Where will it fall end?

[azza33]

Here is your chance to pick the bottom of the bear market!

I am using the S & P 500 as the Dow Jones is not that meaningful IMHO.

I personally think somewhere between 700-800 will be the end of the stupidity.

Personally i think we are headed for a deep recession, the current correction, whilst rapid is just the US markets finally adjusting to a bear market P/E multiple.

Recessionary earning of around $70 and bear market P/E of 10 puts the index around the 700 mark.

$70 is ballpark for 20-30% decease in earnings - typical of a recession.

[PigDogg]

(azza33 @ Oct. 27 2008,02:50) Personally i think we are headed for a deep recession,

I hope that's the extent of it.

But hobos hopping freights, breadlines, grapes of wrath type scenario is real possibilty.

[pacman]

I went real low, 301 - 400, nothing scientific about my prediction, it's just that the markets are losing all rationality & as they turn to blind panic, all logic goes out the window.

Some analysts are still peddling the line about the market moving into negative territory as part of its regular cycle of ups & downs.

I think they are missing completely what appears to be happening, that this is not a serious downturn but in fact the start of the disintegration of the US stock market.

I will be happy to endure the scorn of all if I am wrong, a far better outcome then the disaster that will quickly follow if I am right.

[terryw]

It could fall below 800 this week but after the US election there is likely to be an upward bounce.

During 2009 I doubt that it will be much higher than its current level at 850

On this side of the pond the FTSE could fall below 3500 as the market reacts to the rubbish coming out of Downing Street

[jaymee]

800

[Stogie]

Whoever guesses correctly will get rich. Most of us, though, won't.

[mirimark]

you people are such Pesimists.   But then again,  most Ladyboy Lovers  see the glass half empty instead of half full.

 I think most of you are wrong..   People are still spending their mones on such frivolous bullshit.  Society has not stopped spending their money,.    As long as we keep trading my dollar fer your dollar a recession is not in our future.

 Quit being so damn gloom & doom.
I think some of you need go apply for Fox News Network.

[Stogie]

What's it like in your world, mate?

[PigDogg]

The Nikkei and HangSeng both up 6% today.  


EDIT: HangSen finished up 14%.

But looks like a dead cat bounce to me.

[jaymee]

I want to adjust my figures to 770 now.

[manarak]

voted 701-800

we're probably very close to the bottom.

don't forget the stock prices naturally inflate over time, not only because of the interest rates, but also because of inflation.

I don't know at what point in the historical data I could set the "fair value" to, but if we take the low in 2002-2003 that would be about 780 points on the S&P.

We are now already lower than these levels if we take inflation and interest rates into account.

In fact, if we think back to the beginning of the financial market's big run, in jan 1995, we would be at 450 S&P points.

If we suppose 7% inflation and interest, we can calculate: 450*1.07^13 = 1084 points
that's about the level where the market would be in a normal market downturn.

If you look at some charts, you will see that the current crisis is unpreceded. We've never had before such a free fall.
Currently, the deleveraging continues, as investors are forced to sell to either cover margin/collateral calls or because their customers are pulling money out.

This puts a lot of pressure on prices, und pushes down world equity indexes.

So if we calculate the lower end, if we take 4.5%, we get: 450*1.045^13 = 797

Therefore I would expect the market to stabilize somewhere between 700 and 800.



Is is also funny to notice that the phones around me often turn quiet for longer periods of time during the day. It seems like many investors don't have anything for sale anymore, don't have cash to invest and that the only players are hedge funds selling off their last assets, and having difficulties finding buyers, which explains the free fall.
Many hedge fund liquidations are to be expected in the next weeks.

[azza33]

Manarak... we have seen such a free fall before  

It was in 1929... the last 6 weeks on the markets looks so very much like 1929 its scary!!
Back then however, the cascade implosion was from near the top, not half way down as it this year.
1929 dropped about 50% before recovering half the losses.....

But the ugly thing is - it then went on to drop a further 80+% after the initial recovery!!    

Lets hope that pattern is not fully repeated!

[manarak]

yes, but... in the 29-32 crisis, the market was not helped by central banks, in fact quite the contrary, since the government passed bills which made things even worse (Smoot-Hawley Tariff Act).
I believe the lack of credit caused the losses after 1929 until 1932.
Since the world's economic powers are fully aware of what will happen if they don't step in, I expect things to normalize when the hedge funds are out of the market.


What is interesting to notice, is that the current crash has been caused by the same thing that caused the 1929 crash: over-leverage.

I hope that we all now have learned our lesson, and that investment banks and commercial banks will never ever be allowed again to merge activities.

[azza33]

(jaymee @ Oct. 28 2008,16:18) I want to adjust my figures to 770 now.

Jaymee... i wouldn't worry about adjusting 30 pts!

If we are wrong by 300 we have something to worry about

[azza33]

(PigDogg @ Oct. 28 2008,13:28) EDIT: HangSen finished up 14%.

But looks like a dead cat bounce to me.

That's one spring loaded pussy