October 15, 2008

What will finally stop the stock market from crashing further?

A) The Dow hits zero
B) All the wealth created over the past 25 years is washed away
C) Every bank is completely nationalized
D) Angelo Mozilo is arrested
E) The shoe shine guy and late night infomercials are telling you to short stocks
F) You don't know anyone who still owns stocks
G) Larry Kudlow jumps



54 comments:

Anonymous said...

1. The phony part of valuations, which are P/E based on crooked manipulation and speculation will lower to normal levels.

2. Obama loses the election

Anonymous said...

So, was this temporary spike in the Dow what they call the "dead cat bounce"?

SD said...

The trendline for the Dow suggests 7000 as the normal level. However, it could easily push down past that with all the bad economic news that is to come:

http://tinyurl.com/4bx6vy

brokersleaveyoubroke said...

The mean for the Dow would be between 5000 and 7800. Right now it's just reverting back to the mean. If the economy gets really bad it should overshoot to 3000 to 4000. So far this isn't a crash, it's just the market getting back to where it should be if easy Al Greenspan hadn't inflated the stock bubble with ten years of easy money.

Anonymous said...

What, haven't you noticed yet that a large part of this sell off has to do with Obama becoming president, and his threats of taxing everything on sight to create a huge welfare state that keeps democrats in power by giving food stamps and section 8 housing to parasites and 20 million illegals/soon to be American citizens?

As Obama grows in the polls, the markets tank. No, it's not the other way around, fools.

Great time in America to be an union or welfare parasite. Middle-class will be decimated in order to support all the Pelozi/Obama welfare programs to buy the ignorant vote in order for the DNC to stay in power.

The rich can protect all their money in tax free Munis. Not sure if you had Finance 101, but Munis only make financial sense for individuals earning above $150k per year.

Obama promises to tax the $250k crowd to death. But how if they'll be investing most of their money in Munis, thus reducing their AGI to levels lower than $100k?

Good luck to everyone earning below that, because YOU are the ones who will support all the welfare thieves, no matter what your Messiah says.

PS: Graduated Magna Cum Laude from a major B-School, finance major, minor in economics. My portfolio has been returning 16% for the last two years. You can listen to Barney Frank or Pelosi or Olbermann instead, if you prefer.

historical inflation said...

I'll take 100 shares of B and 150 of C. Clearly the DJIA has been in serious overshoot for a while, but if you take 1K as the approximate value in 1968 (I know it was a bit lower but it quickly went to 1K) and add an inflationary doubling every 10 years you get... 8K.

I figure that is close to fair value, and will consider getting back in after we get some stabilization at a level significantly below that.

Anonymous said...

When the wealthy Chinese overlords, rich from our exported industrial base, land, and seize control of their collateral: the entire continental United States.

gutless and lazy said...

G) Larry Kudlow jumps
ROFLMFAO!!! That coke head, pin stripped, phoney GOP political hack is an embarrassment to CNBC.

Anonymous said...

When GWB leaves office.

keith said...

Another great video, this one from 1987, with my hero, Rukeyser

Man, he woulda loved this one...

http://uk.youtube.com/watch?v=XFn1G2goDQw&feature=related

Anonymous said...

Another great video, this one from 1987, with my hero, Rukeyser

I really miss his program on Fridays.

keith said...

Not having Rukeyser or Russert during this madness makes it so much less interesting

Nobody is even close to those two. Not even close. Think about Kudlow vs. Rukeyser and Hannity vs. Russert.

Yes, the world is getting dumber.

Meanwhile, after this week's action, I think we've all forgotten about the housing crash. Took a stock market crash and worldwide economic meltdown to get housing prices off the front page.

Trillions will be lost on housing. But the knock-on effects will make the trillions lost on housing seem like chump change.

Thank you Angelo Mozilo. You destroyed the world.

Mark in San Diego said...

"Fed says we are in recession, Wall Street tanks." DUH!!!!!!!!!!!!!!!!!!!!!!!. . .Wall Street just discovered we are in a recession - shows how far their head is up their ass.

Glad Bernake isn't sugar coating it anymore - makes me have a little faith.

went2puke said...

"Welcome to the Panic of 2008 - That was interesting, wasn't it?"

Keith, I disagree with the above caption you'd put there on the site's banner. You seem to not understand that the panic is yet to come. It ain't over, as your caption suggests. I am afraid it's going to get much uglier than what we are seeing now. Bush and his cronies have not only put an end to American dominance, they have also started something nobody can stop--the beginning of the end of the world order as we know it. Sit back and watch.

brenda smith said...

"If the economy gets really bad it should overshoot to 3000 to 4000."

the stock market was about 3000 when Clinton took office and the shot up;

if 5% growth is manageable, then $6500 is manageable over 16 years and perhaps things will be OK after things get smoothed out.

Anonymous said...

The size of the problem is over $50 trillion. So far they've applied maybe $3 trillion in bandaids. We still have to wash out $40+ trillion to see a bottom.

There is no quick or easy fix.

Anonymous said...

H) Gold jumps $100/oz daily.

Anonymous said...

When the Quadrillion of derivitives hit and everything really goes to hell the ones who will realy suffer will be the Thinking types. The avg joe sixpack will simply bow down and be a slave. You will all have to make choices, will you fight to free joe sixpack? (who helped create this mess), or do as im going to do. Move in with keith.

Joe Lunch Box said...

Major B-School Grad said...
"What, haven't you noticed yet that a large part of this sell off has to do with Obama becoming president, and his threats of taxing everything on sight to create a huge welfare state that keeps democrats in power by giving food stamps and section 8 housing to parasites and 20 million illegals/soon to be American citizens?"

Maybe they didn't teach cause and effect in your "major b-School" but Obama did not have a lock on this election until after the markets started collapsing. Obama has taken the lead in the polls because out of seven possible dwarves the RNC chose Grumpy and Dopey to run as Prez and Veep. The Grumpy and Dopey campaign's response to the declining economy speaks for itself they are idiots who think the solution to this crisis is to persist in the follies that have brought us to the brink of a major economic collapse.

It was a graduate of a "major b-school" that has been in charge of this country for the last eight years and we all know how well that has worked out.

All the crazy bs investment products and accounting procedures that are playing a big part of the collapse of the world economy were created by graduates from "major b-schools."

The investment banks that are collapsing and being bailed out by the tax payers were ran by graduates of "major b-schools."

Many of the people filing for unemployment these days are graduates of, you guessed it, "major b-schools."

As far as bragging about being a graduate of a "major b-school," maybe not such a great idea these days. The way things are going "b-school grad" might become an insult for times when somebody does something so stupid that it defies logic and reason. i.e-Quit talking like an f-ing b-school grad and try making some sense. You should think about. Maybe you could just tell people you used to be a realtor.

And thanks for giving Obama the 411 on the Muni Bond Tax scam, I mean loophole. We all know Barack's an HPer. Now he can close that loophole before he starts making people who make more than $250k pay their fair share in taxes. Good news for you is you probably won't have to worry about paying those taxes as you will be out on the street with all the other "major b-school" geniuses who exacerbated this colossal mess.

PS I graduated Summa Cum Laude from a major party school (ASU)with a degree in English Literature and a Minor in French and I belong to a union (IBEW) and every time I read a post like yours I laugh because you geniuses do not even realize that you destroyed your own fantasy land and that the game is in its final innings at least as far as "major b-school grads" go.

The times are changing and in the words of the title of a business book I'm sure you listened to on tape, it's Lead, Follow or Get Out of the Way. Your option at this point in history is Get Out of the Way because you do not produce anything of value and therefore are a parasite. Use your downtime to learn a useful skill or you will be the one living in section eight housing.

PPS-I am an English Major, Union Member and a Democrat who has read many of Ayn Rand's book including all 1500+ pages of Atlas Shrugged. Actually read it. Cover to Cover. Not the Book on Tape. Not the Cliffs Notes. Unlike any Republican who lies and says it is the second most important book in their life. We all know what the first one is and the two books are mutually exclusive on anybodies top ten. If you disagree with that then you don't understand either book and you probably have not read either one.

Anonymous said...

I will never be able to witness a dead cat bouncing by again without thinking of our beloved stock market... sob... L.

LoneLibertarian said...

one world currancy?

Not some phony amero crap.

All the world banks have been coming together.

The Treasury has essentially become an additional branch of the government.

And all this time I thought that the constitution only allowed for 3 branches of government. But hey, what do I know.

Anonymous said...

Well .. when went off the Gold Standard in 1971 the market was at about 2500. That probably is a good peg considering this is an unraveling of the BS that started then.

Billy Smith said...

Brenda -- don't forget that when Clinton took office, the economy was in the toilet. That DJ level was probably already in overshoot to the negative, so I'd guess 6500 is a possible floor -- hard to time that one.

"It's the economy, stupid!"

Paul E. Math said...

With all that money that the Treasury just forced the banks to take, what are they going to spend it on?

They'll be forced to lend to insolvent businesses? What will those businesses do besides piss the money away paying employees who aren't creating any real value?

I think tomorrow should be interesting. Stock prices will gyrate up and down so tomorrow could be another down day or we could be right back up. Long-term trend is down.

I believe the PPT is doing in secret exactly what JP Morgan did to stem the crisis of 1907. When the head of JP Morgan tried the same trick in 1929 it worked again but only for a day. The PPT has already been more successful than it's predecessor was in 1929. How long will that last?

Agent 99 said...

D) Angelo Mozilo is arrested
H)EU backs emergency accounting changes

Published: October 15 2008 20:06 | Last updated: October 15 2008 20:06

Accounting rules blamed by some banks for exacerbating the financial turmoil were eased in the European Union on Wednesday, bringing its 27 countries in line with changes agreed by international accounting rulemakers.

An EU regulators’ committee in Brussels voted unanimously to accept Monday’s emergency changes made by the International Accounting Standards Board. These will give banks more leeway in how they value certain assets whose prices have plunged. Lawmakers in the European Parliament soon endorsed the vote and member states gave their unanimous support. This means the changes, which are optional, can apply to calculations of banks’ third quarter results if they wish.

Anonymous said...

That will take a whole lot of good paying jobs for legal citizens to start buying crappy houses that represent 1/4 or less of their net income, so we can go out and buy crappy cars, crappy techno junk, crappy toys, Wal-Mart crap, watch crappy movies, and go out to eat crappy food.

Um, it is going to take a while.

nke514 said...

This may sound like a big conspiracy, but the only thing I can think of that could fix the problem for all nations is one thing:

One

World

Currency

And I think this might have been the plan all along.

Anonymous said...

Hi Guys! I'm new to this site. Can someone tell me why there's a picture of a corpse on the right column under the words 112 Days of Shame?

Thanks!
newbie

6% Realtor said...

Great video - all 5 parts. Deja Vu?

thomas jefferson said...

"The size of the problem is over $50 trillion. So far they've applied maybe $3 trillion in bandaids. We still have to wash out $40+ trillion to see a bottom."

I don't mean to make anyone soil themselves, but that's not quite right. The dollar figure of derivatives is closer to $681 trillion. THAT's a lot of infected scratch to work its way out of the system, kids.
Link: http://monkeyfister.blogspot.com/2008/09/bis-says-derivatives-trades-at.html

Anonymous said...

When investors come to accept that we're a mature economy growing at less than 3% and that stock markets can't return much more than that. We reached maturity a long time ago and we kept the game going with all kinds of deceptions: women entering workforce, easy credit, lower savings rate, consolidation, repealing laws to keep growth game going, cutting rates.

The only future growth potential left is selling stuff to the Chinese but why would they want our stuff when they can produce it themselves?

When investors realize growth is dead, the growth multiple in stock markets will disappear.

Anonymous said...

Time to buy will be when:

1. CNBC pitches stocks to short all day long
2. Commodities take over from stocks as investment shows
3. Cramer is taken off the air due to lack of viewers
4. The public dumps stock instead of not opening their 401k statement
5. stocks is a dirty word

jim said...

Yes, yes, yes, of course the markets are crashing because they're afraid of the scaaaary black man who might win in a landslide against kindly ol'mccain.

What the hell happened to all the logic, reasoning and data that showed to me crystal clear a year and a half ago that this correction/crash waas inevitable?


OHHHHH a MUSLIN with an anti American PREACHER!!1 RUN MARKET RUN!!!!

Anonymous said...

Has anyone thought about the fact that it's the perfect time for some Muslim nut jobs to let loose somewhere in the world.

Watch out. Timing is everything.

Anonymous said...

This is going to make 1929 look like a walk in the park.

Joe said...

This is my perspective: although the market is going to be up and down a lot in the next few months, it still has more downside than up.

Why do I think that? Our economy is based on an assumption of unending growth forever. If that assumption is invalidated, it will just slowly fold in on itself. I think we're going to find that it's invalidated by evidence in the form of retail sales over and over again. People aren't hunkering down because they heard the economy might be bad, they're just tapped out.

This situation will continue until they manage to pay down their debts significantly or they start earning a lot more money.

k.w. - Southern Ca. said...

And .... here ... we .... go ....
BOOOOooooommmmmm!

As a friend of mine stated (and others as well on this blog), this is a massive transfer of wealth to the upper 2% financial elite.

As predicted, a suckers rally, now we'll see Bernanke/Paulson funnel more devaluating tax-payer's dollars into the failing financial institutions.

They just keep doing the wrong thing, which will result in this economic downturn lasting that much longer.

Miss Goldbug said...

Thanks Keith for posting this! I saw the entire program afew months ago. I think it was on PBS.

Excellent!

Anonymous said...

H.) When the TED SPREAD falls back to normal level.

http://www.housingwire.com/2008/
10/15/feds-yellen-a-fog-of-
confusion/

Federal Reserve Bank of San Francisco president Janet Yellen suggested on Tuesday evening that the U.S. economy has fallen into a broad recession.

Despite the government intervention, however, it’s not clear that things are getting better.

The so-called TED spread, 2-year swap spread, yield on 3-month Treasuries — all have been getting worse thus far, not better.

And it's worth remembering that the government has been “taking action” since before the first economic stimulus package was passed by Congress.

Miss Goldbug said...

Looking into my crystal ball....

things look errily similar.

Wait...


Is history repeating itself?


Get ready-Oct 23 will be ugly.

DOPES 2 said...

YOU TOOLS!!!

ALL THE ABOVE!!!

THE CRASH ENDS WHEN I RETURN FROM SOUTH AMERICA!!!

TARDS!!

DOUCHES!!

DOPES!!!

www.slycapital.com said...

We will be at the bottom of this one when you say you are buying stocks and people look at you like your crazy.
However if we go down again tomorrow (the futures don't look pretty at the time of writing) I'm picking up calls.
Maybe I have become a trained monkey but I have watched too many option day rallies and I also believe the financial system will simply collapse if the market makers have to take the losses they are sitting on right now.
Before anyone gets too excited about how crazy a position that is I know it is gambling. I've been short the market since Dow 13 500 so its time to have a little fun!

Anonymous said...

I'll take 100 shares of B and 150 of C. Clearly the DJIA has been in serious overshoot for a while, but if you take 1K as the approximate value in 1968 (I know it was a bit lower but it quickly went to 1K) and add an inflationary doubling every 10 years you get... 8K.
.....

Um, 68 was 40 years ago. That means it doubled 4 times. 2^4 = 16 not 8.

Now, inflation does not average 7% per year so your double period of 10 years is not long enough. But if the market only kept up with inflation it would be a horrible bet.

Anonymous said...

NEVER!!!!!

Anonymous said...

Hey Korea and other idiots holding Asian stocks, good luck!

Bloomberg -- The Korean currency slumped as much as 12 percent today, extending this year's loss to 30 percent, Asia's worst decline, as Standard & Poor's said yesterday it may cut credit ratings for Kookmin Bank and six other Korean financial companies because of possible difficulties refinancing maturing debt.

``Risk aversion returned,'' said Dariusz Kowalczyk, a strategist with CFC Seymour Ltd. in Hong Kong. ``It will be very difficult, if not impossible, for Korea to roll over its short- term debt.''


Now I let you idiots go back to buying AAPL, because, as you know, a bunch of overpriced laptops and phones will save the world. Geniuses!

Miss Goldbug said...

Here's another great documentary on youTube called:

"1929 Wall Street Stock Market Crash"

Anonymous said...

"PS: Graduated Magna Cum Laude"

And your heart is a tiny lump of coal. Correlating Obama's lead with the stock market crash is marvelous pretzel logic, Mr. Know-it-all. I'm in awe.

George L said...

to anon 10:08pm who wrote the following:

My portfolio has been returning 16% for the last 2 years

that part was as realistic as your imaginary girlfriend. lmao!

what's with the loser talk,already conceding defeat?already blaming the guy that hasn't won yet?

it's people like you that are destroying the GOP.you whine,assume the worst of people,don't care to look at the facts and worst of all, you support this false republicans out of fear.

in the end,if you really have a brain and a pair which you don't,you'd realize that no matter who wins,the outlook of the economy is still going to be pretty f@cked up.

bet everyone is wishing they'd have listen to Ron Paul, I bet alot of people miss him...

Anonymous said...

Dow down another 500 plus tomorrow, easy!

Anonymous said...

signs the bottom is near:

1. "retail" types are touting gains they have made shorting stocks
2. bears are saying that "the P/E on the S&P still suggests the S&P is expensive" after earnings have crashed, just as bulls a year ago were saying "stocks are cheap" on a P/E basis even though profit margins were at all time highs.
3. CNBC is off the air or many of the bullish commentators are replaced with more "sensible" types or even bearish types
4. Marc Faber suggests stocks aren't a bad bargain
5. No one even talks about stocks any more except the shorts
6. MBA's stop looking to get into market related jobs and look to be entrepreneurs and work for big co's or go overseas.
7. Warren Buffet is fully invested.

mickeyc said...

Wow Joe Lunch Box - I'm in awe. Particularly about the Ayn Rand bit. I don't care about the political side of things but that book is something of a bible to me and I cannot believe the people I meet that say they like it.
My reaction (inside my head at least)is usually "really?!".
The world could not be the way it is if people actually read it. I have given it to several people who I thought it might spark an emotion of shame in and they all come back with "Oh my God I loved it!"
The world will be a place for the doers in a reasonably short space of time.
I sold my business that was ten years old out of pure disgust at the people I was forced to serve. Real scum with unlimited credit who never worked and acted like God.
I had one customer on the phone in a screaming fit because his crew took a thirty minute lunch break in the middle of a 12 hour day. That was literally his story: no embellishment, no extra back story.
When I worked out that really was his only gripe and he had no other complaint I told him he was a disgrace to humanity.
People will be flabbergasted when businesses no longer take their cr@p (I mean real businesses: the ones where the owner gets up every day and works out how to improve it. Not your Sprint, BOFA etc where the only goal is to humiliate and steal from their customers)

CrisisGuy said...
This comment has been removed by the author.
Anonymous said...

Several things need to happen for the stock market to stabilize.

1. Arrest Mozilo
2. Mark to market assets
3. Recapitalize consumers

keyser soze said...

Anonymous said...
Another great video, this one from 1987, with my hero, Rukeyser

I really miss his program on Fridays.

October 15, 2008 10:35 PM

Those were the days...Sir John Templeton, Peter Lynch, Warren Buffett(without Becky Quick), Bill Gross as guest with 20 minutes to talk uniterrupted...and my favorite panel of Eddie Brown, Jim Grant and Allison Deans, when she was still beautiful.