How low should the markets go?

[pegasus]

I just came across this graph earlier today, and based on what I can see here, the price of the S&P 500 should go down a further 50% (~$350), before the shares reach a decent P/E ratio, which means despite the big drops, they are still over priced.

So basically things will have to go back to around 1990's levels!! Nice work greenspan :bball:

 

[Samoan-Z]

Greespan still in the show I thought he died?

 

[Ironslave]

interesting.... are you thinking of shorting any stocks?

 

[Duality]

what would you guys recommend my parents do with their retirement fund? it's been taking major hits and they're being advised to just stay the course, but i'd like to hear some advice from guys who really know what they're talking about, any help? i don't know much about the stock market (i'm trying to learn) and would like to get some kind of consensus on this.

 

[tim290280]

I just came across this graph earlier today, and based on what I can see here, the price of the S&P 500 should go down a further 50% (~$350), before the shares reach a decent P/E ratio, which means despite the big drops, they are still over priced.

So basically things will have to go back to around 1990's levels!! Nice work greenspan :bball:

50%??

I think that stock markets have to be plotted out and have a line of long term average growth put through them to get an idea of what has and should happen.

Notice the downward spike after the correction when "stimulus" was applied.

The Australian graphs are different again, but similar overall trends.

 

[pegasus]

what would you guys recommend my parents do with their retirement fund? it's been taking major hits and they're being advised to just stay the course, but i'd like to hear some advice from guys who really know what they're talking about, any help? i don't know much about the stock market (i'm trying to learn) and would like to get some kind of consensus on this.

This is not an investors market, its a traders one. If you're going to go into this market you gotta go in very carefully, but you gotta be ready to run if things start going against you. buy and hold is probably not the best thing to do here.

Usually when gold goes up the dollar goes down, but these days its lost its parody somehow, there are days that you'll see both the dollar index and gold both go up!! However, I think this will soon go back to how it used to be, and during inflationary times cash is the worst thing to keep, so you have to hedge against inflation. To do that I would suggest silver instead of gold, cause its showing a nicer trend, but it still follows the same direction as gold. Remember though, you don't buy gold to get rich, you buy it for a short while to hedge, if you want to hold it for a long time its best to buy shares in a number of different mining companies, not just in the USA but also in other countries like Australia. If you remember the table IS posted with Ron Pauls investments, you could see how well diversified he was, and because of the the gains he made managed to out perform his losses.

I would also avoid ETF's, like GLD, and SLV, there is something fishy about this company, and it would be a wise thing to buy gold coins etc.

Also make sure your parents place a "stop loss" when they invest into anything, if more people had done that they would've managed to stop there losses, cause sometimes I hear of people making 50% losses and makes you wonder why they didn't pull out sooner.

 

[pegasus]

interesting.... are you thinking of shorting any stocks?

This market is too volatile for a small player like me, its the big institutions that are running the show now, and its very very dangerous for me to go in now. I'm standing aside for now waiting for things to calm down a little. You've seen the way that markets rocket up or down when either obama or the fed bernanke give a speech. Not a very stable market.

 

[pegasus]

50%??

I think that stock markets have to be plotted out and have a line of long term average growth put through them to get an idea of what has and should happen.

The Australian graphs are different again, but similar overall trends.

Well maybe not 50%, but the real P/E and the 10 year P/E are still quite a distant apart. If you look closely at the real P/E you can see its already taken a nose dive to try and go back down the somewhere closer to the 10 year P/E. So I think that index is still overpriced, but if one would go and find individual stocks which have a good P/E ratio, and maintainable liabilities then I would assume there stocks won't be going that much lower. There is also a strong possibility that the bubble at the start of the decade never really get to correct it self completely, and it was reflated when because of all the extra cash that people had, due to how easy it was easy for people to get access to credit.

 

[pegasus]

Greespan still in the show I thought he died?

No, he's still alive. Here's the fucker trying to defend his stupid ass..

 

[Duality]

This is not an investors market, its a traders one. If you're going to go into this market you gotta go in very carefully, but you gotta be ready to run if things start going against you. buy and hold is probably not the best thing to do here.

Usually when gold goes up the dollar goes down, but these days its lost its parody somehow, there are days that you'll see both the dollar index and gold both go up!! However, I think this will soon go back to how it used to be, and during inflationary times cash is the worst thing to keep, so you have to hedge against inflation. To do that I would suggest silver instead of gold, cause its showing a nicer trend, but it still follows the same direction as gold. Remember though, you don't buy gold to get rich, you buy it for a short while to hedge, if you want to hold it for a long time its best to buy shares in a number of different mining companies, not just in the USA but also in other countries like Australia. If you remember the table IS posted with Ron Pauls investments, you could see how well diversified he was, and because of the the gains he made managed to out perform his losses.

I would also avoid ETF's, like GLD, and SLV, there is something fishy about this company, and it would be a wise thing to buy gold coins etc.

Also make sure your parents place a "stop loss" when they invest into anything, if more people had done that they would've managed to stop there losses, cause sometimes I hear of people making 50% losses and makes you wonder why they didn't pull out sooner.

thank you very much for the advice i will show them your post.

 

[Ironslave]

I agree with Pegasus... looking long term, I think Gold (bullion) will go up.... if the money supply increases a lot, it will have to, really... Physical gold is preferable to stock, because stocks are hit or miss.... with stocks you're dependent on the performance of the company, which could be highly shaky.

Long term, I think agriculture is the way to go... the world is going to have to start producing much more, especially once oil reserves become harder to find.

 

[skindnef]

This market is too volatile for a small player like me, its the big institutions that are running the show now, and its very very dangerous for me to go in now. I'm standing aside for now waiting for things to calm down a little. You've seen the way that markets rocket up or down when either obama or the fed bernanke give a speech. Not a very stable market.

Totally Agree. The only stock I have left is 10 or so shares of Apple. Sold everything else. I agree also on Gold, I have heard precious metals around the office as a safer place to be right now. Gold, I heard will be $1700 oz by end of 09. That's almost double current levels, but no way to be sure. Diamonds, I had ok luck with years ago.

 

[pegasus]

Totally Agree. The only stock I have left is 10 or so shares of Apple. Sold everything else. I agree also on Gold, I have heard precious metals around the office as a safer place to be right now. Gold, I heard will be $1700 oz by end of 09. That's almost double current levels, but no way to be sure. Diamonds, I had ok luck with years ago.

It's impossible to predict the market, so I won't take anything as precise as $1700, or $2000 or whatever serious.
Also remember that as the price of gold goes up a lot more mining will be happening, so the supply side will also be going up along side with the demand.

 

[pegasus]

I agree with Pegasus... looking long term, I think Gold (bullion) will go up.... if the money supply increases a lot, it will have to, really... Physical gold is preferable to stock, because stocks are hit or miss.... with stocks you're dependent on the performance of the company, which could be highly shaky.

Long term, I think agriculture is the way to go... the world is going to have to start producing much more, especially once oil reserves become harder to find.

yup, when I decide to tip my toes back in, I'll go with commodities, but I don't see a good trend developing with any right now so I'll just have to wait.

 

[tim290280]

Some good stuff Pegasus!

Long term, I think agriculture is the way to go... the world is going to have to start producing much more, especially once oil reserves become harder to find.

Actually something that is happening now in Ag is investment in land and production to secure food supplies and offsets. Corporate farms are starting to become a reality.

But in terms of it being a good investment...... I think there is a lot of things that agriculture will be on the short end of that will make agriculture a hit and miss. Historically it is also in governments interests to keep agricultural commodities cheap for the populous. As a result it is unlikely that we will see anything other than a continued closing of the terms of trade (well unless you are one of those subsidised American or European farmers :bball.