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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (32100)	4/1/2008 10:28:07 PM
From: Ilaine	Read Replies (3) \| Respond to of 219368

Given that the collapse of subprime became manifest two years ago -- why not? We were seeing it in the bankruptcy trenches in Spring 2007 but it was apparent in the credit markets in 2006.

To: carranza2 who wrote (32100)	4/1/2008 10:33:00 PM
From: TobagoJack	Respond to of 219368

more stuff in in-tray quote you hit the nail on the head......just to support your argument about earnings and outlook by companies, a few comments. What I've noticed is that analysts steadfastly retain buys on stocks that should be downgraded because the fundamentals surrounding the company or companies they cover are deteriorating to the point where it's only a matter of time before OPMs, earnings, sales, etc slow down or costs rise. But human nature doesn't like to go out on a limb (the average human feels much more comfortable w a view held by the crowd) so analysts tend to wait for confirmation before acting. By then a downtrend is already well underway. So what we get is earnings and target price downgrades, but they still retain a buy on their stocks, because they either believe that we are not in a bear mkt or can't grasp that fundamentals will deteriorate rather more quickly than the companies are telling them. Stock prices generally are far ahead of most analysts and sell-off way ahead of any downgrades. Analysts thus end up chasing earnings down and finally capitulate at/near the bottom as they can't take the pain anymore (usually in short order across houses) and finally cut to sell, which then becomes your buy signal. Lest you think the sell side is unique to this, plenty of buy siders I've spoken to over the years act very similarly. Recent examples include Suzlon in India (+10% since we cut to sell) and Dongfang Electric (we cut to sell yday but stock off >50% already)....get ready for a rally in that one. Maybe I'm just too old and cranky but it's all very predictable imo, and anyone like Phil (or others on this board) who've been through several cycles can see this coming like a hangover after a good night out. this by the way, works in reverse at the beginning of a bull market. Agree with Phil that the next wave down will be micro-fundamentally driven. unquote