Dow 10,000? [Archive] - RetrieverTraining.Net - the RTF

: Dow 10,000?

Richard Halstead
10-12-2009, 05:25 PM
Close today 9, 885.79

Is this a level we can break through or a barrier to anything higher?

10-12-2009, 05:30 PM
when it gets to 13000 let me know...

10-12-2009, 06:55 PM
As long as Congress continues to get bogged down with healthcare the market will climb. Once they pass health insurance reform, or move on and pass some other major legislation the climb will stop or at least stall.

10-13-2009, 05:33 AM
when it gets to 13000 let me know...

Yes. That'll be a double up. I just hope it doesn't get there too quickly. :)

10-13-2009, 06:42 AM
My point was it was 14,000 not that long ago so, I am not sure 10,000 is a real barrier.

Uncle Bill
10-13-2009, 03:28 PM
Don't mean to throw a wet blanket on your fire, folks, but if you are still 'playing' with your own money in this market, you may want to guard against trying to 'find the top', and take some profits before there are none to get.

Not sure what the 'correction' will amount to, or when it will begin, but if you think Wall Street has it pegged, and you're "all in" as they say in Texas hold-em lingo, you will get hurt.


My other brother Bill sez it this way:

The Biggest Bust Will Follow the Biggest Bubble
by Bill Bonner
London, England

Our 'Crash Alert' flag goes back up the pole...

October is almost half over. Will we get through the month without a major sell-off?

Dear reader, if you think we know the answer to that, you've got us mixed up with someone else. Someone who is crazy.

No one with his wits about him thinks he knows what the stock market is going to do.

Still, here at The Daily Reckoning, we have our hunches. We think it's time for a major pull back. Frankly, we'll be disappointed if we don't get one soon. Because, once again stocks are too expensive.

Too expensive for what? Too expensive for the circumstances.

The Dow rose another 20 points yesterday to a new bounce record. Oil rose to over $73. Gold didn't budge.

Of course, everyone now knows that the recession is over. NABE interviewed 44 economic forecasters. Four-fifths of them said the recession was over.

But we don't care what they said. These are the same seers who missed the biggest single event in financial history. There are many banking crises, recessions, panics and defaults in the record books. But none were as great as the one that hit September a year ago. Most economists didn't see it coming; why should we trust them to tell us when it is going?

Besides they've got the whole thing wrong. It isn't a recession; it's a depression. There is no recovery from a depression; instead, the economy has to re-invent itself in another form. Things aren't going 'back to normal,' in other words. Because the period leading up to the crisis was not 'normal;' it was a bubble. After a bubble explodes, you have a lot of debris to clean up. The bigger the bubble, the more damage it does when it blows up.

"The force of a correction is equal and opposite to the deception that preceded it."

You've heard our dictum before. In fact, you've heard our explanations for all these points before.

We just lived through the biggest bubble in history. Get ready for the biggest bust. Not just two years of falling stock prices and news- making bailouts. Not just 10% unemployment. Not just 100 bank failures and 30% off housing prices.

Noooo... We're talking about a worthy correction...a real correction...a noble and distinguished correction...a correction that can hold its head up in public.

This is a correction that will take many that will knock housing prices down for at least five years...and stock prices down to the point where people no longer want to buy them. It's a correction that goes deep enough and continues long enough to do its work - wiping out the bad investments and mistakes of the Bubble Era, while allowing the survivors to pay down their debts and build up their savings.

Now, here's a confusing little item. Yesterday's news tells us that consumer spending as a percentage of the entire economy has edged up to 71%. Now wait just one cotton-pickin' minute. How could consumer spending be going up?

Hold on, cupcake. It's not going up. It's going down. It's just that the other components of the economy are going down even more.

In the second quarter consumers spent $195 billion less than they did the year before - a 1.9% drop. In the 20 years before that, consumer spending increased at an average rate of 3.3%. So, you do the math... that's an about-face of more than 5% of GDP - a loss to the economy of about $700 billion!

Consumer credit is going down (we reported the figures earlier in the week)...unemployment is going up...consumer spending is going down...

..those are not the circumstances in which stocks sell for 27 times earnings...and move higher. Those are the circumstances in which stocks crash.

David Rosenberg:

"By some measures, the S&P 500 is already trading at valuation levels that would ordinarily be consistent with an economic expansion that is five-years old as opposed to a recovery that, at best, is in its infancy stages.

"On an operating ('scrubbed') basis, the trailing P/E multiple on the S&P 500 has expanded a massive 10 points from the March lows, to stand at 27.6x. Historically, when the economy is taking the turn away from contraction towards expansion, which indeed was the case in Q3, the trailing P/E multiple is 15x or half what it is... While we will not belabor the point, when all the write-downs are included, the trailing P/E on 'reported' earnings just widened to its highest levels in recorded history of nearly 140x, which is three times the levels prevailing during the height of the tech bubble."

So, here, we are officially running our "Crash Alert" flag up the pole here at the London headquarters of The Daily Reckoning. Cross Blackfriars Bridge and you might see if flapping in the wind, between the two huge gold balls on the roof.

Our Crash Alert flag is out because stocks have become too expensive...and because this bounce should be reaching its apogee by now. Already, central banks are talking about cutting back on their efforts to sustain the bounce with easy credit. Australia led the way last week with a rate hike.

It is also becoming clearer and clearer that the feds' efforts aren't really working. They can give money to their friends in the banking industry. They can give money to speculators who then make bets on the stock market, among other things. They can bailout major companies. But they can't really get much money into the real economy.

Au contraire; they take money OUT of the real economy. The feds will absorb $700 billion of private savings this year finance their deficit. They expect $1 trillion deficits at least for another 10 years. That won't leave much money for the private sector.

Naturally, Washington, DC, is doing well. While unemployment is near 10% in the rest of the nation, it's only about 6% in the Washington area.

But let's face it... What's good for Washington is bad for the rest of the nation. The feds have used this correction to increase their power...and add to their wealth. The average federal employee now earns twice as much as his counterpart in the private sector - if the fellow in the private sector has a job at all.

A news item tells us that TARP recipients spent $114 million lobbying for their bailout money - most of it going into Washington, of course.

And the feds now own major stakes in what used to be the private sector - insurance, automobiles, and banking industries.

This has been a great period for government. Money, is all floating down the Potomac like raw sewage...and coming to rest in the capitol city.

Our advice to the feds: enjoy it while you can. When stocks fall again...and people figure out what a mess you've made of the'll be lucky if you aren't tarred, feathered and run out of town on a rail.

Bill Bonner
The Daily Reckoning

Richard Halstead
10-13-2009, 05:42 PM
You can throw a wet blaket on my Dow 10,000 today it closed down 14.74 still hovering close at 9,871.05 still hovering close to the 10,000 level. All monies gained during this bubble spendas well as those dollars what do you propose I do with the Bank of America stock bought at 2.00 to 17.80 or several of the other gains :Uncle Bill you need to do more than copy a magazine article.

10-14-2009, 09:31 AM
I'm the exact opposite of an authority on the matter, but that was most definitely a rare opportunity. It is really odd how that stuff works, and I have to wonder what someone was thinking when they were selling at $2.00. It must have been someone who bought at $3.00 and was losing their shirt. I am not all that familiar with Bank of America, but I quess you knew they weren't going to disappear anytime soon. Where we are at right now, I imagine is anyones guess, but there won't be a repeat of BAC at $2.00 anytime soon, that is pretty obvious. Congratulations.

Uncle Bill
10-14-2009, 10:33 AM
You can throw a wet blaket on my Dow 10,000 today it closed down 14.74 still hovering close at 9,871.05 still hovering close to the 10,000 level. All monies gained during this bubble spendas well as those dollars what do you propose I do with the Bank of America stock bought at 2.00 to 17.80 or several of the other gains :Uncle Bill you need to do more than copy a magazine article.

That is excellant, Richard. I'm not saying lots of money hasn't been made in the stock market...just like you have. All I'm warning folks about is this is not the time for euphoria...this is the time for extreme caution.

I'm NOT in this business, but I've been taken to the cleaners so often, I'm only offering some thoughts to prevent you and others from doing likewise.

The 401's I had no control over have gone by the wayside, like I suspect many others have. The same is true of many pension plans. So what I'm saying is if you have been buying stocks and have hit the bullseye, get your principle out and play with their money, or at least snug up your stop-loss margins, so should it all go in the crapper, you'll be able to get out in time before going under.

All I was providing with the Bonner piece was a different take than what ALL the talking heads on TV are selling you. Regardless, my views are only that. I'm not in this rally, except for the gold part. After the dot-com era, I had lost all I wanted to, so I took what was left and bought gold. Haven't had to watch and read the market sheets since.

I'm happy for you Richard, and wish you well. Just don't let Wall Street rip you off.


Richard Halstead
10-14-2009, 10:53 AM
An interesting site is, that has a chart showing a comparison with dividend paying to non-dividend paying stocks. Most of my holdings are in larger dividend stocks.
The biggest holding is the energy company serving this area. The company had problems and I purchased a block of shares around 6.75 now the stock paying 5% dividend at the current price of 19.50. That's nearly 15% on the initial investment plus the gain.

And the Dow is nearing 10,000.

10-14-2009, 01:23 PM
It broke 10,000.

Richard Halstead
10-14-2009, 02:18 PM
I don't always make good trades but I try not get into emotionally about the trades and eliminate those not working. I also trade online and I saw a new site that offers $2.99 trades. I check while I am reading posts.

10-14-2009, 03:16 PM
I'll take the 10,000 but would much rather see the all time high of 14,164 we had under W. Whats really concerning me is the devaluation of the US dollar. Meanwhile Gold is at an all time high. That ought to tell us something about the worlds confidence in the dollar.