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How Low Can It Go? How Low Can It Go?
By JLP | March 2, 2009
What is the market telling us?
I think the market is telling us that it is not sure where the economy is headed or how long it’s going to take to get things back on the right track.
Surely at some point stock market valuations have to be bargains.
Topics: Credit Crisis, Investing | 10 Comments »
March 2nd, 2009 at 1:46 pm
I think the market, in general, is already a bargain. However, it’s going to take a lot more people to start believing that before the market moves higher. It could take a while, or it might not take very long at all. Will be interesting to see how this plays out and over what period of time.
Just remember, for every person out there selling into the panic, there’s someone else on the other side of the trade that’s buying from them that things they’re getting a good deal.
March 2nd, 2009 at 1:51 pm
I just remember what my dad always taught me: “Buy low, sell high.”
And it’s LOW right now!
March 2nd, 2009 at 2:32 pm
Sure it’s low, but so is real estate and I wouldn’t buy that either. Asset classes have good periods and bad periods of time.
The stock market is not likely to be a good investment for a long time, no matter how much you are in love with it. Sure you can buy now and wait for 10 years before it comes back, but with inflation, how much will you really be ahead? Especially with the massive amount of money they are printing.
Even if you are already in with both feet and are forced to tell yourself over and over, ‘it will come back, it will come back’, there is not much of a chance of it coming back within a time frame that will make it a worthy investment.
You are better off, cashing out and paying off debts or just holding the cash until to find an investment that has a chance in the future economy.
March 2nd, 2009 at 4:23 pm
I think the market has ZERO confidence in the Obama administration. It’s not a political statement; just a statement of fact.
March 2nd, 2009 at 4:50 pm
“Buy low, Sell high”
That makes me laugh. Talk about the most overrated ambiguous statement ever uttered.
So the market is low, huh? compared to when. last month? last decade? Maybe it is still high. If you are to buy low now, will it go lower tomorrow, and should you then buy then too? The only way to know “low” is after it has passed, so you are virtually guaranteed to miss it. Great wisdom!
I hate that saying. Timing the market never works. In fact, investing in the market never works. Invest in COMPANIES, not the market.
Take a look at some of the words used in the post and comments section … “think, not sure, surely, could, might, likely, chance”
seeing a theme here? Same words I hear in Vegas.
Oh, and to answer your question JLP, it can go ALOT lower. In fact throughout all time, up until 1997, it always had been lower than now.
March 2nd, 2009 at 6:16 pm
I sold most of my stock positions the day after the election. It wasn’t so much a “vote on the vote” as much as I figured the market had come up to a local max and was due for a hard tank as there was nothing but bad news coming for a long, long time. If I had more courage, I would have shorted and made money from this, but at least I’ve been able to mostly sleep at night.
March 2nd, 2009 at 6:41 pm
I remember at the beginning of all of this, there were some folks pointing to the Graham p/e ratio and saying we could very well be looking at the Dow at 5,000 before this all turned around. Since that standard is just for normal recessions and this may not be a “normal” recession, I’m waiting for the Dow to go at least that low. I hope to god it doesn’t go below that.
March 2nd, 2009 at 10:34 pm
Regardless of the state of the market, I won’t invest money into stocks for any time frame less than 10-15 years. My retirement accounts are the only place where I have stock, and I continue to dollar-cost-average into my 401K. Retirement is 25-30 years away, well past the four, or perish the thought, eight years of damage that the current administration can cause. (To be fair, I’ll add that they are building on the damage caused by the tail end of the last administration….)
I can only hope that the steady march towards socialism will be ended at some point prior to retirement….
March 3rd, 2009 at 12:20 pm
Markets hate uncertainty. As Obama ran on a platform of ambiguous “change”, and given his and Congress’ behavior since the election, the market only knows that things are going to change, but not how. Most seem to be guessing that that change will be for the worse from a business standpoint, and I agree with that assessment. But as Shorty said, you don’t buy stocks as a short-term investment if you’re smart. By the time I sell my stocks the market should’ve recovered.
March 4th, 2009 at 10:21 am
It’s all about earnings, and right now, the earnings outlook is not good. Stocks may be a bargain price-wise, but they will not go up anytime soon because of all the uncertainty. Companies will be de-leveraging (debt, inventories, inefficiencies, employees) for at least another year. Only then can earnings improve.