S TO LATE TO EARN IT BACK.
ONLY THOSE IN THEIR 30-40'S COULD POSSIBLY BENEFIT FROM YOUR WISH.
RIGHT NOW I AM 30 IN S&P EQUITIES AN BONDS AND 70% IN MONEY MARKET.
I HAVE HAD THIS ALLOCATION FOR
10 MONTHS AND HAVE BEEN SLOWLY
LOSSING WORTH EVERY MONTH.
AMERICA IS WITH OUT DOUBT IN A PERFECT STORM LED BY A PRESIDENT WHO TODAY ON TV MADE IT CLEAR HE DOES NOT CARE ABOUT SMALL INVESTORS AND WILL NOT STEP UP
AND PRESENT A PLAN THAT NO MATTER WHO IS ELECTED WILL FOLLOW.
THE DEBT THRU THESE BAIL OUTS HAS REACHED 1/2 T WOULD BELIEVE EVEN TEN YEARS AGO THIS WOULD BE DONE.
PS WHERE THE HECK IS CONGRESS?
COUPLE OF WEEKS AND THEY ALL GO HOME FOR ELECTIONS. WHAT HAVE THEY DONE TO HELP STEM THE ECONOMIC TIDE?
9-18-2008 @ 7:20PM
william lindblad said...
I anticipate further drop, but not to the 8.000 level. With all the government intervention it will be more like 10,000.
At the very least there is sure to be a severe recession - and it could go worse.
Wall st. has been riding a wave of optimism all year and it shows no sign of quitting yet.
Bad news is regarded as it could be worse and anything that looks like magic is readily believed. A new version of the RTC to pull this rabbit from the hat? I doubt it as this time the problem is just too big and diverse. The only cure for this one will be a bitter pill.
9-18-2008 @ 11:57PM
ynot said...
I smell a big fat sucker rally. Get real folks. Unless average incomes come up drastically while unemployment rises the housing prices have a long way to go down before any housing market turnaround. Get ready to see the sheep fleeced. Baaaaaaaaaaahhhhhhhh.
9-19-2008 @ 3:00AM
Susan said...
The Government better tell the CEO's and Presidents and Vice-Presidents to take some pay cuts and save jobs while they bail out these companies or else we will have more foreclosures than ever...and more banks failing and more bailouts until the US Government has no more taxpayers left. All the big CEO's shelter their tax...they do not pay taxes like the middle class does...better think about this Feds!
9-19-2008 @ 6:09AM
Bruce Wilhite said...
If President Obama taxes the rich, the money will flow out of the country like a waning tide. All the boats will hit bottom. Then Obama will be forced to tax the middle class to fund his big socialist projects. But there won't be enough money there. No project will ever be cut, government will grow until we are all on the dole, and socialist America will have arrived to take care of everyone forever, just like all those other wonderful socialist paradises. Do you suppose the One will become Great One or Dear One?
9-19-2008 @ 8:45AM
douglas said...
One of the things that people don't realize is that money is never lost. Yes, one group of people lose money but it is money. That means that another group gains it. When the market crashes, and crashes big that only means that someone else makes it really big. You never hear about them. Only the ones that lose. They take your money and love it. What I want to know is who are these people and companies? Who are these people that are financially raping the public?
9-19-2008 @ 9:13PM
Ben said...
MISSION ACCOMPLISHED.
Thank you Mr. President!
You attacked the wrong country, and you turned your own country into a banana republic by deficit spending, corruption, constitutional abuses, and a profound lack of leadership. This republican is voting for Obama, and if you can't stomach voting for a democrat, at least stay home on election day, but the republican party MUST be held accountable for having a big greed party and putting the bill on the world's largest credit card.
9-21-2008 @ 4:29AM
jljamup@msn.com said...
I am sure it would be to the dems advantage for the stock market to crash even though it would hurt the whole country, i am sure that the die-hards are keeping their fingers crossed, what makes them think that obama has all the answers. i notice in some of these blogs that some are already calling him president which confirms that a little education is very very dangers .
9-22-2008 @ 11:17AM
Watchmen said...
AMEN to what Ben said....9/19 9:13PM
9-23-2008 @ 3:48PM
james penman said...
Everyone knows what's wrong, our politicions do whats right for them and
their party and not what's right for the country. We need to take back our country.Our motto for this election should
be,REELECT NO ONE. This should apply
srate and national elections.
9-23-2008 @ 9:01PM
Shelley said...
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10-09-2008 @ 4:31PM
Dennis said...
Be carefull of what you wish for-Dumbass!
10-13-2008 @ 3:34PM
jude mccarney said...
ever noticed how the signifigant stock market crashes go togeather with R presedents? 1873-Grant. 1929-Hoover. 1973-Nixon. 1987Reagan. 2001-Bush. 2008-Bush.
11-11-2008 @ 9:04AM
Rick said...
Greed has hit its peek now the real workers and survivalist will soon prevail and the lazy ones might go hungry.our world system is built on lies and deceit surprised it took this long
11-20-2008 @ 8:36AM
Charles said...
The Market will return to 10000 if Obama would have a press conference and promise to keep Capital Gains Tax where it is or even back off a little. 100% guaranteed