View Poll Results: How is your portfolio positioned right now?

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  • It will benefit if the equity markets rise.

    13 46.43%
  • It is market neutral.

    12 42.86%
  • It will lose money if the markets rise.

    3 10.71%
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Thread: Just how bad are the markets?

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  1. #1
    Join Date
    Apr 2006
    Texas>home of GW Bush, Dick Armey, Tom Delay, Phil Gramm

    Default Just how bad are the markets?

    Here is a good summary detailing some of the record-breaking aspects of the current US markets' debacle.

    Barry Ritholtz (The Big Picture): Record-breaking data everywhere!
    “One of the interesting aspects of this unprecedented housing collapse, credit crisis, economic recession and market crash has been all the new records we keep seeing:

    Over the past year, the S&P 500 Index lost ~$1 trillion more than the entire 2000-2002 bear market, according to Standard & Poor’s. From the October 2007 highs of 1,565, to yesterday’s close of 806.58, the S&P 500 market capitalization lost $6.69 trillion. That’s almost $1 trillion more than entire 2000-03 bear market losses of $5.76 trillion. (Marketwatch)

    The S&P 500 hasn’t been this far below its 200-day moving average on a percentage basis since the Great Depression. (Doug Kass)

    CPI: US consumer prices in October registered their largest single-month decline since before World War II. It is the largest monthly drop in the 61-year history of the data;

    PPI, down 2.8% for the month, was also a record-breaking drop.
    The dividend yield on the S&P 500 is now greater than the yield on the 10-year Treasury. That hasn’t happened since 1958. (Barron’s)

    First-time claims for US unemployment insurance rose to the highest level since September 2001. The total number of people on unemployment benefit rolls jumped to the highest level since 1983.

    Housing starts fell to 791,000, off 38% from a year ago. That’s the slowest pace of starts since data began being compiled in 1959. Starts are now down 65% from the early 2006 peak - this has become the very worst housing downturn on record.

    Permits for new houses, at a 708,000 pace, were off 40% from a year ago, also the lowest total since it has been tracked starting in 1960. Put this into context of population - in 1960, the total US population stood at 180 million - 60% of today’s 300 million.

    The 30-year return for BBB-rated corporate bonds is now greater than the 30-year return for stocks. So it has not paid to take equity risk for 30 years! (The

    The TIPS Spread ( Treasury Inflation Protected Securities versus the 10-year Treasury) is at a record low 54 basis points (1997).

    The Russell 3,000 now has 1,228 stocks a share price under $10. That’s 42% of the index. At the market’s 2002 lows, there were significantly less stocks trading below $10/share - just 884. (Bespoke)”

    Source: Barry Ritholtz, The Big Picture, November 20, 2008.

    And here is an expansion on the second bullet point above regarding just how oversold the SPX was on 11/17/2008, before it dropped ~109 more dollars to its intraday low Friday 11/21 of 741.02.

    Bespoke: S&P 500 200-day moving average spread at -32%
    “Multiple market pundits have recently mentioned that the S&P 500 is trading the furthest below its 200-day moving average since the Great Depression. Below we have plotted the 200-day spread indicator going back to 1927. The index is currently trading 32% below its 200-day moving average, which is indeed the most negative spread since 1937. While the spread can remain negative for quite some time, the reaction to the upside has been extreme once the market turns. In the 1930s, and even following the big declines in the 70s, 80s, and early 2000s, the spread turned violently positive in the months following the ultimate low in the 200-day spread. Unfortunately, nobody knows when that low will be.”

    Source: Bespoke, November 17, 2008.

    At the Friday low of 741.02, the SPX was 40.4% beneath the closing value of the 200 DMA for 11/21/08; however, by the close the SPX was only 35.55% below its 200 DMA.

    I'm always looking for rhymes in markets' behaviors, and if one scrutinizes the chart above, my assessment is that the current level of the SPX being oversold is consistent with that at the very left of the graph, which I assume was the bottom of the 1929 crash. We have now surpassed that first downdraft.

    Everything I read suggests a bounce upwards in due in the US equity markets, but perhaps I am biased in what I choose to read. That there is a rather wide-spread, as I see it, "call" for a bounce gives me serious pause as to whether or not it will occur.

    Generally, when polls are put up around here there is such a paucity of response, I assess whatever the results as being too small to matter one way or the other, but I shall try again to get some polling information.

    I am not interested in what people think at this point is the longer term direction of the equity markets, but rather the shorter-term direction is what interests me right now.

    One could ask: "Where do you think the equity markets will be in two months?" and possibly get a result of one type vs. asking: "How are your investments positioned with regard to the equity markets right now?

    It is the latter question that I think is important, you know like "Show me the money."

    So here goes a poll and we'll see if it is worth a hoot.

    EDIT: Well, shit, I placed my vote in the wrong category, I hope everyone else is smart enough not to do that. I am ~50% invested to make money if the markets rise from here, and I mis-ticked the last choice.
    Last edited by Jim Nickerson; 11-23-08 at 01:38 PM.
    Jim 69 y/o

    "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

    Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

    Good judgement comes from experience; experience comes from bad judgement. Unknown.

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