What's Next? Dow 5,000?

If someone had told you one year ago that Bear Stearns, Fannie Mae, Freddie Mac, AIG, Washington Mutual, Wachovia, Lehman Brothers, Merrill Lynch, and Citigroup (NYSE: C  ) would be either bankrupt or saved en route to bankruptcy, you probably would have laughed.

And as recently as, I don't know, last month, if you had told anyone the Dow would be on the path to some obscenely low number -- we'll call it Dow 5,000 -- most people wouldn't take you seriously, either.

Well, Fools, meet insanity. It's quickly becoming the new reality.

What's notable about today's trip below Dow 7,000? Not that 7,000, or 5,000, is really of any significance. Other than being a psychologically painful barrier, the Dow's short-term fluctuations are of little importance.

What's notable is that the mood doesn't seem to be the panicky, 10% daily drops, sell-now-and-ask-questions later mood we saw last fall. Not that anyone's claiming to speak for Mr. Market, but the mood now seems to be based on coming to terms with the financial sector's insolvency. In other words, as markets keep falling, the selling is getting more and more rational.

Falling hard
Today's big news, for example, was word that AIG (NYSE: AIG  ) was back at the trough, hoping another $30 billion of taxpayer dole will do the trick. This after reporting the largest quarterly loss in history -- any company's history -- of $61.7 billion. Do the math: that's $7,762 per second.

Problem is, this is AIG's fourth bailout in six months. Citigroup is on round three. Bank of America (NYSE: BAC  ) is hoping bailout part deux will be enough.

That's what's underscoring the market's plunge right now: Every "plan" so far has been a finger-in-the-dike attempt at plugging a hole that's getting exponentially larger. On the other end of the spectrum, Goldman Sachs (NYSE: GS  ) and JPMorgan Chase (NYSE: JPM  ) actually want to pay their TARP money back because -- surprise -- Uncle Sam, as it turns out, can be the ficklest of business partners.

The original idea was that by preventing systemic collapse, private capital would eventually be lured back into financial markets, hence paving the way for recovery. But since every few weeks the rules change, the strategy shifts, and the dilution gets bigger, no investor in their right mind wants to dip their toes in.

Can they handle the truth?
General Motors (NYSE: GM  ) , Chrysler, and Ford (NYSE: F  ) had to submit turnaround plans and a general strategy as to how they'll dig out of their hole. No one really takes these goals seriously, but at least there's a strategy. There are clear-cut rules and deadlines that need to be met. There's clarity, if you want to call it that.

Banks don't have anything remotely close. It's a free-for-all of, "A few billion here, a couple billion there. Change the rules here. Add more terms there." Investors, rightfully so, want nothing to do with it. No one wants to play until they know the rules.

Until there's a coherent plan, (which I think means nationalization of at least a few of the walking dead), investors will stay a million miles away from financial investments -- even if assets look undeniably cheap. As long as that's the case, banks will crumble; As long as that's the case, the economy will follow suit; And as long as that's the case, stock indices won't be far behind. And around and around we go.

Where to now?
Last October, at the pinnacle of market hysteria, we ran a poll asking Fools how low the Dow might go. 66% of respondents didn't think it would dip below 7,500.

In the spirit of the wisdom of crowds, we'll try it again: How low do you think the Dow will go? Take a second to weigh in with the Fool poll below, and share your thoughts in the comment section as well if you wish.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. JPMorgan Chase is a former Motley Fool Income Investor recommendation. The Motley Fool is investors writing for investors.


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Comments from our Foolish Readers

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  • Report this Comment On March 02, 2009, at 4:31 PM, FinancialFellow wrote:

    Eventually we'll hit a point that there aren't any "sellers" left in the market. At which point things would flatten and start heading up again. (Admittedly though, continual drops appear to be making sellers out of people that previously were not.) I fear that the bottom is going to be around 4,000 for the DJIA - horrendous as it sounds.

    The AIG 4Q loss is just staggering. $61 Billion!?! What are their losses in the upcoming quarters going to be. They aren't turning around anytime soon and you can only throw money in that hole for so long. Just another reason why I think we have room to drop even more.

    The only bright side of this whole thing is that the massive drop creates the potential for significant long term gains. I'm using the opportunity to evaluate online brokers and begin buying more stocks: http://financialfellow.com/2009/03/02/tradeking-offering-up-...

  • Report this Comment On March 02, 2009, at 4:54 PM, PatrickDickey wrote:

    I can't say where it will go as far as down. However, I do hope (and have some faith) that it will at least come back up to the levels we're at now in the future. If not the entire index, then at least some of the individual stocks.

    If you're a long-term investor, then how low it's going to drop right now isn't a concern. The only real concern is that it will rise above the levels where you're investing at.

    Have a great day:)

    Patrick.

  • Report this Comment On March 02, 2009, at 5:02 PM, saneguy50 wrote:

    The dow is going for a free fall. I predict it will hit 5000 in the next 1 to 2 months. As for AIG and Citibank cmon Obama quit bailing them out.... They are a sinking ship,let them sink.And for all you fat cats on wall street,I hope you go broke. Wake up and smell the coffee America

  • Report this Comment On March 02, 2009, at 5:26 PM, Steeplechase106 wrote:

    I wouldn't be surprized by a two step drop to 4,000. First some time in the 6,000 range during which individual investors assess the damage to their savings and retirement plans. Then when investors realize they haven't time to rebuild their nest eggs in the market, they will further cut spending, driving the broader economy even lower and non-financial corporate profits along with it.

  • Report this Comment On March 02, 2009, at 5:29 PM, mcculda wrote:

    The market is going down for a reason-people are trying to salvage something before the dow hits the 4000- 4500 level. People are really scared, The proposed budget is totally a negative reinforcement for those who own companies, those on Medicare, those trying to invest and have a decent return relative to capital gains or dividends, small businessmen, and entrpeneurs of all wage levels, those who use electricity and on and on. Where is there any incentive?The budget is punitive The budget is based on a false HOPE of taxes paid in the future. Who will be making any money? If anyone gets close to making $250,000/year for a couple, they will shut down work and stay at home with their spouse and pets, to avoid paying taxes at a higher rate.

  • Report this Comment On March 02, 2009, at 5:39 PM, foolraoul wrote:

    I have a degree in Economics (1971) from the University of Michigan. As an amusing classroom exercise we studied trends and cycles and predicted there would be another Depression beginning in 2008 and bottoming out in 2011. Sad to say the crash isn't nearly over.

    The author is correct. Some banks and insurance companies need to be temporarily nationalized under a CLEAR set of rules. Sooner would be better.

    Unfortunately this will spook the stock market even more. I'm looking for 4000 this year.

  • Report this Comment On March 02, 2009, at 5:44 PM, ddstults wrote:

    AIG is using this govt. money to bailout their buddies on Wall Street and across the pond. Hell with them, let them go broke!!!

  • Report this Comment On March 02, 2009, at 5:49 PM, chringram wrote:

    There is no doubt in my mind that the Dow will fall to and perhaps below 5,000 and have been saying that for 2 years. The signs as they say were all around us and the Wall Street ethos of this century makes the 80's look like socialist devotes. There is also no doubt in my mind that gold will break 3000. As the realities sink in we can expect extremes in political,social

    and emotional financial moves. Regarding paying more taxes, I have always thought that avoiding paying taxes when one has the cash to do so epitomizes what has happened in the markets in general during the last8-10 years, a la, I want mine-screw everyone else. Why should I pay for public schools when I can afford private and why should I pay for a bridge repair if I have a helicopter etc. I like paying taxes, it means I'm making more than enough, which I pray my fellow Americans will be able to do in the future. Good luck all!:)

  • Report this Comment On March 02, 2009, at 5:52 PM, jth54 wrote:

    I have less than 30 days experience in the Motley Fool Stock Advisor group, so the value of my viewpoint is minimal. However, what a time to get more involved in my investments! I hear others talk about fear driving so many to do irrational things, so the market could sell off down to 5000, but I also hear that $9 trillion (is that right?) is sitting outside the market waiting!

  • Report this Comment On March 02, 2009, at 5:55 PM, teejk wrote:

    not all of the Dow is composed of financials. There are a lot of companies in there that sell 'tangible" products...their stocks are already beaten down to absurd levels...skip the banks and such and pick up some bargains

  • Report this Comment On March 02, 2009, at 6:00 PM, Rone222 wrote:

    With all the bad financial news and economic problems, I am loaded up on inverse ETFs and some Gold ETF. I am watching the market but so far my the inverse holdings are adding wealth to my portfolio. My gold ETF was up a $1,000 but has dropped down.

    Ron in Philadelphia

  • Report this Comment On March 02, 2009, at 6:01 PM, collihi wrote:

    I predict that the market will find a floor at 5700 (+ or - 100). It will occilate in that + or - 100 range for considerable time with just the occassional break-out and fall-back. I wouldn't look for another DOW 14,000 in the next 5 to 10 years at least. Why? Because the street, the banks, and the government have gone too far this time and with the worst audience (victims) possible. The baby-boomers are the single largest demographic group of Americans now living and they have been burned bad. There are still individuals who were burned in the great depression who have never returned to the markets. Once fear replaces greed, a turn-about isn't likely. People have seen their retirements go up in a puff of smoke while wall street, banking, and government fat cats have theirs locked-up and safe. There is no large group out there to back-fill for the baby-boomers and any hope of a bailout for this group of Americans just went out the door when Obama and congress signed away 3 trillion. So wall streeters, bankers, and government hacks - we hope you enjoyed your run because elections are on their way and unless I miss my guess, we will see the largest group of incumbents ever to get voted out, looking for new jobs. After several elections in a row, the message will begin to sink-in - "WE HAVE HAD ENOUGH - NO MORE CAREER POLITICIANS FOR US".

  • Report this Comment On March 02, 2009, at 6:03 PM, mysticmountainra wrote:

    Dow 4000-4300 is all but a certainty! I've been an investor since 1958 and history does repeat "itself"! The lack of liquidity on a worldwide basis and the poor world economy all but guarantee 4000-4300 as a logical bottom and it could even possibly overshoot into the 3000 range. I sold 90% of my long positions 18-24 months ago and am glad I did! The snowballing feeling of investor gloom and hopelessness will get even worse than it is now and with low-rate cd's, continuing decreases in RE values and few investment alternatives, there is nowhere for the market to go in the next 6 to 18 months but lower...albeit with a few "sucker rallies" thrown in! Sell! Run! Flee! ...or you'll never live long enough to recover!

  • Report this Comment On March 02, 2009, at 6:03 PM, SissyTheClown wrote:

    I sure hope it's close to the bottom. I only have 4 years before I start drawing retirement from my IRA and retirement accounts. At the rate our government is going, I'll have to find more work at 65 to have any monthly income at all. If the government would let these stupid banks go ahead and fail -- then pick up the pieces -- instead of throwing more money we don't have after bad, then Wall Street just might settle down. But NOOOOOOOOOOOOOOO, the socialistic "big daddy" approach has to try to fix everything. This is the kind of "change" we did not need.

  • Report this Comment On March 02, 2009, at 6:07 PM, ReillyDiefenbach wrote:

    "how low it's going to drop right now isn't a concern."

    Really? It must be nice to have that much disposable income to put in the disposer. I'm in cash since November of 2007, no thanks to Motley Fool. It's called capital preservation, you know, Buffet's first rule, which apparently he forgot about.

    This AIG thing is beyond belief. The most crooked insurance company yet seen, yet we're giving them half the amount of money we've spent on the occupation of Iraq, and all we get is nothing? GM and Ford, who actually make things that people can use are going begging for a tiny fraction of that amount?

  • Report this Comment On March 02, 2009, at 6:11 PM, rsproat wrote:

    I have to wonder if these kinds of predictions are really doing us any good. Yes, we know things are bad. Yes, we know that it's going to be a long haul before we get ourselves out of this mess. But does it really help to keep making dire predictions? Markets are fueled by psychology. There is nothing materially different now than a few weeks ago when the Dow was still in the 8,000-9,000 range. Things were bad then. There have been few surprises of any real import and reports basically just confirmed what we already knew. So why fuel the pessimism any more than it is already fueled?

  • Report this Comment On March 02, 2009, at 6:51 PM, BlancheDuB wrote:

    I see a lot of pessimism here, based on a lot of fear and panic. Get a grip!! Are we a whole lot smarter than Geitner and his team of financial wizards? I doubt it.

    They're saying these bailout measures are critically important to saving millions of people and their pensions (in the US and around the world) from ruin. Geitner continually states that their decisions are for the good of ordinary people, NOT for Wall St. Doesn't that count for anything? And I totally agree that your dire predictions aren't helping to stop the bleeding. In fact, they're only causing more panic. Just reading most of your comments made me want to sell off my whole portfolio! Thanks to CNBC and all their cheerleading for more investment (despite a lot of experts who tried to warn them – and were rebuffed on various shows) we got into trouble in the first place. Now you can hear the fear in their own voices as they try to pin the whole thing on the bailouts and Obama's policies. I'm finished listening to the Bulls, the Bears and the fear-mongers. Time to listen to myself!

  • Report this Comment On March 02, 2009, at 7:02 PM, money4eds wrote:

    Indexes show us market history.

    My best guess, the market is going lower. It will continue lower until confidence returns. Those that have a job will buy stuff. The question to answer; is when will they buy stuff?

  • Report this Comment On March 02, 2009, at 7:04 PM, dlsavvy wrote:

    No-one can predict the bottom! With all of the government money being pumped into the economy over the next year, it would seem reasonable that a turnaround should begin to take hold. It is, of course, quite likely that the DOW might continue to decline for another couple weeks or months, but it is certainly possible that it could be going in the other direction in the second half of the year.

  • Report this Comment On March 02, 2009, at 7:14 PM, YRDOG wrote:

    The Dow at 5000 is too high. If you draw a line from the low of 1932 to the end of 1980 and intersect that line with the support of 1994 at 3750 to 4000, it intersects around Sept 2009. So my prediction is Dow 3750 to 4000 by September. THe support line from 1994 is easy to see for a chartist. The line from 1932 to 1980 represents the true sustained growth of capitialism after all the bubbles are removed. 1932 was the bottom of the depression and 1980 was the end of 15 year sideways movement in the market from the debt of the Vietnam war, the US going off the gold standard in 1971 and stagflation. Most people just look at all the bubbles that capitialism produces and start making predictions about the future based on the air money of bubbles. My prediction is based on the deflated growth of capitialism, which is a much more realistic apprasial of the system.

  • Report this Comment On March 02, 2009, at 7:26 PM, dutchburger wrote:

    I believe that In the current circumstances any valuation that was based on 'hope', growth potential, earnings estimates, historic results etc. will evaporate. What might remain to calculate value is cold historical math. My calculations go as follows: Look at the historic growth rate from the DOW in the days of conservative, non-derivative, limited volume, no-gambling trading and valuation and use that as a calibration for the growth forecast afterwards. I take two periods: 1: 1933-1982 and 2: 1942-1982. In both 1933 and 1942, the DOW was on the 100 level. In 1982 the DOW crossed the 1000 level. The average increase of the DOW in period 1 was 5.0%. The average increase for period 2 was 6.1%. If we now predict the DOW in 2009 based on a 5.0% annual increase since 1982, we arrive at approximately 4100. If we use the 6.1% figure, we get approximately 5300 in 2009. Reality may end up somewhere in between.

  • Report this Comment On March 02, 2009, at 7:27 PM, stokerb1 wrote:

    I would like to give some words of wisdom to ya'll

    Never play with money you can't afford to loose. I bought my first stock in 59 but never bought more then I could afford to loose. I am 70 now with cash in the market but not more then I can afford to loose. I'm sitting on a bunch of CD's and a solid retirement income only because I "never go all in" as they say in poker. Gl Stokerb1

  • Report this Comment On March 02, 2009, at 7:36 PM, aeneas2009 wrote:

    Question and would like an answer:

    Since banks have historically been very profitable, what is wrong with nationalizing a failed bank, and the government making money with it to lower the national debt. There could always be a NAV for any any entity who wants to buy it, albeit far, far into the future. Even as taxpayers, we shouldn't invest without looking to for a profit.

  • Report this Comment On March 02, 2009, at 8:23 PM, tselios7 wrote:

    Why would anybody by now, when everything

    points to DOW 5000???

    Even the stock of companies that sell everyday items that everyone needs will be on sale in the future,

    don't you think??

    Stock pile cash now and wait for dow 5000.

    Blue light speceial is coming!

  • Report this Comment On March 02, 2009, at 8:33 PM, docboyer wrote:

    The Dow will go to 5000 and maybe a little lower. Obama is bankrupting this country withn his pork ladened bailouts which he claims have no earmarks. Each bailout has had about 9,000 earmarks. He is lying----our children and their children will be paupers. He is a socialist and is rapidly driving the USA to Socialism. We will soon see super inflation followed by a depression that will make the 1930's look like a picnic. May God forbid he be elected for a second term!

  • Report this Comment On March 02, 2009, at 8:37 PM, CrankyTexan wrote:

    Morgan Housel, thanks for scaring investors even more. You're helping shorts the way that liberal Democrats helped Al Qaida.

  • Report this Comment On March 02, 2009, at 9:09 PM, fox3xs wrote:

    JAIL CONGRESS. GET A CLUE. DOW 5,800

  • Report this Comment On March 02, 2009, at 9:26 PM, trenton1ryan wrote:

    < Those that have a job will buy stuff. The question to answer; is when will they buy stuff?>

    And how much for how long will they be able to buy it??

  • Report this Comment On March 02, 2009, at 9:30 PM, trenton1ryan wrote:

    docboyer:

    You'll be one of the first ones with a gun in your hand, won't you??

    You a praying man?? You may want to concentrate on keeping your sanity and taking care of your brothers and sisters than trying to blame a minor player like Obama.

    Good luck to you sir.

  • Report this Comment On March 02, 2009, at 9:30 PM, trenton1ryan wrote:

    YRDOG:

    Great post-thanks.

  • Report this Comment On March 02, 2009, at 9:35 PM, brassbear wrote:

    We get the government we elect. Unfortunately, "we the people" don't seem to care enough to demand more from our politicians, get involved in the issues of the day or share honestly-held opinions without personal attacks or retreat behind ideological word bombs we don't define or support with facts. Not only do we get the government we elect, we get the government we deserve. based

  • Report this Comment On March 02, 2009, at 10:15 PM, Entertainme wrote:

    We are now getting what we voted for last November! Surprised?

  • Report this Comment On March 02, 2009, at 10:20 PM, LRtex wrote:

    From the comments I just read it looks like the concenses is that the Dow is going to go at least another 1000points down. If true , I guess the smart thing to do is cash out my 401K. Doesn't make sense to lose more of my retirement money. It also appears that 5 years is not enough time to even get back to where I was in mid 2008. So much for retirement. I needed at least 5 years of growth from my 2008 money to rearch a reasonable retire goal.

    In response to the comment about not investing more than you can afford to lose. I think there is a very large group of people my age that started out having a company pension, but then through the years got shifted to a personal 401K which magically was worth less then when you had a company pension fund. Because of this people had to invest everything in mutual funds (moderatel risky) to "catch up". I guess the 'smart person" would have sipheoned a portion into cash or cds as the years rolled by. I guess even you can say that people like me got greedy trying to reach and exceed their retirement goal. :(

    One last thing, government intervention into failing companies will make things worse. It never has worked and never will . Capitalism will fix itself.

  • Report this Comment On March 02, 2009, at 10:21 PM, katinga wrote:

    Normally I'd say that with all the doom and gloom as evidenced on this thread, we're nearing a bottom. But I have to agree that Obama is both trashing the economy and trash talking the economy, so who would want to invest?

  • Report this Comment On March 02, 2009, at 10:35 PM, trenton1ryan wrote:

    Stop bitching about Obama. Grow up and just admit that we're all to blame. We've been apathetic and greedy, and that combination is a double edged sword when the economy goes from good to awful.

    Stop lying to yourselves and everyone else.

    Sheesh.

  • Report this Comment On March 02, 2009, at 10:54 PM, holosys wrote:

    I think the Dow will keep falling until trading is halted, otherwise I fear the worst: Dow -1,000 (Dow minus one-thousand). As of today 03/02/2009, GE is at 7.6 (with P/E 4.43). If the Price to Earnings ratio makes GE a K-Mart blue light special, it can only get better for buyers as the Dow plunges... or is there something we've overlooked?

    XO Communications is a model for a Dow heading in the direction of zero. By declaring bankruptcy, XO Communication could legally "retire" the stock of its shareholders, ballasting $1 billion in debt and rendering its New York Stock Exchange listed stock permanently worthless. Then, billionaire Carl Icahn lead the company to come out of bankruptcy and magically create brand new stock to sell on the New York Stock Exchange.

    The legal process of retiring stock through bankruptcy and emerging as the same company with new stock, is how a company continues its cruise while replacing all its paying passengers. Simply throw the passengers overboard without life-vests (saving these for the new passengers), dock, and take on all new paying passengers for the duration.

    Don't believe GE and others could pull a Carl Icahn on their shareholders, retire GE shares, and reissue all new GE shares to anyone willing to buy them? Better brush up on your history. Try plugging in these keywords into Yahoo.com:

    XO Communications bankruptcy

    You'll discover a filthy secret that nobody has yet discovered in the stock market. Few large companies besides XO Communications to-date had the moxy to "retire" all shares after it dropped from $10 to $0.01 per share, euthanizing its shareholders, then reissuing new stock at over $3 per share.

    I was involved in a massive class-action suit challenging the right of a corporation listing stock on Wall Street to do this. Not only did I lose my $7,000 investment (at $1.11 per share, after which XO dropped to near zero before it retired all shares, after which XO simply disappeared from my brokerage account holdings). I received an offer to buy XO's newly minted post-bankruptcy shares for over $3 per share. Cute... real cute.

    I felt like a fool, no pun intended. That is why I'm not in a hurry to buy any "bargain stocks" because a wave of corporate bankruptcies and restructurings could cause stocks to be retired. Even Google could legally declare bankruptcy and retire its stock, reissuing it and permanently wiping out current share values. Don't believe me? Ask your lawyer, or better, research XO Communications bankruptcy.

    I urge Fool.com to do a series of articles about how major corporations can legally declare bankruptcy, "retire" all shares (effectively rendering them permanently worthless) and reissue new shares. The stock market could hit zero, leaving corporations the option to start from scratch and retire their stock, then sell all new stock to raise new capital post-bankruptcy. The SEC did not charge XO or Icahn with fraud. I was legally robbed and had absolutely no recourse with other shareholders. If I buy a valuable work of art and hang it on my wall at home, unless my home is burglarized, I don't expect to come home to find an empty wall. Yet you can invest in a stock and it can disappear from your portfolio not just if a company goes bankrupt, but if that same company emerges from bankruptcy unscathed, to resume business as usual without any interruption! Look at XO Communications today. Who would have thunk someone who bought their shares a decade ago, and considered these shares a "long-term investment" would have no XO shares in that same account today? Talk about major depressionesque loopholes that could leave tens of millions of investors holding shares of major corporations with nothing! Everyone assumes if a company like GE or Google survives a bankruptcy, their shares will eventually return to normal... not necessarily true.

  • Report this Comment On March 02, 2009, at 10:57 PM, ReillyDiefenbach wrote:

    "He is a socialist and is rapidly driving the USA to Socialism"

    Faster, please, I want to have a quality of life as good as France and Sweden, asap!

  • Report this Comment On March 02, 2009, at 10:58 PM, ReillyDiefenbach wrote:

    I'll settle for as good as Canada, though.

  • Report this Comment On March 02, 2009, at 11:02 PM, ashcomp wrote:

    Um. . .If there are no buyers, why should there be a bottom? Dow 000 anybody?

  • Report this Comment On March 02, 2009, at 11:03 PM, TDUBFISH313 wrote:

    This sounds like a great investing community.

  • Report this Comment On March 03, 2009, at 12:14 AM, musicnerve wrote:

    Corporations have screwed up their balance sheets. Now they get to fix them while the government screws up its balance sheet. This is part of the capitalist cycle. I'd like to see the DOW at 4000. We needed a big reset. It would be great to go back to before MTV, the dawning of cable...

  • Report this Comment On March 03, 2009, at 12:17 AM, CrankyTexan wrote:

    TDUBFISH313, you don't need buyers to maintain the stock market. You just need people to stop selling. If no one buys and no one sells, the market stays steady.

  • Report this Comment On March 03, 2009, at 12:20 AM, CrankyTexan wrote:

    musicnerve, most corporations did NOT screw up their balance sheets. Many banks did, but most corporations are not banks.

    Only an idiot would want our economy to fail. You are wishing that you friends and family will suffer.

  • Report this Comment On March 03, 2009, at 12:23 AM, simonkathrein wrote:

    Two economic commentators I listen to are Peter Schiff and Harry S. Dent. Not that either of them have a chrystal ball... however their logic has been pretty accurate up to this point, and Dent believes the Dow could fall as far as 3800 before this is all over. Also, if you believe their ideology, then we probably won't see a bottom until 2012/2013 or so. Check out a free lecture Dent gave on you tube at:

    http://stockcapitalist.com/?p=1026

  • Report this Comment On March 03, 2009, at 12:42 AM, CrankyTexan wrote:

    When Peter Schiff and Harry S. Dent earn as much as Warren Buffett did from investing, I might take them seriously.

  • Report this Comment On March 03, 2009, at 1:30 AM, olwreckdiver wrote:

    OBAMA? He's just the lead dog! If some loony shoots him, we'll have Biden!!!! then Pelosi!!!

    The whole group is culpable! They;re so inwardly turned and Socialist that NOT ONE of them has a clue as to how things really work!

    I truly fear for my country and my grandchildren.

  • Report this Comment On March 03, 2009, at 2:22 AM, CrankyTexan wrote:

    olwrecker, blame voters for voting for these socialists. It was no mystery before the election that Obama is a socialist anti-American.

  • Report this Comment On March 03, 2009, at 2:35 AM, refuseFEAR wrote:

    Thanks to Rellydiefenbach. What is so scary about

    Socialism? It works with our fire depts., police and the US mail doesn't it ? I asked a Canadian about their healthcare and what they thought about ours and this is what he said "I think the greatest difference is that no one in my country loses their home if they or one of their loved ones gets sick." I thought about how many people I know struggle with illness and stresses that happen financially because of illness and now believe it is the only way to become higher than 37th in the world in healthcare. After all, we are America and should be #1 but even in this arena greed has been around too long ! The main thing wrong with just about everything going on right now--GREED!!!

  • Report this Comment On March 03, 2009, at 2:36 AM, KiwiGandalf wrote:

    Dow 4000 is quite possible if one looks back at historical trends, though a pause in the mid 5000s on the way down is likely.

    This is the decline of the American Empire we are witnessing. The destruction of an ideology of consumerism. This is a historic shift which will lead to the reemergence of Asia as the global centre of trade and economic growth.

    Some big money will be made from these tectonic shifts in the economic landscape, but not necessarily in the US (while it remains united).

    And there is nothing wrong with socialism... do your homework and you will find there are a range of socialist systems, some resulting in comparative wealth for most of the population. And there are others, just like corrupt capitalist systems, that are downright nasty. Greed and individualism ultimately results in the decline of a society.

  • Report this Comment On March 03, 2009, at 2:46 AM, CrankyTexan wrote:

    If your idea of greed is that people who earn money get to keep their earnings, then I approve of greed.

    Socialists on the other hand believe in FORCING people to give their money to other people.

  • Report this Comment On March 03, 2009, at 2:52 AM, IIcx wrote:

    Capitulation and a retest are signals of a bottom. This one is likely to test lower but it's hardly the end of the world.

    In 2001, I watch numerous stocks fall to book value including Apple at $15 a share. It's like buying stock for nothing so I did.

    The market usually reflects what will occur 6-9 months down the road but it looks like the economy is going to lead us out this time.

    There are trillions sitting on the sidelines waiting for some positive signals or panic selling (absurd lows) before investing. You can't blame them for being cautious. Every time they invest, some 3 year old waltzes in and shorts the scene lower.

  • Report this Comment On March 03, 2009, at 3:13 AM, KiwiGandalf wrote:

    Revolutions happen when a greedy few dominate the wealth and resources... look at history for the various instances of that. If you want to protect greed, there will need to be an increasingly authoritarian and violent society, until one day it will all blow-up.

    It is better that there be SOME sharing of the wealth... SOME redistribution that enables a reasonable standard of living for all. The system has to be balanced, and part of the reason for the current problems is that the system has not being balanced for a number of years... probably back to Reagan.

  • Report this Comment On March 03, 2009, at 3:24 AM, tarig wrote:

    A lot of otherwise smart Fools have commented on how we should let companies like AIG, Citigroup, and BofA "fail" rather than bailing them out, and that, by taking our medicine now, our financial system might recover faster. First of all, I understand and agree with the frustration of giving billions of our tax dollars to the greedy idiots that got us into this mess. Also, I would prefer to take some harsh medicine short-term if it meant avoiding a lost decade such as Japan endured with zombie banks unable to help the economy or even themselves. The problem with this proposed solution is that allowing one of the "systemically important" financial institutions to fail will cause the current terrible financial situation to deteiorate cataclismically and overnight. As Buffett so eloquently put it in his letter to Berkshire shareholders, these financial institutions "slept" with each other, and the counter-party risks and interrelationships mean that if one large institution fails, it will in very short order, bring down many other large financial institutions (due to the fact that they are counter-parties on so many large deals). The web of deals back and forth between these institutions is so convoluted, that it is virtually impossible to "undo" these deals without tearing the very fabric of the remaining financial system apart. So, we have a terrible solution of endlessly throwing more money down a hole, with no end in sight. Yes, we are mortgaging our future, we will incur huge taxes to pay for the government debt being issued and/or we will pay for it in a less valuable US dollar down the road, but the alternative is even worse.

  • Report this Comment On March 03, 2009, at 3:31 AM, kirkydu wrote:

    This article makes a huge point, the selling is rationale. The irrational dumping came from September to November of last year. I know this because I am an investment advisor in a large independent firm. The sellers are institutions, accredited investors and funds looking to reallocate or raising money to cover call obligations. Those sellers are just about exhausted as measured by cash flows and knowing that the hedge funds are mostly done with redemptions. Unless there is a round of panic among retail investors shortly, we are near bottoms in the markets. These bottoms might or might not hold after a rebound rally (my guess is they will as stagflation sets in), but a rebound rally is about on us regardless.

  • Report this Comment On March 03, 2009, at 3:41 AM, cordwood wrote:

    Guess I'll be doing the same thing I did in the early '70s:

    Saved most of my earmarked investing money as cash;DRIP most of my core holdings; waited for PEs of < 5 . Guess that means I wait till about 3000 on Dow!

    So,where did the PE of 5 come from? Well,I had a Prof. at Purdue,[nickname "Captain Kidd"-English Lit.].He said that's what he did c.1929 -1932.Bought Gulf,US Steel,Dow Chem.GE,etc.Worked for $1/year to keep active. "...less than PE 5,and you'll have a good investment

    ..".

    Not written in stone,for I have made a goodly number of purchases at greater PEs,BUT since the subject was "what's low",that's MHO.

    PS.... to any old Purdue alums....A popular Financial Prof. was a man named Ersulchak[sp];there was a waiting list to signup for his Personal Investing course .....Requred course book..WSJ...ring any bells?

  • Report this Comment On March 03, 2009, at 5:05 AM, ApoluneUSA wrote:

    "The first paragra[h begins "If someone told you ... " then concludes "most people wouldn't take you seriously."

    That's inexcusably sloppy writing, editing and proofreading.

  • Report this Comment On March 03, 2009, at 5:40 AM, owup74 wrote:

    WOW I cant belive how many comments are posted on this one. Normally when I see articals I may see about an average or 10-20 maybe 30 at the most. I guess it hit a nerve eh? I think it will drop below 3000 most of it is because of everyone. The CEO's and management who been burning money with out a care continuing their bad management pratices and exporting jobs overseas. What kind of crack were they smoking? Did they not think by moving 1,000 jobs here and there to China and India was not going to come with a price tag? The consumer who is another group thats 1 beer can short of a 6 pack. In the 80's and early 90s who lived in apartments cause they could not afford to buy a house and got a subprime loan. If you could not afford it before the Clinton administration's subprime loan then what made you think you could afford the loan to begin with? Another group that is even bigger than that. The card addicts who go out and get 5-10 credit and department store cards and max them out buy things on borrowed money. Did you not think that one day you have to pay it back? That group is probably about 80% of the Americans. Of course alot of us probly got that when we were 18 to early 20's you know young and dumb. (even I am guilty of that) but then when I got called up to active duty for Iraq I took advantage of the tax exemption and extra pay and only spending less than 200 dallors a check and paid off all my credit cards and auto loan. The Obama plan probably wont work because it left the door to far open for buracrats to get their greedy paws in it and spend the money in their interests and not the people. It takes about 8-10 years for economic policies to really show their effect. We are now paying for Clintons faild policies and he was really riding high on the Regean and Bush policies. This latest drop comes from preasure of the Clinton policies and the second Bush policies where he was side tract by 9/11 and bear in mind then due to the election crises he only had a coupple weeks to throw a cabnet together so he did not get such a good line up. One thing online retailers could do is make their sites more user friendly toward the military. Amazon.com there are many electronic things that they will not ship to the military with a APO adress forcing them to have them shiped to parents who spend money shipping it to them. Most of them say they dont want to pay the high international shipping cost...anyone home in there. Shipping to APO is no different than shipping to Calafornia or Virginia same shipping rates...idiots. with the PX/BX always failling them and not selling what they are looking for there looking at those kind of companies to get what they want.

    Last thing is until this vicious cycle of everyone not spending money and jobs being exported and goverment still waiting to start their projects and bad banking pratices continuing it will only get worse. We will recover one day but we also have to be carfull when you look at history what has usally happened when the economies around the wold tanked? We had wars world wide most notably WW I and WW II. I plan to just wait for the market to bottom out then as K-Mart would probably say "theres a blue light special on the stock market today" then its off to a shopping spree :-)

  • Report this Comment On March 03, 2009, at 6:30 AM, 4Magoo wrote:

    At 6,000 I caculate the DOW will have lost 58% from the high of about 14200. If we go down to 5,000 we are down to a lost of 64.8% from the Bull Market high. That is about an additional 7% drop and so in reality anyplace in here we have to be getting close. I have been averaging back in as we decline. My worry is that I will be sitting on the sidelines too long and miss those initial 25% increases when the market finally turns. Typically I miss the bottom, then I wait for it to go back and test the bottom there by missing all the initial bounce brought on by all the cash sitting in Government Bonds.

    I noticed that this article did not talk about the 3,000 that some people are talking about. My concern is that if the economy doesn't show some signs of life, we might fall below the 5,000 just by drifting lower. If the economy doesn't pick up until 2010 it will be a long time moving sideways.

  • Report this Comment On March 03, 2009, at 6:34 AM, work4ever wrote:

    The FOOLS keep saying "Buy Now, Buy Now". FOOLS you are, I am going to wait until the DOW hits 1000 or less!!! Never say Never! Now for my morning coffee :)~

  • Report this Comment On March 03, 2009, at 8:44 AM, accuscope wrote:

    Hi...

    Who say's it will recover???... Look at japan!!!

    We had boom times due to massive reckless lending / borrowing and banks will never return to such lending practice again... Therefore, End of story end of game!..

    The economy will never re-inflate anywhere near to the same degree again unless there is a massive new technological revolution!... We need, innovation and invention that set's fire to the economy and creates millions of jobs... That's the slim hope.

  • Report this Comment On March 03, 2009, at 8:48 AM, scofy wrote:

    Dow in the 3000.

    scofy

  • Report this Comment On March 03, 2009, at 9:45 AM, ifyouaskme wrote:

    The market will turn around when we all decide to talk about the positive things rather than the negative.

    For example, we all have more discretionary spending money by the simple drop in gas prices. I don't know about you but I am saving a couple of hundred dollars a month.

    I look forward to the lower tax rates on the majority of us. Again, more money in my pocket.

    Certain industries and trades outside of the financial markets will get a boost from the stimulus which will again provide more discretionary spending.

    Mortgage rates are really low and we are coming up on the Spring real estate market launch. Housing is at affordable prices and interest rates are in the 4s and 5s depending on term and down payment. You can still buy homes with little down you just need to buy mortgage insurance for a buck and a half per month until your ratio hits owed to market value hits 80%.

    The reason Motley Fool exists is because we all believe we should invest in ourselves. The stimulus package does just that. You can argue over which projects should or should not have made it but the end result is that we are investing in ourselves. Yes we are doing it on margin but history has proven that this kind of borrowing to invest in a nation's future works.

    Lastly, if we were the only ones providing stimulus packages in a global market I believe some of the concerns about using tax payer money to bail out the nation's economy would have more relevance. But the reality is that all industrialized nations see the way out as doing the same thing. Regardless of where the numbers end up, it keeps us all in relatively the same position. Bottom line, the world is working to extracate us out of the mess that credit default swaps, other derivatives, sub-prime lending, and oil commodity deregulation put us and the rest of the world.

  • Report this Comment On March 03, 2009, at 11:02 AM, kartha1 wrote:

    Dow far below 5000 and around 2000 is what I think where it will land. The so-called market is completely rigged. Until, the reality is exposed, it will keep falling.

  • Report this Comment On March 03, 2009, at 11:31 AM, chilstad2 wrote:

    I am not adding more money to the market now, but as I have a job, and can save some thousand USD pr month, my bank account (in CITI) is accumulating every month, waiting for a reason to enter the market.

    Have already lost 40% on what I already have in the market, but not taking it out, as I have no clue whatsoever where the bottom form my stocks really is.

    Luckily I can afford it (at least today), so I sit tight, accumulating money, ready to jump in when I see something I think is a bargain, in my limited mind.

    I have never invested in "the DOW", so I am not sure I really care where it goes. I pick stocks, and right now I do not have any finance stock, so I do not think I have so much far left to drop with my portfolio. I bought the stocks I have because they are strong companies with little debt, or at least managable debt, good management, good balance sheet, good cash-flow, and good products These companies will be the survivors after this shake-out.

    This board starts to look like the yahoo board. Cannot believe all the ranting on socialism, Obama, etc. Who cares about that? Obama is just a blip in history, he cannot move markets. Let him help the needy, and pay your tax with a smile. Not everybody is as fortunate as you, and your (and my) wealth needs to be re-distributed. Is it fair that I can take one of my two cars or my motorbike to work, while 1000 of my fellow citizens do not even have work? I pay every tax dollar (or in my case peso) happily, but the tax regulations let me pay less than I could. I honestly do not really need all the stuff I have, so I could pay more.

    Invest in companies with strong management, good products, strong balance sheet, and you will be fine.

  • Report this Comment On March 03, 2009, at 11:37 AM, CJager13 wrote:

    Date DJIA_Close

    9/3/1929 381.17 All time high thru 1930's

    7/8/1932 41.22 Lowest close, 10.81% of high

    11/23/1954 - date the DJIA regained previous high

    Date DJIA

    10/9/2007 14,164.53 All time high up to current day

    Personal Prediction:

    8/13/2010 1,531.76 Low based on same % as '29/'32

    12/28/2032 Date high is regained based on '32/'54

    just my 2 cents based on a simple spreadsheet ...

  • Report this Comment On March 03, 2009, at 11:43 AM, ReillyDiefenbach wrote:

    Joe Klein has a good one for once:

    "We are at the end of a 30-year period of radical conservatism, a period so right-wing that many of those now considered "liberals"--like, say, Barack Obama--would be seen as moderate pantywaists in the great sweep of modern political history"

    So what do we say to those who mindlessly parrot the talking points handed down from Hannity Nutjob Central? (one can always identify the dittoheads by which president they are excoriating.) Last year it was Clinton. Now, he's out of favor. This month it's Roosevelt and Carter, with his aid to minority first time home buyers. Never mind the undisputed fact that Phil Gramm, Alan Greenspan with their holy Randian grail of total deregulation caused this mess.

    If a further talking point tracer were needed, which it isn't, the febrile cry of socialism, the time-tattered boogeyman of the pajamahadeen since the Fabulous Fifties will point the way to Rupert Murdoch, Richard Mellon Scaife and the whole unsavory clique of multi billionaires.

    Gentlemen, we've tried your way and you've ruined us. You're fired, at least insofar as we're able. Hit the bricks, go peddle your papers elsewhere.

  • Report this Comment On March 03, 2009, at 11:49 AM, jettrey wrote:

    Well, if it makes any of you equity investors feel better: I was talking with a coworker and he made a comment about how he used to think he was a smart investor until now. I assumed he was talking about stocks, but no, he was 100% in real estate. At least with stocks, even if I were 100% in equities and the Dow goes to 0, at least my investments won't go negative. As always, never a good idea to put all your eggs in one basked.

  • Report this Comment On March 03, 2009, at 11:52 AM, jettrey wrote:

    ... or type "basked" when I meant "basket".

  • Report this Comment On March 03, 2009, at 11:53 AM, UrbanJackBag wrote:

    <I asked a Canadian about their healthcare and what they thought about ours and this is what he said "I think the greatest difference is that no one in my country loses their home if they or one of their loved ones gets sick.">

    If they die waiting for treatment, oh well, right? It would be fine if Canadians would stop coming over the boarder for the expensive treatments that don't do over there. As usual, America takes up the slack the rest of the world can't....

    It will all end soon enough tough....

  • Report this Comment On March 03, 2009, at 12:31 PM, atlantiscats wrote:

    While everyone covers their head like chicken little..... the big dogs are out cherry picking. Buy that big forclosure now, cause when it turns back around, it's going to turn fast. It always has, and it always will.

  • Report this Comment On March 03, 2009, at 1:10 PM, ReillyDiefenbach wrote:

    "If they die waiting for treatment, oh well, right? It would be fine if Canadians would stop coming over the boarder (sic)"

    A much more likely event on the U.S. side of the border, I'm afraid. Next time you're on a flight, ask yourself if you might be sitting next to one of the 50 million uninsured, some of whom might have tuberculosis, but can't go to the doctor for lack of health insurance. Bon voyage! While you're sitting there inhaling the bacilli, ask yourself why you're paying twice what the Canadians pay for the same prescription.

    Where did this anti-Canadian stuff get started, one has to ask? The AMA? I know it predates Fox News.

    Look up Tommy Douglas some time, voted the all time greatest Canadian.

    No one has to wait for any urgent medical situation in Canada. And there's no such thing as a "medical banktuptcy." That is reserved exclusively to the self-titled "greatest country in the world."

  • Report this Comment On March 03, 2009, at 1:46 PM, EagleTraderOne wrote:

    In 1978 Deng Xiaoping, Chinese party boss, gave a speech that turned out to be the most important in modern Chinese history. He urged that the regime focus on economic development and let facts - not ideology -guide its path. The results have been astonishing. China has grown over 9% a year for almost 30 years. Obamas bailouts and budget are based on ideology, not economics, not facts. Obama, Pelosi and Harry Reid, the new triad of Socialist power will drag this country through a series of catastrophic convulsions that will destroy our economic, technological and intellectual capital.

  • Report this Comment On March 03, 2009, at 1:50 PM, atlantiscats wrote:

    Bah HUMBUG Reilly Diefenbach! *cough~ What do you mean we *cough, have bad health care in the US!!? *cough~ Just like our leaders we have the BEST money can buy.... *cough

  • Report this Comment On March 03, 2009, at 2:20 PM, BMFPitt wrote:

    So after reading the $7,762 per second I had to look it up and yeah, they lost more than Bill Gates' net worth in Q4...

  • Report this Comment On March 03, 2009, at 3:51 PM, matinthehat58 wrote:

    Just a thought (well...ok, a fantasy). Turn off the TV, the radio, the computer(sorry Fool), don't read the paper, or anything else that might say one more thing about the markets or the economy. Then, with all that free time you've now got, take a walk with your honey, or your pet, or yourself, or with God. Think about all the wonderful things you've got in your life. Do nice things for people, call those you love and encourage them, go see your great aunt or uncle that you haven't seen for years and love up on them, etc. Then after two weeks or so, jump back into the mess. You'll realize that even though your portfolio stinks like a sewer, you my friend are very wealthy indeed. Now with this incredible revelation protecting you from pure terror, assume a cash position until you think the bottom has been found. Then, put your coins in the slot of the money tree, and call your mother.

  • Report this Comment On March 03, 2009, at 6:48 PM, bubbatul wrote:

    after reading all of these comments, i was just going to go kick the dog, but MatInTheHat58 (last comment) really woke me up. Thanks much!

  • Report this Comment On March 04, 2009, at 5:18 PM, rolandstoan wrote:

    Here, here Matinthehat58. I keep telling my wife pretty much the same thing. I refuse to let this situation get me down.

    But... I too wonder if I'm a fool after going long for so long when believing the "experts" when they were and still are pushing the benefits and wisdom of: "true investors buy and hold and the speculators buy and sell and lose money". I did the same thing while all the dumping was going on back in the early 2000's when I lost a third of my life savings. Why do I/we continue to fall for this? Is it that they're actually saying... "hey, you go long while we go short and

    maybe you can pick up our crumbs later"

    Why is it that I couldn't seem to remember the frequent advise of: "When your securities lose 10% of their value, sell" when I should have?

  • Report this Comment On March 04, 2009, at 10:06 PM, farcha wrote:

    The bailout is about 'getting businesses and people to start spending again'. It's just more of trying the same thing over and over again and keep expecting another outcome. This country is in for one (more) big shock. When people - and companies for that matter - realize that they can only spend what they have (or what they're worth). The age of borrowing without collateral is almost over but not quite. When I look around me in my relatively affluent neigborhood, it seems we haven't gone low enough to shake people out of their dreams. When it actually IS over, then finally this runaway train will come to a grinding halt after which we can put it back on the proper track and slowly, slowly but surely get it moving in the right direction again. We will have to get back to real money, real expectations, real goals and real values before we can start building a new and bright future for ourselves and our children.

  • Report this Comment On March 04, 2009, at 10:11 PM, farcha wrote:

    Oh, by the way, I forgot to ask a simple question. Hopefully someone out there has an answer. What is wrong with saving for something that you want until you can buy it? Or, on a company scale, what is wrong with making money with which to pay your empoyees (first and foremost!) and your shareholders? Why is it so good to have debt on the balance sheet?

    Thanks!

  • Report this Comment On March 05, 2009, at 4:40 AM, onyshua wrote:

    Edward Lewis

    Feb。 17, 2009

    Revised March 5, 2009

    Predictions From 1991 Have Proved to Be Correct

    This theory accurately predicted this depressionary period 17 years ago, based on the idea that industrial revolutions happen every 80 years, leading to 2 kinds of economic depressions.

    • About 20 years ago I started writing predictions about the past decade based on a theory that scientific revolutions and industrial revolutions happen at 80 year intervals, more and less, and that these industrial revolutions lead to two kinds of economic depressionary periods. One kind happens during the industrial revolutions (1890s, 1970s, etc.) and another kind happens midway between these industrial revolution depressions about 10 years after the beginning of a productivity growth acceleration.

    About 10 years after the beginning of a productivity growth spurt, like happened about 1999, since there is the formatation of oligopolies and a cessation of introduction of new kinds of products, people become unemployed. I call this kind of depression "technological acceleration" depressions. During these depressions, there have been high productivity growth rates. Productivity growth will continue to increase during the next two decades I predict, if the economy follows the past pattern. By about 2030 or 2040, it will reach a peak. This matches what happened in the last two cycles. This theory is an explanation for the Kondratiev wave as I described in articles you can see online at lenr-canr or on my website cust38.metawerx.com.au

    In 1990, based on this theory, I predicted the timing of the productivity growth acceleration, the economic boom, and the characteristics and timing of this depressionary period. What I mean, is that I predicted 17 years ago that a deep recession or depression would start about now, following a 10 year “booming 20s” type economic boom. It did. You can understand the reasoning for the theory by reading my prior articles and online articles. I tried to publish these ideas many times, but have rarely been able to.

    During the 1990s, a problem was convincing people who already believed in “long-waves” or Kondratieff waves that the long-wave economic depressionary cycle is really a 40 year periodicity, not a half-century or 60 year periodicity as they believed. I tried to explain to people that the 40 year economic depression cycle is based on a 80 year industrial revolution cycle, which is in turn based on an 80 year scientific revolution cycle. But few people believed me.

    But it is obvious no 1930s style depressionary period happened during the 1990s or early 2000s. It is happening now, as I predicted 17 years ago or more. It is happening now, starting about 40 years after the last depressionary period in the 1970s, which followed 40 year after the beginning of the Great Depression, which in turn followed about 40 years after the beginning of the depressionary period of the 1890s. In the US, this depression started about 1893. But in Britain it started in the 1880s, because Britain was the technology leader.

    This current depressionary period is starting now, at the end of the decade of the 2000s, because at this time in the life cycle of the industries based on quantum mechanics theory, the emphasis has switched from product innovation to process innovation which involves price competition for standardized products. Historically, during the prior two industrial revolution cycles, process innovation involved the formation of oligopolies and the reduction of human labor by automation and economies of corporate scale. The same process is happening now, as I predicted two decades ago. This is why labor productivity is increasing rapidly, as also happened during the prior two technological acceleration depressions.

    Another problem I faced is that people seem to think a scientific revolution replacing quantum mechanics theory can’t happen, and economists think cold fusion anomalies are a hoax. They also think Fleischmann and Pons were hoaxters, as do physicists, generally. People don’t think a scientific revolution cycle is possible. There has also been a lot of stupidity.

    This theory is an explanation for the Kondratiev wave as I described in articles you can see online at lenr-canr or on my website cust38.metawerx.com.au

  • Report this Comment On March 05, 2009, at 10:56 PM, Dexter815 wrote:

    Although I am not a chartist or a technical analyst by any stretch, I believe the next technical support level on the Dow is 3750 and we're on our way there. While I admit there are "cheap" stocks out there at the moment, they will be cheaper stocks if one has the patience to wait a while longer. A coherent, concise banking and/or mortgage plan may have aborted this downward spiral, however, neither of these has occurred and I wouldn't await one in the near future with President O'Bomber and his merry band of tax avoiders. The $700 billion TARP bailout would've been best utilized by letting the existing bad banks go belly-up and creating, at a 10 to 1 leverage ratio (small in comparison to today's ratio), $7 Trillion worth of brand new, well capitalized banks that would've been capable of lending again, rewriting or issueing new mortgages, etc. But that would've been too logical and easy. Why let the criminals pay for their crimes when the taxpayers can bail them out? In any event, prepare for Dow 3750, be long Gold, a little Platinum, and soon to come Silver. Short the S&P, Dow, and U.S. Treasury and collect your winnings at the gate!!

  • Report this Comment On March 06, 2009, at 2:24 AM, kryotex wrote:

    I like your thinking Dexter; however I fear even a Dow 3750 may be wishful thinking. Based on just the undisclosed fraud out there (price, earnings, profit, balance sheets, investor reports, etc), there's a long ways to go before investor confidence is restored. Firms that may appear to have value now, are based on their "reports", which are easily.... lets says, "fudged". Investors know it; don't think you're buying value now, when the rest of the investorts already know the fraud out there and are waiting for investor confidence to be renewed by some sort of Wall Street cleanup which has just begun to happen. I'm all out of stocks now - sold all in 2008 when the Fools thought I was crazy, telling to buy MORE and HOLD. What a load of bull. Wait until the rules are known, and the confidence has been rebuilt. Patience is a virtue!

  • Report this Comment On March 06, 2009, at 8:13 AM, RenormalizationG wrote:

    I must say I appreciate these 'pessimistic' posts - I think the best thing about the fool is the fact that they have created quite an interesting and intelligent community of people who would never have interacted with otherwise.

  • Report this Comment On March 06, 2009, at 2:18 PM, ceocomp wrote:

    The securities market is manipulated totally. This meltdown was/is well planned and on schedule. It is all about total ownership and control by the "global elite". Who? Start looking here - bis.org and rbf.org. Stock market "wealth" was harvested in 99/2000. Home equity wealth is the latest crop to be harvested. Both of these markets are 0 sum games - for every loser there is a winnner. Who wins? Simple -who do we pay interest to on the trillions in paper loans needed to finance the current insanity of pouring on more debt to handle a meltdown caused by too much debt.

    The Dow may well go to 0 as we move under the control of the police state. Get ready for a new one world currency. The ONLY hope for financial freedom is if Americans wake up and throw out the criminals controlling their government. But don't hold your breath waiting.

    You could do a lot worse than to buy real wealth - minerals, natural resources, precious metals. Check out South Africa - they were not "sophisticated" enough to fall for the big con game that subverted Americans . And they have REAL wealth in the ground. Lots of it. And China is moving in fast!

  • Report this Comment On March 06, 2009, at 2:35 PM, scootrnc wrote:

    For those of us who might believe that faith is an element in this situation, I'd simply say -- that is merely foolish. Faith, by definition, is belief in claims for which there is no evidence.

    Do you really want to follow that road?

  • Report this Comment On March 06, 2009, at 3:27 PM, lyndaharris wrote:

    I agree with Entertainme. You got what you voted for. I think the answer is to cut corporate taxes and cut the capital gains tax. I DO NOT think giving all this money to banks etc. is going to help. I think it is going to make things much worse. The democrats are going to make a big mess!

  • Report this Comment On March 06, 2009, at 4:38 PM, mikerphilly wrote:

    Like it or not, we're all in this together. AIG's $60B 4Q loss was mostly imaginary money to begin with. So is much of the decline in home values. Unfortunately, the impact of the fallout is not imaginary. Our obsession with monetary values has obscured our ability to remember real values.

    We need to stop siding with greed, and look instead toward civic responsibility. I realize many traders aren't happy with Obama's plans so far, but perhaps that's because they're looking for success in the wrong places. We measure success by the living standards of ordinary people, not by the stock indexes. If it takes a drop of the DOW to 5,000 (or lower) to get some of you to wake up and come back to Earth, then so be it.

    At least our kids have a better chance for a happy life. No one wants to see our corporations in such disarray, struggling to make the right plans amidst such uncertainty. However, I'm quite sure the kids could care less about the value of stocks. In other words, it needn't be the center of our world.

  • Report this Comment On March 06, 2009, at 4:44 PM, FoolNoMore99 wrote:

    "If someone had told you one year ago that Bear Stearns, Fannie Mae, Freddie Mac, AIG, Washington Mutual, Wachovia, Lehman Brothers, Merrill Lynch, and Citigroup (NYSE: C) would be either bankrupt or saved en route to bankruptcy, you probably would have laughed."

    Actually, I know several analysts that WERE saying this as far back as 2007! Mike Larson and Martin Weiss at Weiss Research Inc. And a book was written about it before that called " Das Greenspan Dossier." Only the idiots at Motley Fool, CNBC, and other Wall Street cheerleaders were blind to the truth. The warnings have been out there for at least two years! Unfortunately I, like most of you, was listening to the wrong people and lost a good bit of my investments before I stumbled upon their research in July 2008.

    "And as recently as, I don't know, last month, if you had told anyone the Dow would be on the path to some obscenely low number -- we'll call it Dow 5,000 -- most people wouldn't take you seriously, either."

    Funny, but these same analysts were predicting Dow 5,000 in July 2008. All the while Motley Fool was still buying and holding! As long as the market is going up, Motley Fool can make you money. But they are clueless in a bear market. I've found two resources that have predicted every single thing that has happened the past year:

    http://www.MoneyAndMarkets.com

    http://www.ETFGuide.com

    I wish I had known about these two years ago and I could've saved my portfolio. But luckily I took their advice, got out of stocks in July 2008 and invested heavily in inverse ETFs. And made BANK!

    Yes, you can actually make money in a bear market...but not if you follow the advice of Motley Fool, CNBC, and Warren Buffett.

  • Report this Comment On March 06, 2009, at 4:49 PM, price12leader wrote:

    My chart supports my belief: DOW down to or near 2,000.

  • Report this Comment On March 06, 2009, at 5:59 PM, thisislabor wrote:

    well.. the market will keep trend lining down until the unemployment rate goes down///the economy starts to recover...

    supposedly that's suppose to happen in another year or so? a few 1000 points a year...

    my vote is 5000ish

  • Report this Comment On March 06, 2009, at 7:31 PM, stingyfarmer wrote:

    I am not a charter. No words of wisdom based on past Dow performance..and a guess is pointless. I have read expense ledgers of great grand parents though who recorded every nickel they spent about the time I bought my first farm at the age of 18. It was very sobering to read that. At the time farming was in a major crisis Tractorcades were rolling into D.C.and Willie Nelson was doing Farmaid concerts. Farmland values took a thrashing after the foolish thinking "buy it because it will be worth more tommorrow" of the 70's. Worked fine till a little problem like a poor crop came along and cash flow was killed.

    Buying my first farm just before everyone else was in agreement it was time to buy again was the best thing I ever did. You will not see me on here posting more jibberish in the next several months. My busy season is staring me in the face when a tractor seat will replace cuddling with my wife watching a movie. 100-120 hours a week will be the norm. Will not have time to listen to all the experts or read about fools. So I just bought Disney near the current years low as my first pure stock purchase ever. Did a new Roth IRA through scottrade. Have let experts do mutual funds for me for years. Yes I understand Disney is a lot more than theme parks and it has some problems. But it is the ONLY business I have ever walked into and not said I could run this better.

    After this farming season I am planning to head to the land of mouse again. Done it several times even with a modest farmers income. I can not think of another so well known destination people will sacrafice and save for other than Disney. Am willing to step up and say I'll buy. Hope it does for me what it did when I was 18.

    Now I see fools rate it as a bargain...I'm doomed!

  • Report this Comment On March 06, 2009, at 11:43 PM, Oldmonkey wrote:

    CrankyTexan, your mindset "If no one buys and no one sells, the market stays steady" applies only to the home you live in. Anyone who has NOT conducted their financial life in a similar mannor to a responsible home mortgage after seeing the warning signs is in for a rough voyage.

    At home I am safe, in real investments being conservitive and putting half down I'm probably OK in my rental investments.. Worse comes to worse, I could always move in to one of my rentals and make a go of it. Growing up poor with street savy, won't take long to find the right palms to grease in a lower income neighborhood to remain safe.

    Got 91% + of deferred of my deferred compensation in government insured investments. The other 10% + new contributions are a gamble I can afford. What really stinks is doing the right thing 30 years ago in spite of this economy I would be anticipating early retirement. Today that is 15 years off, and even then I will probably work part time as a consultant.

    Barney needs to be "Frank", and Chris needs to stop being such a "Dud" I have heard several progressive intellegentia suggest causing far less financial misery than this to so many should be sufficient grounds for Capital Punishment. Being Liberitarian, I am inclined to agree. Let the American "French Revolution" begin. "Off with their heads!"

    Obama, your bounce is at best that of a dead cat! My parents and godparents lived throught the Great Depression. My godparents were White Okie migrants abused by California Agriculture, and growers. (Illegals you are treated far better than they were, and are stealing American jobs) Do us both a favor Obama, and sell California to China! You can even ballance your budget for a couple years, and bluster how it is in everyone's best interest. Speaking fluent Chinese not only will I adapt, but thrive. I'll probably retain more of my freedom than you will afford me with a lower misery index. Quoting a famous Chinese rock star, Obama with your leadership; "Yi wu suo you". With you, I have nothing!

  • Report this Comment On March 06, 2009, at 11:49 PM, Arptopns wrote:

    I haven't seen prices this low since I could afford stocks. I am in mutual funds and now I'm buying as much as I can. If they keep going lower I will keep buying. I am just happy that I have set up myself correctly by using basic personal financial principles. I guess the teacher in my Army ACS Personal Finance Class knew what she what talking about. I still have a few more years before I retire. And am looking forward to it.

    I have heard The Stock Market might go as low as the 3000's. I hope it doesn't. Many people are losing everything. Everyone, just hang in there. This thing has got to turn around. As Warren Buffett always says, "Buy when everyone is selling, and sell when everyone is buying". It would be interesting to know what folks said during the great depression during the same time frame or compared to where we are now.

  • Report this Comment On March 07, 2009, at 12:05 AM, richie54 wrote:

    The dow will continue to plummet until such time as the big banks are honest about their total loss exposure. When inquirying minds ask for an accounting of all these billions in bailout money they seem to get a "None of your business!" response. Watch out if it goes below 4000.

  • Report this Comment On March 07, 2009, at 2:13 AM, CarrboroFool wrote:

    That's it ~ everyone thinks we're doomed and the market will keep falling.... now I know... it's time to buy.

    Lordy... what a negative crowd. It's true, we're hurting, but there are some fundamentals at play here, so I'd suggest you not get all carried away with technical analysis and "support lines from 1932 to 1980" and craziness like that. Buy companies that sell real products that will still be needed in tough times, and buy now, don't wait for "the bottom". Market timers seldom time the market very well.

    And as for political comments like: "We are now getting what we voted for last November! Surprised" What a crock of BS. Bush ran this country into the ground, wasted tons on an unnecessary wars, didn't support law and order in the markets, then promotes the first set of bank bailouts, and now.... people blame Obama who hasn't been in office 2 months. Too funny! ("oh, it's that Obama guy, he caused all this trouble").

    Get real.

  • Report this Comment On March 07, 2009, at 5:48 AM, Viking70 wrote:

    Wow, like many who have posted, I have to say that you all are very depressing. How many of you have lost your jobs, have been forced out of your homes, and are living on the streets? Right, so we are all losing wealth--come to Afghanistan, and I'll show you real poverty. In time our wealth will return. Try not to kill yourself in the meantime.

    As for Obama and his socialistic programs. I don't mind paying taxes, and I pay heavily. I pay heavily right now because I am willing to work in a war zone when fanatics have repeatedly and publicly stated that their aim is to kill Americans like me. Oh well. Get in line. Why do I do it? Money is only a partial reason. A driving force for me is that I know that I and many of my fellow expatriates here can do good in this country. As an engineer, my training and experience far exceed 99% of the local population. I can ensure that the facilities being constructed under my purview are done properly, safely, and to high quality (read "US") standards. No one is going to get electrocuted in one of the facilities I construct due to improper work procedures. Do I get paid too much? Who knows--do you have the knowledge, experience, and training to do what I do? If you do, are you willing to take the risk? Probably not. So, supply and demand. I am one of the greedy Americans--but I also know that I am doing my tiny little part to make the world a better place. Better to be greedy and trying to make a difference than crying over spilt milk, blaming everyone for your problems, and doing nothing to improve the world you live in.

    And, as I said, I have no problem paying taxes. What bothers me is how my tax dollars are spent. Free, or at least inexpensive, health care for all? Sure, why not. The problem I have is that I estimate 50% of my tax dollars are wasted on government inefficiency, fraud, waste, and abuse. Earmarks for BS programs like funding abortions overseas (regardless of your belief (and I happen to be pro-choice) I can't see how this makes any sense other than to poke conservatives in the eye), $59 million to study the mating habits of the Pacific salmon (I am all for environmental programs, but is this necessary at this time?), $2 million for astronomy awareness in Hawaii (seriously, give me a break), and $1.8 million to study the effect of swine odor on the environment (I grew up next to a pig farm in Minnesota--I'll share my experience for free). I earn money, and I pay my taxes. Now, if the darn politicians would just become half as responsible as a majority of the American public, we could easily support some of the social welfare programs that might make a difference.

    So, by all means, call me greedy, but it is the taxes on my greedy salary that is paying off the mortgages for clowns who bought houses well beyond their ability to afford (I, for one, had to tell my real estate agent to "shut up and quit trying to sell me a house beyond what I want to pay.") as well as other (and sometimes even useful) social welfare programs.

    Greed is not bad--it fuels hard work, innovation, and a more prosperous future. Lack of ethics and morals, well that is another thing. That is what is wrong. And it permiates every economic system regardless of your belief--trust me, I've seen it everywhere I've been/worked in the world. There is always a way to steal, lie, and cheat to get ahead. The government's job is to keep the lying, stealing, and cheating in check, which the government did not do. It is not the government's job to bail out the the fiscally irresponsible, which is what it is doing. Oh boy, this is going to be a tough one.

  • Report this Comment On March 07, 2009, at 8:58 AM, dmjst11 wrote:

    6288

  • Report this Comment On March 07, 2009, at 12:27 PM, ChrisWeeks4 wrote:

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  • Report this Comment On March 07, 2009, at 1:38 PM, PTKeil wrote:

    I'm sure this has been said before, but for those of you who have your retirement $ in stocks/funds and NEED that money now (or in the near future) and are seeing it plummet, you should have followed the advice of retirement specialists and had your money liquidated 5-10 years BEFORE you retired for this very reason.

    I plan on retiring in 20 years (and am pumping the same money I was 2 years ago into the system now) and you can bet when the markets go up years from now (which they will) that I will have my money in cash, CD's, money markets, etc.

    I'm sure it will go lower (and as someone else said before, it is fruitless to speculate on absolute numbers), but I have time and am not concerned because I am still investing at these rock bottom prices.

  • Report this Comment On March 07, 2009, at 1:45 PM, RayJoe14Jesus wrote:

    ifyouaskme,

    Are you serious???

    Discretionary spending ???

    The lower fuel cost is caused by lack of demand...Hello...that means people are not going to work...Products, Goods and services are not moving around the country...therefore...your lower taxes???What are you talking about??? Your lowere tax of thirteen dollars a week in payroll tax (later $8.00 a week) will really lift your portfolio to new heights!!! The stimulus package may on the short term seem like a great idea...But history tells us that it could lead us to another Great Depression. Wake-up!!! You should not turn to the government for anything other than to protect your homeland...AND LOOK AT OUR BORDERS!!! Need I say more? Name one idea program or regulatory system that the GOVERNMENT touches that is not wasteful???

    God Bless,

    Ray Joe

  • Report this Comment On March 07, 2009, at 4:03 PM, Bennerob wrote:

    I thank ReillyDiefenbach, chilstad2, trenton1ryan and a few others above for saving my sanity. They were rays of light in the damnest litany of insane ranting I've ever fallen victim to! All this talk of socialism and Obama and government leading us to perdition! How quickly we forget who led us where we are! And why even blame them? They were crowned by the same group of loyal sheep who also cheerfully, and greedily, accepted all the market risk that led...well, to the financial freefall that we're all hyperventilating about. This freight train was rolling down the tracks LONG before Obama came along and neither he nor all the king's men are soon going to put Humpty Dumpty back together again. When the economy does begin its recovery, the same group will of course say that it happened IN SPITE OF Obama...they are already practicing that chant, just in case. As for socialism, if it takes a touch of it to properly fund Social Security, provide good healthcare for ALL Americans and afford an equal, quality education for all of our children, I'm for it.

  • Report this Comment On March 07, 2009, at 6:14 PM, cdm99 wrote:

    I think that the current recession has been brought on by the fact that the baby boomers are due to retire. Our government does not want this to happen due to social security payouts. What better way to keep people working and not retiring than to take their money. Think about the old saying: 95% of the money is controled by 5 % of the people.

  • Report this Comment On March 07, 2009, at 8:26 PM, TallPaul59 wrote:

    My, my all is bleak on here... Dow 5,000? How about 500? 50? 5? Going once... going twice. The first law of human nature seems to be that when time are good, we assume they'll just keep getting better. And when things are going bad, we assume they just have to get worse. I think it's all just a bunch of guessing.

  • Report this Comment On March 07, 2009, at 11:36 PM, GooddogRoscoe wrote:

    Will this market be like the Japaese index down from 18000 to 7000 never to return, and if it is not why not. The stockmarket is like a building with two rooms. Out side are people who will never invest in stocks they are in something else, rental houses, the two rooms are in the market and out of the market. The out of the market has one permanent exit door, The lost generation of investors 1983 ,1987, 2001 used this exit never to return. They licked their wounds and bought rent houses.

    In the daily reports from msnbc. I would like them to say what percent of total stock capitalization was traded. who was selling and buying ,insiders, hedge funds, mut funds , pension funds.small investors.

    It is my bet that the top 5% of the population that controls 30% of the investment wealth(a guess) are leaving never to return(hedge fund selling), so the market will never recover because they are using the exit door located in the temporary out of the market room instead of waiting to go back into the inthe market room. Therefore they have a disprortionate impact because they permanently leave the game like Japan. Any body have any research to support this theory.

  • Report this Comment On March 08, 2009, at 1:58 AM, USA4EVER wrote:

    How low the market will go is anyone's guess--it all depends on investor confidence not charts and historical comparisons. I am thrilled to have Obama as president. He is a brillant man who cares about the poor and middle class. Bush only cared about the rich. The Republican policies of trickle down, deregulation and tax cuts for the rich have gotten us into this mess. Add Bush's fraudulent war, the cost of which he never had the guts to put into the budget, and you get this disaster. I am relieved to see a different strategy in play and I hope it works. Right now putting people back to work with government money sounds like a good plan to me. Asking the rich who have benefitted mightily in the past to help pay for it seems fair. If we all stop being so greedy and start thinking about what we can do to make our country a better place we might just succeed. Obama is a breath of fresh air. I wish him the best and hope we all will take his message of public service and sacrificing a little for the common good to heart. Godspeed.

  • Report this Comment On March 08, 2009, at 6:05 AM, TimHedrick332 wrote:

    I just love all the Obama bashing on here. Really relevant... He's been in power for all of two months yet this is HIS fault! Regardless of how you feel about the radical actions he has taken in that two months, you have to admit he (and we) has inherited a radical financial disaster that none of us have ever seen before. It calls for radical action, even if what's been taken might not be correct. To blame Obama for causing this is absurd. This was well underway before he was even elected. To question his solutions, is another matter. At least that's relevant.

    Many more people's retirements rely on IRAs, 401ks, etc., than they did 25 years ago. Subsequently, these people have a lot more impact on the market than they did 25 years ago. A LOT of these investors out there have pulled huge amounts of capitol out of the market and are sitting on it waiting to see where the market is headed. There aren't that many panicked average joes out there that haven't already pulled all or a good portion of their money out of the market. At the first reasonably durable plateau, you'll see 20% of so of these funds belonging to the more courageous infuse back into the market in search of bargains. I think this will happen before 5,500 at the lowest. As very modest gains are seen, or at least no further dramatic loses are seen, you'll see perhaps another 20% ease back in over the following year. More will follow very slowly and will fuel a very slow climb. You may not see all of that money back in the market for several years.

    Is this going to result in some huge rebound? No way. We are not going to return to 12,000 for 7-10 years (possibly more). But the doom and gloom here is a bit overblown. We've all taken a severe beating but the "End of Days" is not arrived. Do not prepare to bring out your dead and you can dig up that gold in your back yard. Please get a grip.

  • Report this Comment On March 08, 2009, at 8:19 PM, genok wrote:

    The Dow will keep on going lower as long as Government policies help it go down with

    non-growth fiscal policies of high taxes on the productive.

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