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1) The stock market gambling was in no way limited to the 30 something's, it
deeply infected the baby boomers, near-retired, and retired. These people
talked of nothing but stocks at every gathering. Now they shut their eyes to
what is happening in the market, don't want to talk about stocks, and fully
expect that their winnings will be restored with a bit of patience.
2) The bubble was in no way limited to the NASDAQ, it was just most evident
in the NASDAQ. The blue chips were and very much remain part of the bubble.
By any gauge of valuation, the blue chips remain valued at historically high
levels. We are now learning that much of the productivity and earnings of
the past 5 years were fictional as extraordinary charges wipe away years of
"profits".
Attached find PE and Yield statistics from this week's Barron's Market Lab
which suggest that the Dow Jones blue chips remain at lofty levels with big
haircuts ahead in prices, earnings, and (especially) dividends:
a) Market to Book on DJIA remains at nearly 8x
b) DJIA PE ratio is still 24+
c) PE ratio on DJTA is 348
d) DJTA dividends are nearly 5x earnings
e) DJUA PE ratio is 48
f) DJUA dividends are nearly 2x earnings
Yes, the pendulum will swing far to the other extreme ... very far. I expect
that when the smoke clears some years from now that sustainable dividend
yields on blue chip stocks will once again exceed the yields on long term
treasuries.
Earl
----- Original Message -----
From: "BobsKC" <bobskc@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, September 07, 2001 7:41 PM
Subject: Re: [RT] s&p .. Where did that cat go?
> Traders ! ... With us, it tends to be gloom or boom and nothing much in
> the middle. This situation is not so terribly complicated in my
thinking.
> The NAS got out of control .. insanely out of control. Kids, (30's and
> younger), thought that fortune lay at the end of buying anything high tech
> and doubling your money in a month .. or a week .. hell, this investing
> thing wasn't work, it wasn't gambling, it was a gift.
> Then, stretched way beyond the limit of any common sense, the bubble
burst.
> The NAS has now fallen from 5200 to 1600. It's been in a clear cut bear
> market for at least two years now. The SP500 and DOW have done much
better
> and the reason is, the NAS money had to go to other stocks. To hell with
> bonds or savings accounts or CD's .... STOCKS! Immediate fortune. Now,
> those blue chips are beginning to join their NAS brothers and drop away
> some. BUT ... the blues were never part of the bubble .. never part of
the
> insanity. I believe that the NAS, over-all, is back in line with
reality.
> Blues were never so far out of reality and may also soon be in line.
>
> This brings us to two thoughts. 1. The markets will continue to sell off
> regardless of value until they are way to hell over-sold. 2. If #1
> happens, small investors, (mutual funds), will be depleted in a major way
> and the hawks are going to find the chickens are no longer in the game.
> I'm just a peanut but I hope to hell we don't drive the little guys out.
> I'm not sure I can make money simply guessing where the program traders
are
> heading for next. I need the little guys to inject greed, impatience,
> immaturity and dreams into the markets for me to make money.
>
> Anyway, my take is that we won't have a capitulation. I don't think the
> little guys are going to pull what's left. They may not put more in if we
> hurt them much more but I think they've dug their heels in and won't be
> shoved out now. Remember the tech bubble and how we all knew it had to
end
> any day? Well, not only did it keep going but the big money went in too
> after they saw they couldn't turn it back. I think the only capitulation
> we are going to see is us.
>
> I sold my MCHM at 6.95 after market on the news and before it tanked. I
> have some LU, some JNPR and some TSO. Other than that, I'm short a couple
> high end retailers and overall, I'm 78% cash. We're do for an old
> fashiioned roast and the shorters are going to be the main course. I'm
> very cautious here.
>
> Have a great weekend all ... Sorry for the longer post .. I don't post
> often .. Good thing, huh? :)
>
> Bob
>
>
>
> At 03:36 PM 9/7/01 -0700, you wrote:
> >The cat stopped climbing the stairs back in 1999. Now what happened in
> >1999? Why was that the top of the stairs for now? Can anyone point to
the
> >seminal factor that stopped the rise, the date, the time, the details,
etc..
> >Was it dividend extremes? PE extremes? When were the first "F" rate and
> >discount rate rises? Who were the smart dudes that stopped buying and
> >started selling in 1999? Answer that and then answer under what
conditions
> >will they start buying again and when might that be. This is some
> >interesting market history being created right now. When looking at the
> >Monthly INDU it is easy to get the impression that we are witnessing the
end
> >of something that has had decades of growth and is now in the late stages
of
> >its growth/death cycle. The significance is of biblical proportions and
> >will need something of a spiritual nature to resurrect it. The INDU
still
> >needs to drop a minimum of 600 points to get into the 2.xx % range. Fed
> >easing only effects one part of the valuation equation. Price,
dividends,
> >earnings also have to come into line with the reality of growth and
growth
> >expectations. Stimulus without responce means this thing could spiral
> >downstairs into the basement as in snowballs growing larger as they roll
> >downhill. Politicians are beginning to point fingers of blame now so its
> >getting serious enough to call it a train wreck. Pushing on a string and
> >train wrecks have a similar appearance.
> >
> >bobr
> >
> >
> >
> >----- Original Message -----
> >From: "Don Ewers" <dbewers@xxxxxxxxxxxxx>
> >To: <realtraders@xxxxxxxxxxxxxxx>
> >Sent: Friday, September 07, 2001 3:06 PM
> >Subject: Re: [RT] s&p .. Where did that cat go?
> >
> >
> >> BobR,
> >> Sage advice, never thought about the cat going more than one way.
> >>
> >> The cat did bounce from 1088.50 (globex) to 1009 early though, then
> >decided
> >> to go downstairs?
> >>
> >> I painfully know as my 1088.25 (fading a 60min fib expansion from 8-27
to
> >> 8-30 target 1086.50 was missed in the globex by a tic) only to hop on
late
> >> and then watch a 12+ H win turn into a BE trade before I could say,
what
> >the
> >> . . .
> >>
> >> I don't know about anyone else, but this is brutal to trade
> >intraday/night?
> >> don ewers
> >>
> >> ----- Original Message -----
> >> From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
> >> To: <realtraders@xxxxxxxxxxxxxxx>
> >> Sent: Friday, September 07, 2001 3:29 PM
> >> Subject: Re: [RT] s&p .. Where did that cat go?
> >>
> >>
> >> > Think of the dead cat bounce as not off the floor, but off of a
stairway
> >> > with each bounce occurring off a lower step. Today the first bounce
was
> >> > from the -0.382 extension of yesterday's range, that took the ES back
to
> >> the
> >> > Open as measured at midnight, then the bounce from the next lower
step
> >was
> >> > only up to the dynamic midpoint. The day ended on the lower step.
With
> >a
> >> > little visualization two mini head and shoulder patterns can be seen
> >> formed
> >> > by the two bounces. The last H&S bounce projects at least another 10
> >> points
> >> > down.
> >> >
> >> > bobr
> >> >
> >> > ----- Original Message -----
> >> > From: "Don Thompson" <detomps@xxxxxxxxxxx>
> >> > To: <realtraders@xxxxxxxxxxxxxxx>
> >> > Sent: Friday, September 07, 2001 1:09 PM
> >> > Subject: Re: [RT] s&p .. Where did that cat go?
> >> >
> >> >
> >> > > Forecasting is a tough business...
> >> > >
> >> > > Ben,,,Where did that cat go?
> >> > >
> >> > > LOL...
> >> > >
> >> > > Not laughing at you or anything. Looks like this market is serious
> >> about
> >> > > continueing down..
> >> > >
> >> > > Don
> >> > >
> >> > >
> >> > >
> >> > >
> >> > > To unsubscribe from this group, send an email to:
> >> > > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >> > >
> >> > >
> >> > >
> >> > > Your use of Yahoo! Groups is subject to
> >> http://docs.yahoo.com/info/terms/
> >> > >
> >> > >
> >> >
> >> >
> >> > To unsubscribe from this group, send an email to:
> >> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >> >
> >> >
> >> >
> >> > Your use of Yahoo! Groups is subject to
> >http://docs.yahoo.com/info/terms/
> >> >
> >> >
> >>
> >>
> >>
> >> To unsubscribe from this group, send an email to:
> >> realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >>
> >>
> >>
> >> Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >>
> >>
> >
> >
> >To unsubscribe from this group, send an email to:
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> >
> >
> >
> >Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
> >
> >
> >Attachment Converted: "c:\internet\eudora\attach\INDUm1.gif"
> >
>
>
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