June 07, 2007

Got cash? Morgan Stanley issues "Triple Sell Warning" on equities, first time since dot-com crash

Got cash? It's tough to pick exactly when markets will crash and bubbles will pop, but it's pretty easy to identify "why". And as Buffett said, always sell too early. The stock market euphoria during this historic housing crash has been interesting to watch, especially in the context of Bernanke's "it won't spill over" statements. Yeah, right, Ben. We trust you.


Everbank is paying 6.01% on savings. HSBC is also 5.5%, and e-loan has some good CD rates I'm enjoying. I check bankrate.com for the best rates and just keep it moving around. With bond yields soaring those saver rates will keep getting better hopefully.

Keep in mind you don't want more than $100,000 in any one bank (FDIC limit), 'cause bank failures may be next during the rush to cash, as is written about here.

Good luck out there.

Morgan Stanley warns the 'mid-cycle rally is over'

Morgan Stanley has advised clients to slash exposure to the stock market after its three key warning indicators began flashing a "Full House" sell signal for the first time since the dotcom bust.

Teun Draaisma, chief of European equities strategist for the US investment bank, said the triple warning was a "very powerful" signal that had been triggered just five times since 1980.

"Interest rates are rising and reaching critical levels. This matters more than growth for equities, so we think the mid-cycle rally is over. Our model is forecasting a 14pc correction over the next six months, but it could be more serious," he said. Mr Draaisma said the MSCI index of 600 European and British equities had dropped by an average of 15.2pc over six months after each "Full House" signal, with falls of 25.2pc after September 1987 and 26.2pc after April 2002.

"We prefer to be on the right side of these odds," he said.

The first of the three signals Morgan Stanley monitors is a "composite valuation indicator" that divides the price/earnings ratio on stocks by bond yields. It measures "median" share prices that capture the froth of the merger boom, rather than relying on a handful of big companies on the major indexes.

57 comments:

Mendoman said...

Yeah, I cashed out most of my non retirement stock market holdings about 2 months ago and then it just kept on going up. But, I can't understand why and how it still rocketing upwards. Yes I agree with Warren B, " I made a lot of money selling too early" I could be wrong and I'll make a little less having it in "safer" place. I also have bought several firearms as of lately, they alway hold their value during hard times. Good luck

FlyingMonkeyWarrior said...

Hey Keith,
Where is my monkey hat tip?

Anonymous said...

If Morgan Stanley is saying sell, I bet it's a great time to buy. Probably another 20% up before the real crash.

Anonymous said...

So far:

No front covers on Time Magazine of "How the Stock Market has made us all Rich"

No taxi cab drivers or shoe shine boys telling me the latest stock to invest in

No Radio or TV promos on "How to cash in on the stock market" - although I still hear them for Real Estate

To sum up - we are NOT at 2001 or 1988. Mild corrections happen all the time...but a "Triple Sell Secret Probation" warning?

Marky Mark

Anonymous said...

that 6.01% is an intro rate, then goes to 5.15% I believe. I'm getting 5.36% at Amtrust, that's the actual rate, not intro.

Anonymous said...

i just called my 401k manager and ask him to call me back and talk about where my money should be shifted.

with the slower summer, ARM resets and the WSJ getting worried that globalization is now "driving inflation," not "taming it," I think the shit's going to hit the fan folks!

all the developed countries have been running their printing presses and letting the poor fools in undeveloped countries grab up their worthless pieces of paper and we would fill up our houses with useless pieces of crap!

ouch!

put a bounty on them said...

too bad inflation and dollar depreciation is twice what any cd pays.

Not to worry I don't have any stocks other than precious metal stocks, not that I want or trust wall streets advice.

Any other money I save in the form of bullion.

shtove said...

But MS still aren't predicting a recession.

Here are notes on Buffett's latest Hathaway presentation:
http://tinyurl.com/2ctxv8
He talks about derivatives risks and fall-out from the housing market about half way down. Seems to think derivatives accounting is a doomsday machine.

His side-kick, Munger, has a sense of humour.

Anonymous said...

"But, I can't understand why and how it still rocketing upwards."

companies are taking out huge loans, buying back stock and then the CEO's cash out their options.

the sad part is "whoever has the remaining stock owns the debt!" and if the company has to go to bankruptcy court, stockholders get nothing! the cashed out CEO's laugh all the way to the bank!

ouch!

Anonymous said...

Watch the bond yields. If they go up then a recession is on the way. The Fed will be stuck because of high inflation and the market will determine the yield

Anonymous said...

Morgan Stanley says jump Al-Qweefer says how high. The term sheeple comes to mind.

Anonymous said...

homebuilders are melting down check out KBH and HOV and WCI

keith said...

Flying monkey I didn't see you had posted this - nice job

This is a big story today.. ugly out there

keith said...

I'm also getting 6% at FNBO direct - through October I think

Just keep it moving, always go for the highest rates

HSBC will be back in the game soon with a good rate - they had 5.75% this spring

eloan has also been good

IndyMac has one of the best rates, but we all know they're going under one day so I wouldn't put anything there

and yes, foreign currency etfs are good ways to move out of $ and into euros, pounds, yen, etc

Anonymous said...

if we gets hyper-inflation W will "martial law" everything and natioanlize the mines and sieze commodities.

g said...

Check this out - the sheeple investors are cashing out real estate and dumping that money into stocks. Forget the MS report - if you want a "sell" indicator, this is it!!!!
http://tinyurl.com/3dxotd

Joe said...

Don't trust the FDIC. They are funded in billions and USA banks deposits are in trillions. Anybody see a problem here? Think about getting 10 cents on the dollar in a real problem scenario.

Anonymous said...

Just keep it moving, always go for the highest rates

-----------------------

Every time you open a new account they do a credit check and hurt your fico. I'd rather give up 0.5% and not get my score dinged with multiple inquiries....unless of course I use Bank of American where SSN's and credit checks are a thing of the past if your name is Jose.

Anonymous said...

Legg Mason Exec has some nice words about how really "smart" money managers are. Also he talks about "why overblown merger activity historically precedes a market top"


http://tinyurl.com/2toopa

GregOr

Frank said...

"if we gets hyper-inflation W will "martial law" everything and natioanlize the mines and sieze commodities."

And order the Brownshirts - oops, I mean National Guard - to shoot posters on Housing blogs on sight, of course.

wawawa said...

What you think is going to happen to China's market tonight. That would be interesting.

Anonymous said...

"To sum up - we are NOT at 2001 or 1988. Mild corrections happen all the time...but a "Triple Sell Secret Probation" warning?

Marky Mark "

-----

You're right Marky Mark, it's not 2001 or 1998.....it's 1974.

Country in the midst of an unwinnable and unpopular war that was fought for dubious reasons.

President is unpopular and unusually corrupt and should be impeached.

Gas prices have been going though the roof.

Stock market fizzling out after a multi-year run.

And we are 2 years past a generational high in home building (1972 was the former record for housing starts until 2005).

All you need to do is check out what did well during and after 1974, and you'll be fine. (Hint: not much did well)

Anonymous said...

I recall some chick at a major Wall St. outfit publically ( or at least to their investors )called the 87 crash about 3 days before it happened. I can't think of any other time a major player made a crash call to the public. Barron's was bearish on the dotcom thing at least a year early, but I don't recall any warnings from the big firms - I think their shills were yelling BUY all the way to the bottom. I didn't give a damn about Cramer then or now.
Can anyone remember serious crash calls from the biggies???? How long has MS been using these indicators? and did they give any public warnings in the past???

Anonymous said...

CD = certificate of death.

You guys are buttheads.

Anonymous said...

I'm all cash since March. Gold and foreign currency for longer than that. Happy renter also.

There are bubbles everywhere. It's going to be sooooo ugly.

Karl said...

Let's all give it up for RYJUX. (Rydex Juno)

Going to keep that one for a while. (Especially as long as Helicopter Ben and Shrub are around)

Anonymous said...

Dow Loses 410 Points in Past Three Days
AP - Wall Street fell sharply for a third straight session Thursday after rising bond yields deflated hopes for an interest rate cut later in the year. The Dow Jones industrials fell nearly 200 points and the S&P 500 index fell below the 1,500 mark.

keith said...

Too bad the anonatrolls who were pimping this market are anon, we can't mock them tonight

Dimwits, probably leveraged to the max

Anonymous said...

"Wall Street fell sharply for a third straight session Thursday after rising bond yields deflated hopes for an interest rate cut later in the year."

Oh the Pain
I would hate to be a FB right now, no hope in sight anywhere!

Anonymous said...

Anonymous said...
CD = certificate of death.

You guys are buttheads.

June 07, 2007 8:38 PM
-----------
So after 3 days the market is down 400+ points. So the realtwhore trolls cannot say "market is up losers". We always told them stock & RE sector did not have a direct correlation but they ignored it and instead kept to their trite mantra. Now, for a non-related reason, that is taken from them.

Of course instead they focus on another un-realted investment vehicle, the CD. Ironically as they watch the value/price/equity in their home crater & put them upside down & trap them for a decade they will wish they had the cash to put into CD's and earn the huge interest rates that will come from the Fed's rate increases that will counter inflation. But sadly as they all have ARMS & other toxic waste mortgage products that will rape them of all their cash from their savings, retirment accounts, second jobs, children's college funds etc they will wish they had CD investments. They could just walk away & rent but they will not until forced out via foreclosure!! The irony and justice of their own ignorance, its just all so elegant!!

Anonymous said...

Everyone here was going apeshit in late Feb. Ooooh a 400 drop for the dow IN ONE DAY!!! Dow is now 1000 points higher than the bottom of that "crash"

S&P went from 1450 to 1380 in late December/early Jan. Now it's at 1490. How'd that "crash" work out for you?

Keep investing in 5% CDs that are taxed as income while I make 12-15% in capital gains taxed at 15%.

Anonymous said...

I wonder how much that MS analyst makes. I predicted a 20% drop mid may. Hmmm maybe I should apply for a job there.

Anonymous said...

9:35pm ghetto apt. renter:

The way you and your fellow tinfoilhatters talk you'd think the foreclosure rate is 80%. It's less than 1%. As in less than 1 out of 100 people foreclose as in 99 out of 100 don't.

Take your prozac and you'll feel better I promise. Tomorrow's Friday and the lines at Starbucks will be long, you better get your rest, lots of Mochas to be made and you need your rest.

Anonymous said...

HaHa Cramer is telling viewers to buy more stocks, nothing to worry about. Man, are these people for real?

Magon said...

I had a CD come due today at M&I. After looking at their rate sheet i said: "I can do better at my credit union; I'll be closing this account."
The bank then offered me 5.35% APY vs. the 5.20 APY printed on their rate sheet!
I've never had this happen, not even during the early 1980's.

Anonymous said...

keith said...
Too bad the anonatrolls who were pimping this market are anon, we can't mock them tonight

Dimwits, probably leveraged to the max
******************************************************

Dimwits??
Keith, didn't you call for Dow 8k two years ago? How many times have you parroted Krugman on this site....Gloom & Doom.

Here is a reality...If you're going to make money you have to take risk. If you're smart you spread the risk around many sectors & consistantly invest. Simple concept...too bad many can't grasp it.

Anonymous said...

Anonymous (aka realtwhore)said...
9:35pm ghetto apt. renter:

The way you and your fellow tinfoilhatters talk you'd think the foreclosure rate is 80%. It's less than 1%. As in less than 1 out of 100 people foreclose as in 99 out of 100 don't.

Take your prozac and you'll feel better I promise. Tomorrow's Friday and the lines at Starbucks will be long, you better get your rest, lots of Mochas to be made and you need your rest.

June 07, 2007 10:00 PM
----------
Got to love it, when they can't point to anything to argue the elephant does not exist they just attack. And of course the more they attack the more you know its because they are screwed and they cannot stand the fact that you laid it out for them in spades!!

For the record:
I'm not a barista and, unlike you, I do not waste money of 5 USD cups of sub-par coffee. Try illycaffe instead. Oops, I forgot you can't afford it because you're ARM interst rate just doubled and/or your a reatlwhore who's not had a comission for months (sorry I digress)

I have no debt.

I own two NEW (an 06 SDN & 07 Roadster) cars out right.

Have 6 months of salary in the bank

Have a six figure (all 6 are to the left of the decimal point) professional position.

Have six figures in a diversified investment account.

Sold an overpriced condo in the Fall of 04

Walk to work from my rental in one of the nices/safest/richest cities in the US.

The carry costs to own the rental is twice what I pay to rent it out.

Have no interest in owning again until fundamentals return.

Am positioned to be an FB's savior when their toxic loan explodes, that's you, but at a price!! (that will be double for you:)

Ciao Bitch

Anonymous said...

http://video.msn.com/v/us/Money.htm?g=8B2F3320-4BF7-462A-87AE-4A22E771F323&f=15/64dispatch&p=hotvideo_money%20top%20ten&fg=

Isn't it time to buy Real Estate NOW?

Watch this silly video.

KMH

Anonymous said...

Anonymous said...
HaHa Cramer is telling viewers to buy more stocks, nothing to worry about. Man, are these people for real?

June 07, 2007 10:04 PM


He said the same thing after the last so called crash in February. Had you listened you would have made 10% in 3 months. Instead you are earning 5% in 12 months via the CD. Well done.

housing hater said...

Kieth is right on surfing for cd rates. The anon who says opening cd accounts ruins your credit score is insane - I wont start rambling about why a saver doesnt have to care about theier fico.
And I have had 2 banks match cd rates in the last year.
The only ? is to take a short term or long term CD.

Anonymous said...

Keep investing in 5% CDs that are taxed as income while I make 12-15% in capital gains taxed at 15%.

I think the tech bubble survivors would do the CD thing.

Who Knows said...

Just a couple of points boys.

You might better keep an eye on the 10 year treasury.So goes it so goes a lot. I was in line behind a young girl this morning at the local choke and puke gas station getting my breekfast biscuit and noticed she paid 2.65 fo a 16 oz. water and a pack of starburst. this country has got some changes ahead

prepare for the Alcoholocaust! said...

That 1974 reference does seem telling....unpopular war, oil concerns, inflationary fears.

I think the Iraq war would look a lot more like Viet Nam if the technology were the same...meaning that the only reason the death toll is lower is because of advances in weopons systems/med care and the like. I can see 10-15 KIA if were there another 10 years. Not exactly Vietnam #s but well get there if we dont get out of this mess....I just wish it were over....

Would someone please invent the $.99 fuel cell or Mr. Fusion ( a la Back to the Future)

dcbubble.blogspot said...

No bubble crash in DC yet.

Prices are holding.

http://dcbubble.blogspot.com/2007/06/may-2007-market-for-dc-condos-single.html

shakster said...

Break out the Moonshine!Yeah,like snorting chinese hot mustard.

Shakster said...

Anonymous said...
If Morgan Stanley is saying sell, I bet it's a great time to buy. Probably another 20% up before the real crash.

-------------------------------------BINGO

turdly said...

Downey and Chase have been matching any CD rate I can prove to them. I am offered that rate for any term I choose. 5.44 at one of them last month.... They've been doing this for me for over a year now.

Anonymous said...

"He talks about derivatives risks and fall-out from the housing market about half way down. Seems to think derivatives accounting is a doomsday machine."

YES. I've been harping on the derivative mess to come for sometime. Cash will be fruitless then. The banks will run to Uncle Sam for a bailout and the dollar will be massively devalued. Precious metals will explode upwards.

Anonymous said...

"if we gets hyper-inflation W will "martial law" everything and natioanlize the mines and sieze commodities."

Nationalize the mines?!? Do you realize what that will do to foreign investment, which the U.S. needs $2 billion a day to stay afloat???? Hugo Chavez would look like an angel next to Bush.

vega crash watcher said...

Buy PSQ to short the Nasdaq.

I resent every day that corrupt countries like the US, China and the UK haven't collapsed economically, and then societally. The US will make Yugoslavia look like a picnic.

Obama said today that whitey better cough up some more entitlement money or there will be justified riots. I hope he wins; that will completely discredit the gov't.

stuckinthecity said...

What's the matter? I thought the economy was great!?

unomyname said...

Elaine Garzarelli is the dame that called the 87 crash

Anonymous said...

Lawl - I love how everyone on here who's spewing bile is making 6 figures and worth 7 figures and dumped their moneytrap and blah blah blah. :) If you dumped a condo in 2004, that means all the equity you made would be required, along with 25-40% of the sales price, to get back into that same condo right now. I can smell how bitter you are. Saddens me to realize how much time I wasted being one of you. :P

Anonymous said...

Anonymous said...
Lawl - I love how everyone on here who's spewing bile is making 6 figures and worth 7 figures and dumped their moneytrap and blah blah blah. :) If you dumped a condo in 2004, that means all the equity you made would be required, along with 25-40% of the sales price, to get back into that same condo right now. I can smell how bitter you are. Saddens me to realize how much time I wasted being one of you. :P

June 08, 2007 3:52 PM
----------
Pathetic!!

Anonymous said...

While Morgan Stanley's call on European stocks took a dramatic turn, its view on U.S. equities remains unchanged. In a June 4 note, chief U.S. strategist Henry McVey said there had been no change to the company's U.S. asset allocation.


http://www.businessweek.com/investor/content/jun2007/pi20070606_559290.htm

Anonymous said...

First, dcbubble.blogspot.com's claim above that "prices are holding" in the DC area are completely erroneous:

As for the Washington D.C. SMSA, the site shows that the inventory of unsold homes has risen 11% in the past 28 days, and by roughly 37% since late February, vs. an 18% rise in inventory nationwide. Interestingly, the average asking price -- $587,000 – hasn’t budged. Henderson (who liked me, lived in Washington for a period of his life) can’t explain it, but wonders if that’s a sign that a number of sellers have tapped out their equity and can’t afford to cut prices. Same situation with condos – a 47% rise in listings since February, but little movement in asking prices. (Washingtonians, why is that?) You have to figure the dam’s going to break at some point.

http://www.businessweek.com/the_thread/hotproperty/archives/2007/05/check_out_this.html

While this quote specifically deals with inventory, anyone in the DC area knows we have seen significant price corrections already.

Second, and more importantly, dcbubble.blogspot appears to have been hijacked by a corporate empire and is now nothing more than a propaganda wing of the right-wing media empire.

CFarer43 said...

Dollar Collapse; Amero by Feb 2009!!
Videos in English with Spanish Subtitles

http://video.google.com/videoplay?docid=1954933468700958565&hl=es

http://buenosdiasparral.blogspot.com/2008/10/el-amero.html

http://video.google.com/videoplay?docid=1954933468700958565&hl=es