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SPY, XLF, IYT - charts indicate that the Bottom is IN!
- Thread starter option_trad3r
- Start date
Quote from bwolinsky:
Do people really trade with this nonsense? Unbelievable.
Last I checked this was elitetrader, not elitetrendfollower/investor.
I guess I have two sides to this. Technically I'm not going to dispute the trend is down, but that doesn't imply it will continue.
Fundamentally, stocks at their lows were so cheap that we got the government rushing in to own a piece of it.
Just think of BAC at formerly 0.19 times book value. Any larger fund could buy every share in a hostile takeover and keep the rest as profit. This is an archaic measure, but a very relevant one, and the actual reason stocks trade where they do in the first place.
This gives rise to the understanding of rationality in a market. BAC at 0.19 book is irrational. Why? I can buy every share, and keep the owners equity. EMH at work in its modern form. BAC is just one example, but median price to book ratios are irrationally low and are usually whole multiples, not fractions of price.
Median Market Price to book is 0.9. I'm sorry, bears have no reasonable basis anymore. This ratio is somewhere normally around 1.5-1.7. Even for financials the rule of thumb is 2.
Yes, most pros trade support and resistance lines. Losers come up with metrics to justify buying in an over-valued market.
Quote from bwolinsky:
Do people really trade with this nonsense? Unbelievable.
stocks at their lows were so cheap that we got the government rushing in to own a piece of it.
Just think of BAC at formerly 0.19 times book value.
1) yes the government rushed in to buy stocks because they were so "cheap", not because the entire fucking system was about to crash.
2) yes still go by the "book" value of those mark to market banks and try to sound intelligent by exclaiming how under valued they are based on book value.
3) your first sentence is very appropriate. Look in the mirror and say to yourself "Do people really trade with this nonsense? Unbelievable. "
Quote from newguy05:
1) yes the government rushed in to buy stocks because they were so "cheap", not because the entire fucking system was about to crash.
2) yes still go by the "book" value of those mark to market banks and try to sound intelligent by exclaiming how under valued they are based on book value.
3) your first sentence is very appropriate. Look in the mirror and say to yourself "Do people really trade with this nonsense? Unbelievable. "
Book value per share on BAC is greater than $20. Look up how to calculate book value and you'll get the same answer.
Quote from ASusilovic:
I think, you should explain 0.19 times "book value" in detail...especially BAC´s...
Same answer. Go calculate book value. I'll give you a hint: Assets-Liabilities over shares outstanding. It's greater than $20, when historic price to book rates are greater than 1.5 to 1. Easy answer. You should draw the same conclusions, or you know nothing about analysis.
Current market median Price to Book Ratio is 0.9 to 1. Meaning you could buy the entire market at its current price and keep the 1/.9 percentage profit for yourself. This implies bears don't have a reasonable and adequate basis on a valuation perspecitive.
I'll tell you , one of these days I expect Meredith Whitney to comment about this. She'll say something like, "But they're going to keep charging off assets directly to their equity." Well, why, then, is BAC posting a quarterly profit?
Either way, current Price to Book on BAC is 0.32, means book values is 32% of the current price. This is plain and stupid a retarded valuation of the market. Value will lead the charge upward, and a very simple filter right now will be those with the stupidest (ie:lowest) price to book values with profitable annual and quarterly earnings. This is essentially the future market not counting the few that will fail (ie:those that are still unprofitable at least on a quarterly basis).