The Biggest Garbage Rally Since 1970

• Report this Comment On December 09, 2009, at 3:52 PM, rogercapital wrote:

  I'm sorry to say this, but the junk rally is old news. It has been obvious by sept and oct that junk has outperformed quality stocks. This NYT article is more history than news.

  Also, junk has rallied more than quality names because they fell harder in late 08 and early 09. So just because junk has outperformed quality names lately does not mean that quality stocks are cheap, especially if you look at the more common valuation metrics such as P/E (either ttm or on projected 12month earnings) in historcal terms.

• Report this Comment On December 09, 2009, at 4:04 PM, JSTVNnGA wrote:

  There is a problem with your definitions of “high-quality” and “junk” equities. Let’s take Ford, for example.

  In the traditional sense, i.e. as Ford Equity Research would rate a company and its stock, Ford Motor Company is a basket case. They owe a huge amount of money, and that factor alone would make a traditional research firm put Ford stock in the wash-hands-after-handling category.

  But, someone with knowledge of the auto industry and marketing would have realized last March that Ford had a product line that was as good or better than any company in the industry, and had new products scheduled for introduction in 2010 that would make its product line even stronger. It also had world-class leadership, and there was an evolving sense among Americans that Ford was the only American car company which didn’t go to the bail-out or government-financed bankruptcy trough with the other swine. Suddenly, Ford began to look like a sure-fire winner.

  Ford’s debt is still a problem, but it seems to be a problem that creditors are willing to help with, especially since Ford’s sales prospects are so bright. So, was Ford stock really junk, or were investors just concentrating on the negatives?

• Report this Comment On December 09, 2009, at 5:31 PM, minibeee wrote:

  The above comment about F is correct and applies almost word for word to AMD. Amd has had improving fundamentals mgmt and litigation against intel finally go its way.Amd was also beaten doen further like F than others in its sector and thus has further to run. How's $20 sound?

• Report this Comment On December 09, 2009, at 6:38 PM, QANoProducts wrote:

  Well put.

• Report this Comment On December 10, 2009, at 4:06 AM, asH95 wrote:

  I'm beginning to believe Fool writers press the AMD button to spark readership.

  is Mark Hulbert living under a rock?

• Report this Comment On December 10, 2009, at 5:19 AM, plange01 wrote:

  the biggest false rally since the last depression and this one will wind up the same as that one did..

• Report this Comment On December 10, 2009, at 11:45 AM, noryakerson wrote:

  I'm starting to question the definition of rally in these articles. This "rally" is 10 months old and seems to be settling into a slower, steadier trajectory, but still upwards. I understand that there are still some major problems with our economy, but is it possible we’re at the point where maybe we’ve settled into more stable territory and will see slower, more cautious growth from here?

• Report this Comment On December 16, 2009, at 12:09 PM, Youstolemyname wrote:

  To minibee and QANoProducts: To put AMD in perspective, AMD is considered Junk. It's debt level is so high it is not worth the silicon it prints on. And if you think AMD is worth $20 per share. I say it really worth .02¢ per share just before filing for Bankruptcy.

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