Kiss the Rally Goodbye

We are an optimistic bunch here at the Fool, and I think that's generally a healthy approach to both investing and to life in general. Still, I find some of our contributors' recent arguments for a continued market revival seriously lacking in support.

The basis for fellow Fool Kristin Graham's recent article "The Rally Isn't Done for Good" was a talk given by BlackRock (NYSE: BLK  ) Chief Investment Officer Bob Doll, so he's really the one I'm taking to task here. This is the same Bob Doll, by the way, who predicted in January 2008 that the economy would skirt recession -- at a Merrill Lynch private client luncheon, no less. The National Bureau of Economic Research later designated December 2007 as the beginning of the recession, and a teetering Merrill has, as you know, since been shoehorned into Bank of America (NYSE: BAC  ) .

Anyway, please check out Kristin's article to get familiar with both the terminology I'll be borrowing and the contours of the argument I will be criticizing.

Not your average snafu
OK, first things first: I'm going to go ahead and reject the notion of a 10% probability that we are experiencing a Normal Recession. There is nothing "normal" about a globally synchronized debt-fueled crackup. The last time we saw U.S. household debt-to-gross domestic product ratios hit 100% was in 1929. Such a phenomenon wasn't normal then, either.

I'm pretty indifferent as to how you might allocate that 10% between Doll's remaining Nasty Recession and Deflation/Depression categories, but Nasty is as good as it gets. That may be a difficult conclusion for an asset-gatherer like BlackRock or Legg Mason (NYSE: LM  ) to draw, seeing as they're in the business of selling investment management services. (These institutions also arguably have little choice but to hold a long bias, given the massive amount of funds they have to put to work.) But let's not kid ourselves. This isn't 1990.

A little short of stimulating
Kristin identifies the first of Doll's two areas for optimism as massive stimulus stemming from both government spending and cheaper crude oil. The point about oil is a good one, since falling prices provide relief for everyone from FedEx (NYSE: FDX  ) to Wal-Mart Stores (NYSE: WMT  ) . Everyone save for producers like Occidental Petroleum (NYSE: OXY  ) , of course.

As far as fiscal stimulus plans, both at home and in places like China, they sound like a lot of money until you look at the financial losses being sustained worldwide. Last year, the International Monetary Fund was talking about $1 trillion in subprime damage around the globe. Now it's more like $2.8 trillion in the U.S. alone -- and more than $4 trillion globally! 

Combine that with the determined deleveraging going on -- from the individual household level to the biggest, baddest banking institutions -- and these stimulus plans strike me not only as a drop in the bucket, but also an attempt to bounce back from a bender by drinking a Bloody Mary or two at brunch.

Vexing valuations
I agree that valuations began to get attractive at the March lows, but beyond that point, Doll and I part ways. Take a look at the chart of his expected price targets on the S&P 500 index. In his Nasty Recession scenario, which shows signs of recovery at year's end, the implied multiple to trailing earnings is somewhere between 18 and 21.

Is that really the kind of earnings multiple we should expect to see at the inflection point of an economy that's just been through an economic Pearl Harbor?

Further, I have a hard time reconciling that $50 to $55 range of S&P 500 earnings in 2009 with the $28.51 estimated by the folks who work at index namesake Standard & Poor's. Maybe Doll was talking about operating earnings, which the S&P folks peg as high as $60 and change. In that case, the multiples assigned here would be even more eyebrow-raising when applied to the market's lower, as-reported earnings.

Far from the final word
Maybe it's just me, but I find the urgent desire not to miss a recovery rally, or even a new bull market, to be a bizarre one. Much more pressing was the need to protect wealth in the face of this partially foreseeable pickle we find ourselves in. Some firms, like Odyssey Re (NYSE: ORH  ) , managed to do exactly that in 2008.

By and large, though, fools and Fools alike failed to get fearful when it counted. Now we're worried about whether we can catch another 15% to 20% rise in the market? No matter how long we've been at this business of investing, we all have a lot to learn.

FedEx is a Motley Fool Stock Advisor selection. Legg Mason and Wal-Mart are Motley Fool Inside Value picks. Sample any of our Foolish newsletters free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. He's recently been bouncing in and out of the ranks of the top 50 Motley Fool CAPS players. Check out his profile or follow his articles using Twitter or RSS. The Motley Fool owns shares of Legg Mason. Its disclosure policy thought you should know that.


Read/Post Comments (58) | Recommend This Article (231)

Comments from our Foolish Readers

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  • Report this Comment On April 21, 2009, at 3:49 PM, BarronvonLoch wrote:

    ....not really buying the Bull market Rally either. More like a "dead cat bounce". Albeit a big cat. We can look for more rallies and profit taking for the immediate future but I do see a bit of light in the second half of the year. Pick good positions now and look for the returns to come ...

  • Report this Comment On April 21, 2009, at 4:13 PM, BTShine wrote:

    Good luck to all trying to "call" rallies. For more information on "calling" rallies, "pullbacks" and other market timing techniques visit the boards on Yahoo Finance.

    I thought Fool wasn't into trying to time the market. Why is this a topic being covered by Fool Staff?

  • Report this Comment On April 21, 2009, at 5:15 PM, DuncanDeac wrote:

    It's probably covered because people like me (and apparently you) find it interesting, and thus read it.

    Tend to agree with the analysis in this article, mostly because the rally has been a big one 25% and really based on not much at all.

    I've seen some pretty interesting commentary about the Dow:Gold ratio that suggests we'll get a pretty sizeable correction to the Dow (again) and probably another significant spike in the price of Gold. S&P yield had also just begun to touch it's mean on the last drop. The fact that both of these metrics haven't reached traditional recession level lows, suggests to me that the decline is not over. If that happens, the latest wave of optimism will be seen as a big mirage, and thus I expect the fall to be somewhat precipitous.

  • Report this Comment On April 21, 2009, at 5:16 PM, mikecart1 wrote:

    Another worthless article.

  • Report this Comment On April 21, 2009, at 5:29 PM, titanicdwn wrote:

    We are going to make so much this Christmas Season-NOT!!!

  • Report this Comment On April 21, 2009, at 5:40 PM, NoMoeMoney wrote:

    So much for investor confidence at the Fool? What happen to turning the corner and maybe, just maybe people had believed we were starting to see some daylight? Naw, kiss it all gooodbye, we don't want the Dow to ever rise, its just a bear market rally or dead cat bounce! Sounds like the shorts want to rule forever because they're the ones who want things to crash FOREVER. If the market wallows in some sort of bottom purgatory then everyone should be fearful and not from investing. They should fear what will happen in society, the dead investor bounce!

  • Report this Comment On April 21, 2009, at 5:43 PM, teejk wrote:

    ...hmmm...fading memory (with old age I guess) but I recall only a few weeks ago that Fool was telling people that this was the buying opportunity of a life-time...

  • Report this Comment On April 21, 2009, at 5:47 PM, paultaut wrote:

    The trend is your friend. Hemlines are not going down. Whitney has turned bullish and Roubini only sees $1.8 Trillion left to go.

    $1.8 Trillion? Isn't that what Obama's annual deficits are forecasted to be?

    S&P yield is meaningless when the companies which delivered previous dividends are reducing or eliminating them.

  • Report this Comment On April 21, 2009, at 5:51 PM, FoolIggy wrote:

    Those that fail to learn from HISTORY are doomed to repeat it! It works the same in financials as it does in war!!

    I see myself as a tiny Fool and my knowledge pales by comparison to most but it takes NO ROCKET SCIENTIST

  • Report this Comment On April 21, 2009, at 5:52 PM, josemans wrote:

    Who is an investor these days....Wouldn't catch me bag holding anything over a week. Think we pretty toppy here. I'm gonna just day trading till this quarters earnings and the "stress test" results are seen and then go from there. Interesting article though. I'd sell this pop and wait with your powder dry.

  • Report this Comment On April 21, 2009, at 5:52 PM, javnnf wrote:

    Just another article for the Marketing reasons!

  • Report this Comment On April 21, 2009, at 5:56 PM, FoolIggy wrote:

    oops, hit the wrong button:

    It takes NO ROCKET SCIENTIST to figure out that the world was/is in for a major correction. Come on, when America starts touting 'FLIP THIS HOUSE' as a major TV Reality show, soneone needs to explain to those overly optomistic people it is only a matter of time until the 'bottom falls out.' Welcome to the bottomless pit.

    Today, we see market runups that have little reason, I guess the Flip This House group has moved into the stockmarte!

    Welcome to the ride -- forget the timing and recognize the times. Search for value, integrity, honesty, and companies that value their shareholders as well as they value their customers and products and in the long run, you WON'T GET FLIPPED!

    Fool on!

  • Report this Comment On April 21, 2009, at 6:12 PM, scvinvestor wrote:

    Come on people, this is just another foolish article written by the best fools around. Everybody knows you can’t predict when or where a sustained rally will happen. Most of the rules have been broken and normal market predictions are worthless. We could see a long and sustained rally or many short ones with many pullbacks. Ultimately the investors big and small will determine when and how the recovery takes place. There’s a lot of money out there with no place to go…. I think the market has started a modest recovery and it will continue with many more corrections than normal until spring 2010.

  • Report this Comment On April 21, 2009, at 6:20 PM, peders01 wrote:

    I find it hard to accept that this is the start of a bull market, even one that may take some time to bloom. I do believe that when the reversal occurs the level of disappointent will be great enough to cause serious harm to sentiment and prices. Better we have a reduction in the upside pressures and then another sustainable run toward a bull--one that can be justified by facts of a real improvement in economic conditions. I am wary of these current conditions.

  • Report this Comment On April 21, 2009, at 6:21 PM, stan8331 wrote:

    The need to preserve capital does not exist in a vacuum. For someone near or already in retirement, of course it makes sense to be in a more defensive position, no matter WHAT the current market conditions may appear to be. For everyone else, if a person believes the market is over-bought, it makes sense to take SOME profits so as to have more cash available to buy when the market drops.

    But to believe that you're smart enough to perfectly time the market, on the way down and the way up, over and over again for decades, with the knowledge that even small misses can drop your returns far below the market average... All I'll say on that is there certainly are geniuses in the world, but for every legitimate genius, there are untold thousands who fancy themselves to be.

    For myself, I find plenty of challenge in just trying to find solid companies that will significantly beat the market average over time.

  • Report this Comment On April 21, 2009, at 6:32 PM, GreenPhotog wrote:

    What does anybody think about the wisdom of following IBD's rule: act according to the market and not market prognostications. It is more labor-intensive but more beneficial in the long run, I believe. Why all this second-guessing about the markets' direction when one can simply "go with the flow?"

  • Report this Comment On April 21, 2009, at 7:02 PM, BTShine wrote:

    The mantra "Less Is More" may help improve the user experience on Fool.com.

  • Report this Comment On April 21, 2009, at 7:03 PM, wonteach wrote:

    At last an investor with some common sense! Where Stan8331 parrots the wrong advice that "experts" are being paid millions of dollars per year to give, GreenPhotog has hit on an obvious approach that actually works. Anyone who bought a cross section of "solid" companies ten years ago has made NO PROFIT WHATSOEVER - MINUS inflation!

    However, just look at three numbers: The total return of the market over the last month, the last three months, and the last year. If two or more of those numbers are positive, then buy (or stay in). If two (or more) of those numbers are negative, then get out (or stay out).

    If you don't want to do any more work than that, then just invest in broad-market index funds when you get in. For myself, I have a 401(k) that offers me a choice of 43 funds, and I use a similar approach to decide WHICH fund to buy. If none of them are up for two of those three time periods, then I stay in cash.

    Contrary to what the overpaid "experts" constantly tell you, performance-chasing WORKS, and "buy and hold for the long term" does NOT work.

    Of course I haven't identified market turns - no one, and I mean NO ONE, has EVER done that consistently. But I'm WAY ahead of the market and WAY ahead of just about every "expert" I've ever heard of, by spending less than a half an hour per weekend.

  • Report this Comment On April 21, 2009, at 7:24 PM, TxTom wrote:

    Okay folks, just keep thinking this market isn't safe for investment, and miss the next 30%+ gain. There is nothing "normal" about the amount of stimulus and assistance this government is providing to make sure it happens. ANY blip with banks or other financial institutions will be met with vigor. That's the plan, and it is working. I'm in, and I'll stay in while we experience the best market performance during our lifetimes. Since my IRA dropped 55% late last year I've regained it all - every cent. That would not have been possible by "sitting on the sidelines". I'm trading, not "buying and holding". This is great!!!

  • Report this Comment On April 21, 2009, at 7:28 PM, jgarant wrote:

    Whoever you are, Mr. Shute, you seem very shortsighted in your analysis and quite pessimistic in your outlook. We are looking at this stretch as buying opportunities for those wishing to invest, not short the market or trade it. Therefore, you need to differentiate and check your crystal ball or put some windex on it. :)

  • Report this Comment On April 21, 2009, at 7:30 PM, ComfortPlayer wrote:

    Well put BTShine

    "The mantra "Less Is More" may help improve the user experience on Fool.com. "

    +1

    I have been a subscriber for only two months and I have almost gotten to the point of creating a mail rule for filtering these Fool articles. I am wondering who the actul fool really is.

  • Report this Comment On April 21, 2009, at 7:49 PM, RaptorD2 wrote:

    Ah ...... Finally, some common sense at Headquarters. Great article and great reasoning. Or maybe I agree because I'm 98% + in cash across all my ports. :) The other 1.8%? Short banks, short real estate and short the S&P 500.

    Great job. Honesty always shines among the rubble as yours did today. I just hope it shines on some of the posters among us. I strongly suspect some of us here are going to get hurt badly, and soon.

    Rally? 30%? Ha! It must be terrible to always be right and then lose to the market because .... hmm .... explain that one, somebody.

  • Report this Comment On April 21, 2009, at 8:06 PM, cestmoi123 wrote:

    The name "fool" is a disclaimer that suits you fine. You fool many of us modest investors with supposedly "good" advice that turns out sour. Who do you really respond to? A response is demanded.

  • Report this Comment On April 21, 2009, at 9:24 PM, sumbawa wrote:

    Agreed that this rally is based on unwarranted optimism.

    However I'd be wary of using the S&P earnings figures provided by S&P. For some reason they are not market-cap weighted. Jeremy Siegel had an interesting piece on this in the WSJ recently:

    http://online.wsj.com/article/SB123552586347065675.html

    Using such a weighting might give a 2009 S&P EPS of $45 - $50. However in severe recessions, markets often bottom out in single-digit P/Es, so with the above EPS and a multiple of say 6 to 9, we'd be looking at S&P in the range of 285 - 430 for a true bottom. Scary.

    And as to the recession or depression debate: the most severe recessions are typically those involving a banking crisis. Considering that this is a global recession coupled with a semi-global banking crisis, the chances of a Depression are considerable.

    If we impose our present "crisis" timeline onto the 1930s, April 2009 corresponds to February 1931. These things can take a long time to play out with many a false dawn in between. While the actions on the monetary and fiscal side have been strong, the core banking crisis has not been tackled properly yet. Until it is, it'll be hard to get bullish.

  • Report this Comment On April 21, 2009, at 9:37 PM, Ibeatmykids wrote:

    No matter what, prices are great right now. Just put half of your money in now and if the market goes back down put the rest in. Or if it goes back up and you feel we are in the clear, invest the rest.

    I am gonna be greedy when others are fearful. No matter what I am gonna hold these stocks for a few years so I just consider myself a bargain shopper.

  • Report this Comment On April 21, 2009, at 9:59 PM, jesse2159 wrote:

    This rally has all the earmarks of a standstill that will be spread out over the next 10 years. Money has to go somewhere, but sustained stock purchases are still not happning. I cannot explain the rally because nothing actually happened to cause it. So, it stands to reason that investors are responding to the old nonsense of not missing the bottom; how stupid a rational to buy stocks. This recession is not at all like the ones since 1945. This one is worldwide and terrifying because we are all linked. The failure of a bank in anywhere could cause problems here and we have no idea how bad the banks are outside of the US. And American banks reporting large earnings are being questioned and challanged. Few believe they turned around from insolvent to masters of the universe in 120 days.

  • Report this Comment On April 21, 2009, at 10:20 PM, jamesbjammin wrote:

    When we are used to seeing major player stocks that used to trade for 10 to 20 times the shareprice as of March 6th, the tendancy is to buy a stock that historically has been the backbone of our country such as(GE). Even if the price drops another 50 to 90 percent from there, the upside potential is so inviting, and even although a lot of stocks have the potential of becoming worthless, most long term investors feel that this blue light special cannot be passed up.

    As for this bear/bull market rally, opportunities are more in abundance now than at any time in my lifetime. I will gladly take the bear market, and even look to new lows because these are golden moments.

    I do feel for the short term investor looking to retire soon, but for the long term investors, go for the ride and average down. Even the shorty can only short so much before he to has to look for the bear.

  • Report this Comment On April 21, 2009, at 10:47 PM, laogao wrote:

    Worthless? This is the first MF article in AGES that has not had an up-sell link at the end.

    What a breath of fresh air!!!!!

    SRS, SDS, FAZ for the next two weeks.....

  • Report this Comment On April 21, 2009, at 10:50 PM, slubglub wrote:

    Which chart are you looking at regarding ORH. The one I am looking at shows it being down, like most everything else. Why hype it here. It doesn't appear at all interesting to me. Where are you coming from ???

  • Report this Comment On April 21, 2009, at 11:29 PM, rcontos wrote:

    This is how I see the market; my long positions have only two possibilities, multi-bagger returns or bankruptcy. There are no "safe" positions (with any upside), but there are incredible growth opportunities, if you have the stomach. I wouldn't put scared money in the market right now, but I do see incredible opportunities, though they come with significant risk. This is really "nothing wagered, nothing gained" time.

  • Report this Comment On April 22, 2009, at 12:46 AM, FinerPoints wrote:

    Any Fool can see that the current situation can be summed up like this:

    Fundamentals and earnings are weak. Duh...we are in a recession, and so experts who make money from recommendations and newsletters will sell the idea of the "golden" opportunity. They can go wrong. It's not their money anyway. This is fine if this is what you rely on. Best wishes.

    Technicals are strong because news are abundantly stimulating these days in all directions. However murky it is, the bottom line is that we are in or on the "Stimulus" bubble now. Long or Short, money can be made and I have been making quite a bit on the confusion and volatility. Chaching!

    For what it's worth, I see another big drop coming. I don't know EXACTLY when but it's coming. I believe this because banks' "creative" accounting and government's "bailout" all have a REAL price to pay whether it is now or later. The real loser in all of this is the "worker bee" taxpayer who doesn't invest or trade to get ahead. But you know what, we need the "worker bees".

    Thank you, Mr. Market and all out there contributing to the opportunity. I welcome all points of view. Whether I put my money down on it is another story. No matter, my final perspective is: Money is only money. There are more important things in life: health (spiritually, mentally, physically and emotionally) and relationships (good ones of course).

  • Report this Comment On April 22, 2009, at 3:45 AM, investusgregory wrote:

    The discussion thread above is nonsensical.

    Does anyone believe that the real economy is going to grow and provide an additional return in the next 12 months that will be above what it is sqeeking out right now?

    The economy will not expand for at least another 12-24 months. On what basis can the markets "rally" or are ther markets just a Fool's paradise?

  • Report this Comment On April 22, 2009, at 5:03 AM, HappiHunting wrote:

    A great article, which has produced a diversified debate – isn’t this exactly what this forum is all about??

    I am new to this game and like most, I don’t know when the market will move and where but, it is the feedback from the community coupled with interjections from MF staff that can help us all – Many thanks to all who contribute.

    PS can anyone give me a two-liner explanation on FAZ?

  • Report this Comment On April 22, 2009, at 6:30 AM, JSinvestmentguru wrote:

    When they take GM out of the Dow average and put in Oracle or Apple they can just make the average go back to 10,000 or more just by taking out a dead company......It's just numbers. My portfolio is already back to where it was before October because i have companies that aren't bankrupt...JS

  • Report this Comment On April 22, 2009, at 8:47 AM, Lemonade951 wrote:

    I keep telling you guys that this administration is in over its paygrade, and you keep expressing some weird form of optimism that it will turnaround someway. Everytime they see some optimism about to ignite, they throw water on the fire, and to think we have almost 4 years to go. I just don't see a happy ending to this fairy-tale. You are on your own, I hope you've learned to pray.

  • Report this Comment On April 22, 2009, at 8:51 AM, Xciteddon wrote:

    If this article wasn't helpful, why are you commenting on it? It makes you stop and think doesn't it? There are endless possibilities in this market.

    One for sure, Prices are great,,,,and may get better! Imagine that! Whenever a door closes, one opens! Keep the glass half full instead of half empty. Have a good day! In the market too! :)

    D

  • Report this Comment On April 22, 2009, at 10:21 AM, gordonkeiser wrote:

    "Economic Pearl Harbor" is an ill-chosen and just plain ridiculous description of the current crisis. There is no valid comparison whatsoever. Mr. Shute should stick to economics and stay far, far away from history.

    GK

  • Report this Comment On April 22, 2009, at 10:33 AM, MyPiggyBank888 wrote:

    100% gross to debt ratio! I would start and end every market analysis with that statement. I have been there and divorce settlement completed, I created a side of the page that said cash and a side of the page that said balance of debt (cash/Bal.ofDebt). I didn't stop spending the cash on that balance of debt until it changed to cash/ balance of stocks. Fools On!

    mypiggybank8888

  • Report this Comment On April 22, 2009, at 10:59 AM, XMFSmashy wrote:

    gordonkeiser-

    In referring to an "economic Pearl Harbor" I'm quoting someone named Warren Buffett.

    Thanks for the comments, everyone.

    TS

  • Report this Comment On April 22, 2009, at 1:10 PM, Shar54 wrote:

    I find it strange how even MF is singing doom and gloom. I think most of the pundits are buying short calls and are trying to get stocks to go down. Check back on comments about Netflix and you will see what I mean. If they would just outlow short calls we might be able to get out of this slump! I am keeping my remaining stocks for the bear that will (historically) follow all this craziness. Timing the market is a (real) fool's game and I'm not playing. I did however make a handy profit on Netflix mostly because I tried to ignore the so-called experts. Soldier on everybody. What goes down must go up!

  • Report this Comment On April 22, 2009, at 1:46 PM, gsj2308 wrote:

    When did the fool become so touchy and conservative? Jeez, I'm watching the Kudlow Report and they're nowhere near as scared as you guys. What gives? Where's the old Fool?

  • Report this Comment On April 22, 2009, at 8:01 PM, diditbad100 wrote:

    Kudlow has never been anything but optimistic, no matter what is happening. I love reading all of this debate about market direction. I personally liked this article and thought that the comparison to Pearl Harbor was a good one. Glad to see that they are not afraid to post something that is not bullish. I have followed the Motley Fool for over fifteen years and enjoy reading all of their articles and the great commentary by fellow Fools.

    If you can not wait ten years I would not put anything into the market at this point. One poster suggested buying 50%. I owned 50% last year....now it is 25%!

  • Report this Comment On April 23, 2009, at 8:13 AM, brwn8484 wrote:

    Does anyone remember all that money we gave to the Treasury? Where did it go. Wasnt it supposed to open up millions of new jobs. Last I heard Obama had promised 3 million new jobs ?

    I think we have been duped again boys! I have not seen any new jobs in my town?

    I'm going to write a new song ... Where did all the Bailout money go????//////////////// You know the tune.

    Unless we get these new jobs .. There will be no paycheck and there will be no new homes sold and there will be no retail improvement and there will be no market rally and there will be lots of pain and more foreclosures.

    If you want to get a realistic review of the market, look at our leaders in Congress and on Wall Street. If they are treating you the way you would be expect to be treated then expect 7-8% return.

    If they are crooked and immoral then expect to lose most of what you have. Our country and our financial system is based on a fair, moral and upstanding system of leaders and laws. When the leadership (and followers) become immoral and criminal, then the country (and financial system) will fail.

    No amount of spending, cajoling, or new party candidates will fix this problem. Only when we hold those people who are criminally and morally at fault will we see our financial and political system restored.

    "I like bats much better than bureaucrats. I live in the Managerial Age, in a world of "Admin." The greatest evil is not now done in those sordid "dens of crime" that Dickens loved to paint. It is not done even in concentration camps and labour camps. In those we see its final result. But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern."

    -C.S. Lewis, Screwtape Letters, preface

  • Report this Comment On April 23, 2009, at 5:41 PM, Objective2020 wrote:

    The latest rally is 100% technical, and predictable. Will you be surprised though if the markets are cut in half (or worse) over the next year. That's what I forsee. If you want to make money in this market you better know how to short.

  • Report this Comment On April 24, 2009, at 11:06 AM, bbeerme wrote:

    Technicals rule in this market!

    If you want to see a real spectacle, pull up a 20 year chart of the S&P (SPY).

    Fool on . . .!

  • Report this Comment On April 24, 2009, at 11:31 AM, qwoofbark wrote:

    The more I read the Motley Fool the less respect I have for it. These people are fast falling into the catagory of 'trash'. It is both pathetic and sad...but also all to predictable....The are chasing money and ignoring quality...the service has fallen from good to crap in three years.

  • Report this Comment On April 24, 2009, at 11:50 AM, estate1997 wrote:

    Even the Pollyanna's are are sending a word to you. Protect yourself and don't have a long mindset.

    Play your picks as they develop and ignore the rest of the media crap.

  • Report this Comment On April 24, 2009, at 12:58 PM, bromat wrote:

    Article caused great discussion. The only answer is everyone is guessing and no one really knows. Half will be right and half will be wrong.

  • Report this Comment On April 24, 2009, at 3:32 PM, wordmouse wrote:

    Not one mention in the article or on the message boards of the need for strong honest fundamentals. I would appreciate valuations based on reported and certifiable fundamentals. I will not accept another shadow banking or financial sector or hyper stock prices alla.com . To old and not enough time to be taken that way again.

  • Report this Comment On April 24, 2009, at 7:35 PM, tuxeroo wrote:

    No one really knows what will happen or when, it's true, but a couple of things are hardly debatable: (1) this is no ordinary recession, and (2) the federal government's approach to getting out of it is risky at best. Markets are subject to the basic laws of economics, which over the long term can no more be ignored than can the basic laws of physics. The fed is printing money in the basement and shipping it out by the carload, which eventually will produce inflation that the fed will have to try to contain by raising interest rates. Having dropped as much as it has, the market likely has more upside than down. If that's true, then stocks are a good long-term bet now; but I'd put the emphasis on long-term, and I'd look for a bumpy road ahead.

  • Report this Comment On April 24, 2009, at 8:17 PM, PrestonCheek wrote:

    Thanks for the article Toby, I like being able to see both sides.

  • Report this Comment On April 25, 2009, at 12:36 AM, jomueller1 wrote:

    Today it dawned on me. Everyone knows that the fundamentals are being ignored by traders. So analysis does not mean a thing, the herd instinct is it. That must have grown with the fast food industry which shows that people pay for getting junk.

    So investing has been reduced to follow the trend (which is recommended anyway) or be able to find the diamond in a ton of dirt.

    So I dance the Texas Two Step and hope I get somewhat ahead.

    Invest with fun, you fools!

  • Report this Comment On April 25, 2009, at 9:57 AM, bkaae wrote:

    The bold letters at the top of the article say a lot. My WWII father in law knows that snfu is short for (situation normal all "F'ed" up). I'm not sure what rules apply nowdays.

  • Report this Comment On April 26, 2009, at 2:21 AM, afooloofone wrote:

    Let's face it. The Mar 6 low was hugely oversold, that is why we have the bounce that we are at now. Buy on the dips and sell on the rips. Find some good undervalued stocks that got sucked into this black hole like WMT (who stops going there?). Buy when they have a 3-5% drop then hold on until they rise again. I'm up selling into the big rallies then buying back when they slide. Copper and nat gas are hugely depressed, and will bounce back higher, abeit not as high as last summer. The MF has become less about help and more about hype around their newsletter. By the way, Marvel Entertainment that they tout as one of their great calls was on Louis Reykuser in 1999.

  • Report this Comment On April 26, 2009, at 11:21 AM, a46 wrote:

    I try and I try to find useful articules and they become scarce. Better less quantity and better quality.

  • Report this Comment On April 26, 2009, at 3:02 PM, ddouge wrote:

    Well done. The ecconomy looking better crownd is basing this assumption on bits and peices of data that is stragegically being monitored and released like a fixed financial statement.,

    I have a problem with fed officials that reveal partial information ,sound bits & data bits while keeping the full story under raps untill they feel such releases will not cause total pandamonia.

    What spin are they putting on this thing and what is going on behind the screnes that is not being told is what scares me.

    The fact that so much information on tarp and other such programs is still unable to be revealed tells me that this thing is still a growing problem that is far from resolved.

    I agree that history tells us they have a bad track record at resolving fiscal policy in the fashion and form they are pursuing

  • Report this Comment On April 26, 2009, at 10:12 PM, ggustav wrote:

    Lots of interesting comments here. Somebody asked about FAZ. It's 3x short on the financials. Ultrashorts are dangerous, short-term plays only. There are lots of good articles on leveraged inverse ETFs, but it's hard to beat this piece at Wiki: http://en.wikipedia.org/wiki/Inverse_exchange-traded_fund

    As to the Fools, I'd like to see you guys focus on developing a list of premier companies, including and especial foreign equities that trade on U.S. exchanges, with regular updates, that:

    a. Are the highest dividend payers around

    b. Are likely to KEEP paying those dividends and increasing them over the next 5 years irrespective of the inflationary depression we are likely to see

    c. Provide global exposure (multi-national)

    d. Do not rely on depleting resources to sustain the dividends (e.g. like oil and gas royalty trusts)

    I've found a few of these, but it takes a good bit of digging. MF could provide a real service with a regular listing of these Ultra-Premium companies with current yields, etc.

    Will we see a new bottom at some point? You bet. Count on it. When? Who knows? But if we keep some powder dry, and if we are ready to pounce on some Ultra-Premium equities when they get pummeled in the next downturn... could be very good.

    Thanks MF. Good service. I agree with comments suggesting this piece was a breath of fresh air.

    Want another excellent piece? Check out this guy Hansen at Seeking Alpha: http://seekingalpha.com/article/133129-the-end-of-the-recess...

    He's very good. And note that he's not suggesting the market won't see new bottoms. He's looking at the larger, macro-economic picture. Fool on!

  • Report this Comment On May 06, 2009, at 3:25 PM, XMFRael wrote:

    Here's a Fool who buys the kudlow arguement. I've seen my share of new bull markets and not one has seemed reasonable or even plausible at the time. When you hear an "all-clear" signal, look out. You'll know you're nearer the top than the bottom.

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