Sh*t, Meet Fan. Nice to Meet You.
By Johnny Roosh
The Dow broke through 8000 in earnest yesterday, moving below the “50% down” benchmark that some analysts believe is/was the line in the sand between a recession and a really really bad recession; maybe, not likely, even a depression, a term that has evaded technical definition (or at least a consensus thereof) due thankfully to its rarity.
Congress showed GM the Door. The market showed the rest of us the bird. Word is once US economic data is revised, it will show that a recession was upon us as of January. Not 2009. 2008.
Which may sound like good news if recessions still last an average of eleven months. If that were true, the market would have started to build back as another rule of thumb is that the market turns when a recession is about 55% done. As it stands, this recession could last as long as twenty four months using that rule of thumb and given the market’s failure to launch.
I get asked the question “What kind of news will it take to make the stock market go up?”
As much as I would advise investors to ignore the market right now I have to at the same time advise them that the market being on the rise will be the news. It will signal the midpoint of the recession and that the market is starting to price in an anticipated rise in earnings and profits. Problem is, we will only know this once the trend is established in earnest; it will manifest itself only in hindsight; which is to say there is no way to predict when it will happen.
The market usually tells us what will happen, not what is happening or what has happened (save a terrorist attack or some other external event).
What to do?
Hang in there. For investors with long-term time horizons of at least ten years, this market may represent a significant opportunity to buy in. Increase monthly or payroll contributions – at least temporarily – to average in lower.
Does that mean that the market is done melting? Maybe not. But it is almost certainly closer to the bottom than the top.
As Warren Buffet says, be greedy when others are fearful and fearful when others are greedy.
…and buckle your seat belt.
November 21st, 2008 at 8:40 am
Roosh is right. Don’t think of this as a near-depression. Think of it as the entire American economy on blue-light special. Be conservative, diversify and be prepared to wait, but buy.
November 21st, 2008 at 9:32 am
AC, yes, stocks are on sale. And most likely products in the retails stores can be had a bargin prices. Gas by my house is $1.68.
I’d say the difference between a recession and depression….recessions are normal periodic economic conditions. Only the gov’t can cause a depression.
November 21st, 2008 at 9:50 am
“”What to do?”” BUY BUY BUY, Seriously, BUY!!
And remember the old definition. A recession is when your neighbor is out of a job, a depression is when you are *grin*
November 21st, 2008 at 10:04 am
Chuckwagon asserted: “Only the gov’t can cause a depression.”
Don’t worry. Shrub will be out of a job in two months. Can’t do too much more harm.
November 21st, 2008 at 10:39 am
Heh. This song keeps running through my head…
LET’S HAVE ANOTHER CUP OF COFFEE
Album : Songs Of The Depression
(Irving Berlin)
Fred Waring & His Pennsylvanians – 1932
Just around the corner,
There’s a rainbow in the sky,
So let’s have another cup of coffee,
And let’s have another piece of pie.
Trouble’s like a bubble,
And the clouds will soon roll by,
So let’s have another cup of coffee,
And let’s have another piece of pie.
Let a smile be your umbrella,
For it’s just an April shower,
Even John D. Rockefeller
Is looking for the silver lining!
Mr. Herbert Hoover
Says that now’s the time to buy,
So let’s have another cup of coffee,
And let’s have another piece of pie!
November 21st, 2008 at 11:27 am
How Obama-Pelosi-Ried-Waxman can cause a depression? By keeping their campaign promises. We are lucky that most of Obama’s promises come with an expiration date (see gays in the military today). Hoping he backs out on his economic promises also.
Night writer. If you purchased stocks in 1932, you would have come out pretty good. If Roosevelt won’t have gotten elected, you would have come out pretty good even sooner.
November 21st, 2008 at 12:07 pm
Gee, I thought angryclown would be behind this “buy” thing all the way. It read to me like he was getting ready to get down and kiss Warren Buffets loafers when it served his purpose (something like “BHO and WB are BFF”), but now his advice isn’t so valuable?
November 21st, 2008 at 12:36 pm
A lot of this current wave of selling is from hedge funds doing their deals. The bulk of them have 45-day notice requirements, which means that they’ve had a ton of forced sales in the last few days.
Even with this crap going on, your 401(k) is still a deal. Look at things this way:
1) You’ve got an employer match in your 401(k). That’s an instant 100% return. That money you personally put in your 401(k) is pretty much still there and you’ve lost your match from the peak.
2) If you’d not invested that money, you’d have a lot less of it in your pocket by the time the IRS and Social Security got done with it. So it’s still better off where it is now.
All this assumes Franken and his fellow Dumbocrats (that particularly economically illiterate branch of the Democrat party) do not get their way with nuking 401(k)s, naturally.
November 21st, 2008 at 12:48 pm
Word is once US economic data is revised, it will show that a recession was upon us as of January. Not 2009. 2008.
I hate to cross the aisle into AC/peevish insanity, but I’d like to point out that if true, and if this had been a Kerry administration publishing these figures and revising them so much, the right-o-sphere would be spinning paranoid delusional conspiracy theories of HuffPo/Kos levels.
Personally, I put it down to the usual government competence, especially when dealing with the economy.
November 21st, 2008 at 5:53 pm
Angryclown advised: “Roosh is right. Don’t think of this as a near-depression. Think of it as the entire American economy on blue-light special. Be conservative, diversify and be prepared to wait, but buy.”
to which Trojan Man unaccountably responded:
“Gee, I thought angryclown would be behind this “buy” thing all the way. It read to me like he was getting ready to get down and kiss Warren Buffets loafers when it served his purpose (something like “BHO and WB are BFF”), but now his advice isn’t so valuable?”
Uh, Angryclown is behind this “buy thing” all the way, you great half-wit.
Let me guess. You were homeschooled, weren’t you?
November 21st, 2008 at 6:03 pm
angryclown was serious? That is a surprise. I took it as the customary sarcasm. It’s my fault that people wearing loads of face makeup are hard to read? *shrug*
November 21st, 2008 at 8:00 pm
Angry Clown keeps recycling my insults at him. Thought you were shunning me?
Over the last 6 months Bush has been destrying the economy with more & more intervention.
What Is Obama going to do different? MORE & FASTER! that’s it.
Not sure what you collectivists think will be the change, but government surplus pixie dust is already being used, & is achieving it’s usual results.
November 21st, 2008 at 8:38 pm
The big three will threaten to close plants in states with Senators and Congressmen who are easily flipped.
So look for St. Paul’s plant to be on the chopping block again soon.
November 22nd, 2008 at 10:09 am
MORE & FASTER
…President-elect Barack Obama picked New York Federal Reserve Bank chief Timothy Geithner to head the Treasury…
Geithner has helped lead U.S. efforts to combat the deepest financial crisis in seven decades, helping oversee the decisions this year to intervene in American International Group Inc., rescue Bear Stearns Cos. and leave Lehman Brothers Holdings Inc. to fail.
“The market is relieved that it’s Geithner,” said Tim Hartzell, managing director and chief investment office at Sequent Asset Management in Houston. “It’s important to have a fresh face come in who has also been in the mix and has been at the pinnacle of everything that has been going on.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVliMjNPmgCU&refer=worldwide
And of course, we all know how much those efforts have helped.
November 24th, 2008 at 11:40 am
buy buy buy buy. Good stock. that have no debt, and lots of cash and pay dividends. Wait for a few years.