10,000 Dow this year...or 5000?

It's procrastination for me, baby, all the way! I know enough to know better than to sell now, because the returns would be pitiful, but three years of losses make me reluctant to invest anything new. On the other hand, I'm still investing automatically in a pension, and I console myself with the thought that I've been buying on the cheap for three years now.

But I hope to be working as little as possible within 10 years (max), and right now I'm not at all optimistic about things turning around.

I wish I could be more wordy on this topic, but this exhausts my thoughts at the moment!

I think it's time to sit tight right now. Most areas seem to be rather volatile and/or extremely low-yield (e. g. I spoke with a broker a few weeks ago and the interest rate for a 6-month T-bill isn't much different from a regular savings account, plus you lose liquidity during the life of the security).

I suspect oil will go up during the conflict but won't shoot down too much afterwards, no matter how long we're at war with Iraq. I attribute this less to market pressures and more to greed. Despite the idea that oil companies will want to back a Republican president, I just don't see oil prices as taking too significant a tumble once we're done with Iraq, unless it's right before election time, and even then I still don't see prices at the pump being down for long, or too far down (after all, the public already buys gas at high prices with little grumbling). From almost everything else will come higher prices, because energy touches nearly all aspects of our lives - the prices of food, medicine and transportation all follow energy costs. If energy stays high, that inflation will hit all of these areas.

So I predict inflation, and the Fed has pretty much nowhere to go in terms of interest rate decreases so that'll start to head up. Higher interest rates and higher prices, plus a lousy unemployment picture (According to John Gray of the consulting firm Challenger, Gray & Christmas, the unemployment picture will stink at least until the fall and perhaps beyond. See: http://www.computerworld.com/careertopics/careers/labor/story/0,10801,79004,00.html ). Sorry to be such a pessimist but I see stagflation rearing its ugly head again. The last time out of stagflation was arms sales (think Reagan) and large deficits (think Reagan again).

Look for the US to get more involved with third-world nations to balance the trade deficit. We'll be selling arms to Burkina Faso and Somalia ere long, and the cycle will repeat itself in a couple of decades as we work and fight to get tin-pot dictators out of those nations and others like them - dictators that we the US have armed.

Of course I may be completely full of it. If the Iraq conflict is a swift slam-dunk, the Administration may be able to sufficiently pressure energy companies (look for sweetheart deals on corporate taxes and contracts to drill in the wilderness and offshore) to keep their prices down and hence stave off inflation. Then interest rates will still rise, but more slowly. While this will harm the housing market a little, but that market is already out of control in the Northeast, and that would provide some needed brakes on real estate prices. In particular if there are a few major changes in either the tech or medical fields (preferably both - I am talking about new medical discoveries or new must-have tech), then unemployment will go down and we could be kicked back into an optimistic bubble-type economy.

'Course that could also be wrong. :-D

I know two things.

One is that history reminds us that we never learn anything from history.

And two is that knowing that, I still refuse to learn a damn thing.

At the height of the market when I was riding high and mighty, and watching my investments go to the moon on a daily basis, I specifically remember the day I sat in front of my computer and told myself to ,"SELL EVERYTHING NOW".....because this would not last.

Of course I did not do that. Because I would never have been able to live with myself if I had, and things just kept going up.

This falls under the category of.....greed.

Now that I have lost sixty five percent of all that I once had, (my future) I am sitting in front of my computer telling myself that, I won't sell whatever I have left because if I did and the market went back up, I would not be able to live with myself.

This falls under the category of........( you tell me).

This does not addresss your questiion.

I, of all people, do not have the slighest idea of where anything is going.

At the moment, I tend to think The Market is at or very close to its bottom. Unfortunately, I don't expect a startlingly robust recovery. My current feeling is a Dow in the mid $9K to low $10k range by year end, but political and diplomatic uncertainties could well negatively impact things. I expect relative near-to-mid term success in Iraq, though I fear for Iraqi-caused civilian and environmental tragedy, and I am relatively confident of essentially diplomatic resolution of The Korea Matter. The War on Terrorism will keep things volatile both politically and financially for some years to come. I don't foresee a crash, nor do I foresee a "Bubble".

Of course, I was convinced I was doing the right thing when I married my ex-wife.




timber

If you wish to read something a bit different in the way of market commentary, check this out:

"Maria Fartoromo has applied for a vendor's license down on the floor of the exchange. She'll be selling the barbecued limbs of Iraqi women and children to lunchtime floor traders on the first 3 days of the air campaign. Should make a killing. For breakfast during the opening salvo, Larry 'The Tick' Kudlow can feast on sausage links stuffed with Iraqi intestine and Porky Pig Cramer can swill his bacon down with blood chasers. Who are these animals? The nonstop marketing of this coming attack as 'good for the indexes' insures a karma blacker than Hell for American finance and I don't care what the chart says or what the wave count portends. This whole paper artifice of greed and ignorance is set to spiritually combust."

"We are right on the cusp of a prolonged and idiotic crusade against the entire Muslim World. This should help to hustle the charts back down to fair value and cut the Dow in half from here more or less. Iran is next and then Saudi Arabia once that house begins to crumble. Can you say worldwide instability?"

(the comments of the color commentator Budda, advisor of Mark to Market, columnist at capitaliststool.com)

DJIA up 230 at midday the day--or perhaps two--before invasion of Iraq commences...(please note date and time of this post)

S&P shows rise of more than 40 points, or 3%...

To quote NYT, "raising hopes on Wall Street the war would end quickly and leave the U.S. economy relatively unscathed."

Do you believe it...or not?

More opinions needed, please...

Waiting for c.i.'s take on the Dow. His record over the past two years has been better than the pros.

Since I opened this thread two weeks ago, the markets have risen dramatically in anticipation of a brief successful Iraqi war.

Numbers as of Friday, 3/21/03 (%ages reflect the increase in the past two weeks):

DJIA 8521 (up more than 12%), S&P 895 (+11.9%), Nasdaq 1421 (+11%)

If you had bought these indices then, and sell them quickly tomorrow morning, you could say you had a pretty good year.

Don't fret; I didn't either.

Now that the war has gotten more difficult, is this run-up valid?

Is now a good time for those who've hung in the last three years to jump off--or is it still a good idea to buy?

A lot of people must have followed your advice to sell this morning, PDiddie. Check out the indexes. Not doing at all well, presumably because the war won't be a slam dunk.

(BTW, I worship Maria B, though I have no idea what her politics are. She's easy on the peeper and so darned smart!)

roger gives me too much credit. With that warning, let me add my .02c worth of opinion. The market is going to remain volatile, not only because of the war, but because p/e ratios are still too high - even at 8,200. It's okay for the p/e ratios to be high, but not when consumer confidence, consumer debt, and the world economies are all going in the wrong direction. Lower interest rates don't mean much when people are already in debt up to their eyeballs. We're seeing more defaults on mortgages - a very bad sign. People started investing in homes instead of the stock market, because they saw low interest rates, and a long bear market - now going on four years. I think the DOW is going to swing between 7,500 and 8,500 (plus or minus 5 percent) for awhile. Buying blue chips anywhere below 8,000 are good buys - for the long term. Cost averaging would be my recommendation. Stay with a good mix of stocks, bonds, CD's, and cash. A higher percentage in stocks if you're still young. Long term investors should have confidence in our economy; otherwise everybody losses anyway. Don't try the day-trade game. It's still a foolish way to throw your money away. c.i.

BTW, I voted for 8,000 on the DOW at 12/31/2003. c.i.

At what poing would the DOW become painful to see?
So damn low it's unbelievable, it's morbid, nothing could possibly justify it yet it's still going lower and lower ... "irrational depression". So low that even Joe Construction Worker decides to start make money by selling short.

That's the bottom. The depression is saturated. Everyone is in on it.

Today's market is understandable.... war, Enron, AOL, tightened budgets, consumer fear, skyrocketing credit card balances, same old push-pull turbulence. Seems quite explainable.

Given the size of markets these days, it needs to hurt big-time before turning and climbing with any solidness. Look for 2-3 months of Armageddon, briefly below 6000, then people will get in for the constructive rebuilding.

CodeBorg, Although 6,000 is a possibility, I doubt it is probable. Most have already lost upwards for 80 percent during the past four years, and many have lost up to 30 percent in 2002. The fundamentals of our economy doesn't look all that promising, but many of the jobs held by Americans are small business jobs - and they usually run a tighter ship. Big businesses seem to overpay its CEO's and officers while they have no problems laying off employees by the hundreds - or even thousands. They continue to offer golden parachutes to officers that provide mediocre performance and are responsible for huge business losses. Small businesses do not run that way. They watch their cash flows more closely. When they lay off employees, it doesn't impact the unemployment rates as badly. Our economy is involved in many different kinds of products and services as compared to 25 - 50 years ago. That has a tendency to protect our economy. During the past three years, many have refinanced or purchased homes. That trend will slow down, and the 'extra' cash will help with the recovery of our economy. After the war with Iraq is finished, fuel prices should come down. That will be an extra impetus on our economy. If the government is successful in providing a tax cut this year, that will also be of marginal help. What has happened during the past several years is the shift of manufacturing to offshore countries with cheaper labor costs. That has helped the US keep our inflation rate under control. We have seen the US dollar decrease in value to the Euro. That's a plus for our country, because it makes our products cheaper in Europe, and we become more competitive. Most of these things bodes well for our country and economy. At this juncture, it's my humble opinion that the DOW can suffer another ten percent downturn in the short term, but I still stick with my 8,000 for 12/31/2003. c.i.

I've been trying to calibrate Iraq invasion news with stock market news. Having become a serious investor some years ago, during the time when "fundamentals" and "institutional investors" ruled, it was also a time when individual investors' caprices and buying capacity had begun to influence the market. Even at that time, my broker argued for attention to fundamentals. He was right, of course, but things they were a-changin'...

I assumed that war news would influence the market more than it apparently has. For the past few days, as the US entered Bagdhad and is now, as I write, claiming victory, the market has dropped again. I'd say the political and economic future are far more iffy than we (or the administration!) would like to believe, and that's what drove me away from voting in the 8000 to 9000 range and looking for a market at between 6000 and 7000 at the end of the year. The near end of war hasn't calmed the sense of upheaval in this country, and a Republican Congress is, today, looking to embed in concrete the "temporary" security measures, making permanent the increased powers of federal law enforcement to overrule individual rights.

I agree, Tartarin. Looks like the "positive outcome" of the war has already worked its magic on Wall Street. Now the underlying issues--weak economy, high unemployment, &c--are back in the picture. It's hard to be optimistic...

A classic "buy on the rumor, sell on the news" run-up the past month.

Fundamentally this market is still under threat from terrorist attack, from the next war we start (Syria? Iran? North Korea?), from companies whose cooked books haven't started to smell enough just yet, and from a consumer tired of spending...

Anyone traveling overseas this summer?

Can the auto dealers finance at something less than 0%?

(Dow 7800 again in a month. Note the date above.)

PDid, This country will always be under threat of terrorist attacks. That will not change. However, the economies of this world will change, and the stock market will see better days. When that will happen is the 64 thousand dollar question. The market will continue to be volatile, and my previous opinion about the 7,500 to 8,500 range did not change. ** Auto dealers can provide financing for under zero percent by giving greater discounts on the sales price. As for overseas travel this summer, I'm off to Machu Picchu and the Galapagos Islands starting on April 30 for 17 days. Then in early August, my wife and I are doing the Trans-Canada Train Tour from Montreal/Toronto to Vancouver. c.i.

Those sound like great vacations, cic. Send us an e-postcard, here in the forum.

I'll go out on a limb and say that you will find plenty of room to stretch out on the planes and trains. Small crowds make for even bettter trips, IMHO. Keep doing your part (and mine, and several others ) to keep the travel industry propped up.

The comment about the price of autos, and its relationship to incentivized financing by manufacturer-connected finance companies, is, I must tell you, a fallacy.

The price of an auto--irrespective of make, model, condition (meaning new or used) is always going to be contingent on two (and only those two) things:

supply, and demand.

You want the hot model? Ragtop in the spring? One of AutoWeek's Ten Best? MSRP.

Is the one you want a slow seller? An off-brand (Mazda, Hyundai, Kia, Dodge)? You ought to be able to dicker them down to nothing and be easily able to verify that it really is nothing.

Availability of cost data on the Internet means there's no profit centers left for them to hide; when people lease more new cars, three to four years later there's a glut of 'good, clean, pre-owned' cars hitting the market (depressing the value of one's trade-in); and when 0% is used to stimulate sales (keeping the factories running, a huge economic factor) used-car values go down the toilet.

Who'd buy a used car, even considering the inflated 'depreciation discount' these days, when you can buy a new one and get a loan for free?

That makes more sense than writing a check for it...

Auto manufacturers and dealers are just another part of this consumer economy of ours that is teetering. Mostly because there are simply too many dealers; as with most of the rest of America's retail sector, this one is "over-stored". But also because their margins are being squeezed. And because the industry employs so many people (even the smallest franchise dealer you could find in the smallest town in this country will have a minimum of 30-40 employees) a slowdown in auto sales is a definite barometer for the overall health of our nation's economy.

So I don't accept that they're still sandbagging their customers. The numbers don't bear that out.

I also would tend to disagree with your preconception behind the statement, "this nation will always be under threat of terrorist atttacks"; while accurate, and a statement I agree with at face value, this phenomenon is a relatively (2+ years) new depressant to our economic health, and has not been factored in to the long-term consequence of many stocks; for one, the airline industry's financial crisis will only send more companies into bankruptcy on the next explosion. And I'm not simply speaking of the next terrorist attack in this country, and its immediate effect on consumer spending. I'm talking about the increased costs of securing our buildings, plants, facilities, cities, ports, airports, etc. While good for the security industry, the money spent here is akin to preventive maintenance: needs to be done, is ignored at a high price later, but shows no real gain to the business, the business owner, or even the consumer.

It's maintaining the status quo. It does nothing for the bottom line this quarter. And won't, ever. And it takes away millions that could be spent on R&D, staff training, benefits, etc.

(My vote was for "about where it is now", in case anyone was wondering. And a lot of seesawing between now and the end of the year, providing buying opportunities for some and selling opportunities for others.)

PDid, When the high tech balloon burst, young engineers driving BMW's couldn't keep up with the payments, and 'gave' it back to the dealers. What is interesting about this phenomenon is that the used car lots were over flowing, but new car sales were going up. With interest rates coming down, and the zero financing offered by the auto companies, people continued to buy, buy, buy. Even housing sales kept it's upward trend. With our unemployment rate over 8 percent in Silicon Valley, the housing market is still up. Very difficult to explain, even for the experts. According to last Sunday's Real Estate section of our paper, our area is showing a 5 to 20 percent increase on sales prices in our zip code. Houses offered over one million bucks are still selling like hotcakes. I'll be damned if I can offer any rational answer as to why this is happening. c.i.