Mike this is what I see. It is response to someone who thinks the bottom is in.
Layoffs are about to happen.
Businesses are going to try to cut back purchases of IT for as long as they can. IT growth at 100% a year for the next 4 years is what it will take to justify the PE's of many companies. Some PE's are even worse than that.
People are in deep deet debt: mortgage debt, second mortgage debt, credit card debt, auto loan debt.
Lumber prices are falling fast. Just 6 months ago they were at all time highs.
People not buying houses means they are not buying refridgerators, carpet, etc etc.
Slowdowns and layoffs in those areas as well.
Home Depot not doing exactly well either. I can see this for myself. Banks of sale lines empty.
When people are out of a job and need money, where will it come from? Sales of stocks I believe.
Even those not out of a job, might see what has happened after every runup and join in on the next selloff.
Who in their right mind is buying today, that would not buy yesterday? Only the shorts, IMHO, only the shorts! After a 30% runup or whatever, what the hell will keep this rally going? When it stalls who will buy? The shorts (LOL)?
Good News? Yeah right. From where pray tell?
From yet another re-iterated "strong buy"? LOL
Now lets take a look at the NYSE. Money has rotated out of tech into "safe financials" etc for how long now?
What will happen to banks with all they have loaned when people out of jobs can not pay? What about foreign loans?
Could there be a worldwide recession. IMHO yes yes yes.
What happens if the almighty $ starts to fall?
How much money will Visa make when people stop spending (reducing transaction fees), and are out of a job and can not pay? What about insurance? In deep sh** as well. IMHO.
Insurance is on everything, even insurance on bank failures, insurance against defaults, etc etc. Some banks are warning already. When will the rest join the party?
How long will people sit in those "safe" stocks after they have seen what happened to tech?
Lets take a look at brokerage houses. Merrill Lynch for example. Will IPOs increase next year. Yeah right. Will money be flowing into or out of brokerages and mutual funds?
Will margin fees be going up or down? Merrill Lynch may be "Bullish on America", but I am bullish on Merrill Lynch PUTs.
People have the belief that one simple rate cut, one that will not take affect for 6 months, will cure all these evils. NONSENSE. Have we even seen the full affects of that last rate increase?
Will people chase tech again like before? No way Jose.
Will people chase ANYTHING anymore? Not for quite some time.
Honestly, I do not see how anyone can be bullish right now.
The fact that so many are, lends more creedence that we have not found the bottom yet.
Not even close. Lowered my target next year to 1600.
M |
