My inbox is full. My emails overwhelming.
How stoney; how did you nab the first big move in the DOW in your 3 Times A Charm thread? And how did you nail the second in your Libor Led Rally Thread?? and why the hell have you not posted so far this week!!!????
Monday was funny and kind of disheartening what seemed like a lazy day of base building turned into a last ten minute free fall-- had that fall been with volume all bets would have been off. Thank God it had none.
There was another bit of depression that set in on Monday, that valuations really were not as cheap as we all thought they were. How can you fall 40-50% and not have cheap valuations? That would seem illogical, but there the gloom and doomers were out in force telling us that somehow with the market where it is now we still had a PE of 19 or so.... in other words all that stock price damage and earnings had fallen just as much! That is the crux of the situation now... just where do we sit in terms of PE??
In discussing this with other investors we have decided to treat each stock specifically meaning it is our belief that the extreme shortfalls in financial earnings weighs on the PE average more than their steep stock declines. This is complicated stuff but my basic thesis is that when you combine all the banks and brokers their stks may have gone from $50 or $70 to $11 or $12... but their earnings have reversed completely going from say a $300 mln gain all the way PAST zero to a $300 mln loss... as such the arrow goes past zero whereas the stk price stops presumably somewhere above zero.... so in that sense the PE is skewered higher. For this reason we separate out the financial stks and deal with each purchase withing the guidelines of their historic PE spread AND only use the stks that have really showed moderate decline in earnings and outlook... if you can buy a stk at or beneath it's lowest PE point AND they have not had a hiccup of royal flush in earnings... well then you cannot be guaranteed success but you can at least go to sleep knowing you have done all you can do as an investor.
Our big purchase in the last thread was Blackrock... and the theme there was that BLK would move with the market and since we had predicted a two thousand point move, it ought to do pretty good but also because they are one of the few stks that will benefit from all this fallout. I will go into more detail here in a little bit. I will also touch on our other picks-- did you all buy AMZN when it dipped to $49 as instructed?? What's up with ADM etc. and where do we stand now.
Now before we get all nervous that half of our 2K advance took place in one day and the move is halfway over let's subtract that 200 point Monday last 10n minute foolishness and peg yesterday as closer to a 600 point move which makes more sense to me. So 1400 More to go!!!
THE BEAUTY OF THE TRUNCATED WAVE 5!
- The wavers always like to have it both ways so although the length of the 4th wave down measured to DOW 8,700 & Predictions of the 5th wave reaching 6,700 was freakin me out... there was always the 10% chance we talked about in our prior thread of a Truncated Wave 5.
Meaning the 5th wave can REVERSE any time and it did. Most think this is due to the Election and I agree to an extent-- remember our headline REPUBLICANS BUYING! Well the higher the market goes from here the better for McCain. As well we were the FIRST IN PRINT TO POINT OUT that the Plunge Protection team was in the market buying stocks and if that turns out to be true... why would they stop now as we head into the election? It's hurtful to think of the market this way but anything is possible.
On top of all of this thought we have the FED meeting and a near certainty of 1/2 point cut and I think a good possibility of 3/4....
When we take a step back and examine the span of time between our three threads-- we could argue that the market has drawn a line in the sand at DOW 8000. That mark is the discount mark for everything we know now. The secret is to know nothing more. I'm afraid when the AIG money runs out or when Paulson comes back top the Senate for MORE money we will go through another death spiral... but for now the blinders on on and the old green DOW 10,000 hat is back out of the closet. Can it be another 10K celebration? Won't that be the lamest ever?
I'm holding on dearly to the fact that on Oct 13 we had a similarly huge move- that was but 2 weeks ago - and so if we can say the TWO BIGGEST MOVES IN 69 YEARS BOTH HAPPENED IN THIS TWO WEEK SPAN.... How can that not be a direction changer and then a follow through day! ~ stoney
~stoney
How stoney; how did you nab the first big move in the DOW in your 3 Times A Charm thread? And how did you nail the second in your Libor Led Rally Thread?? and why the hell have you not posted so far this week!!!????
Monday was funny and kind of disheartening what seemed like a lazy day of base building turned into a last ten minute free fall-- had that fall been with volume all bets would have been off. Thank God it had none.
There was another bit of depression that set in on Monday, that valuations really were not as cheap as we all thought they were. How can you fall 40-50% and not have cheap valuations? That would seem illogical, but there the gloom and doomers were out in force telling us that somehow with the market where it is now we still had a PE of 19 or so.... in other words all that stock price damage and earnings had fallen just as much! That is the crux of the situation now... just where do we sit in terms of PE??
In discussing this with other investors we have decided to treat each stock specifically meaning it is our belief that the extreme shortfalls in financial earnings weighs on the PE average more than their steep stock declines. This is complicated stuff but my basic thesis is that when you combine all the banks and brokers their stks may have gone from $50 or $70 to $11 or $12... but their earnings have reversed completely going from say a $300 mln gain all the way PAST zero to a $300 mln loss... as such the arrow goes past zero whereas the stk price stops presumably somewhere above zero.... so in that sense the PE is skewered higher. For this reason we separate out the financial stks and deal with each purchase withing the guidelines of their historic PE spread AND only use the stks that have really showed moderate decline in earnings and outlook... if you can buy a stk at or beneath it's lowest PE point AND they have not had a hiccup of royal flush in earnings... well then you cannot be guaranteed success but you can at least go to sleep knowing you have done all you can do as an investor.
Our big purchase in the last thread was Blackrock... and the theme there was that BLK would move with the market and since we had predicted a two thousand point move, it ought to do pretty good but also because they are one of the few stks that will benefit from all this fallout. I will go into more detail here in a little bit. I will also touch on our other picks-- did you all buy AMZN when it dipped to $49 as instructed?? What's up with ADM etc. and where do we stand now.
Now before we get all nervous that half of our 2K advance took place in one day and the move is halfway over let's subtract that 200 point Monday last 10n minute foolishness and peg yesterday as closer to a 600 point move which makes more sense to me. So 1400 More to go!!!
THE BEAUTY OF THE TRUNCATED WAVE 5!
- The wavers always like to have it both ways so although the length of the 4th wave down measured to DOW 8,700 & Predictions of the 5th wave reaching 6,700 was freakin me out... there was always the 10% chance we talked about in our prior thread of a Truncated Wave 5.
Meaning the 5th wave can REVERSE any time and it did. Most think this is due to the Election and I agree to an extent-- remember our headline REPUBLICANS BUYING! Well the higher the market goes from here the better for McCain. As well we were the FIRST IN PRINT TO POINT OUT that the Plunge Protection team was in the market buying stocks and if that turns out to be true... why would they stop now as we head into the election? It's hurtful to think of the market this way but anything is possible.
On top of all of this thought we have the FED meeting and a near certainty of 1/2 point cut and I think a good possibility of 3/4....
When we take a step back and examine the span of time between our three threads-- we could argue that the market has drawn a line in the sand at DOW 8000. That mark is the discount mark for everything we know now. The secret is to know nothing more. I'm afraid when the AIG money runs out or when Paulson comes back top the Senate for MORE money we will go through another death spiral... but for now the blinders on on and the old green DOW 10,000 hat is back out of the closet. Can it be another 10K celebration? Won't that be the lamest ever?
I'm holding on dearly to the fact that on Oct 13 we had a similarly huge move- that was but 2 weeks ago - and so if we can say the TWO BIGGEST MOVES IN 69 YEARS BOTH HAPPENED IN THIS TWO WEEK SPAN.... How can that not be a direction changer and then a follow through day! ~ stoney
~stoney