Are You Ready for Another Crash?

• Report this Comment On August 20, 2009, at 3:20 PM, jason2713 wrote:

  It's my firm belief that this article is dead on, and I'll tell you why:

  1) Unemployment keeps rising, with one blip that went a little lower. Everyone jumps all over this "good" news and the market goes nuts.

  2) Mortgage defaults and foreclosures hit all time highs over this summer, yet some construction company reports "better than expected" numbers and the market goes nuts. We haven't gotten to commercial real estate yet, why is no one talking about this?

  3) Credit card defaults are definitely on the rise, yet some "economist" somewhere can say we have hit a bottom, the market goes nuts.

  4) Oil reserves go down, but imports go down by almost 10% for the month, and the market goes nuts.

  5) We are in MOUNTAINS of debt, the gov't is only buying time buy playing the game with interest rates vs. letting the economy boom. They are stuck between a rock and a hard place, only delaying the inevitable. It's an expensive game that we all will have to pay for. So its going to be even worse when they have to raise taxes, interest rates to pay for this.

  I am completely out of the market, there is no rhyme of reason for any of this green going on. 9400-9600 seems to be the big resistance point, so I don't see any upside to being in. Just my 2 cents.

• Report this Comment On August 20, 2009, at 4:02 PM, profturb wrote:

  Excellent perspective . The main reason the solid value companies have not made bigger gains is inflationary pressure driving people to take more risk hoping to get bigger gains to match the increases in daily living costs due to the massive debt of the U.S. Solid value takes second place to the need for more money to cover daily expenses. Let's face it - the U.S. companies gave away our technology advantages to the Chinese and others so that executives could continue to reap large bonuses on falsely inflated earnings. Since U.S. labor is not willing to work for chinese rates, they win. The turn came when we stopped being a "manufacturing society" and were sold the idea that we could become a "service society". So today we make no new products and pay $95 for a technician to come check our air conditioner, etc. The recent meltdown caused by lack of Fed oversight of risky derivatives is the tip of the iceberg. My money is in the market in high value stocks all paying decent dividends. I'll let other "fools" take the higher risks.

• Report this Comment On August 20, 2009, at 4:55 PM, kamuirei wrote:

  I went from all in to 40% bonds a week ago... I'm 24 with very high risk tolerance. I just don't see much upside atm. My smart analyst pool has been saying trouble and the dumb ones have been screaming rally. That's the best indicator I know of.

• Report this Comment On August 20, 2009, at 4:57 PM, kamuirei wrote:

  (and I'm debating further action)

• Report this Comment On August 20, 2009, at 5:37 PM, texastar1 wrote:

  I am 50% cash on a fairly large portfolio. There are no fundamentals to sustain any of this fake rally of late. I have almost 10% in the several Hidden Gems recommendations and they are up so far. I also bought gold shares, etc. when gold was about 5% lower. My prediction is that over the next couple of weeks, the other shoe will drop with the Dow string to go down about 20% and the S&P and Nasdaq to follow...will take about 6 months to consolidate then hopefully and "orderly" climb. many say that it's time to short SPY...I think it's a relatively low risk bet.

• Report this Comment On August 20, 2009, at 5:59 PM, Fool wrote:

  I'm back to cash. High unemployment continuing, high credit card debt, thousands more foreclosures, people saving more and inflation in the wings. I also see taxes coming for ALL people. Cap and Trade (tax) would be the final nail in this economy. I skip healthcare because I think the Dems are getting scared of the next election and are pulling back when recess is over. As written in an earlier comment, I also expect the other shoe to fall regarding commercial properties. Stores are closing in malls all across the nation. Strip malls are failing. Condos are depressed. All of these properties are financed to a large extent. Look out.

• Report this Comment On August 20, 2009, at 8:49 PM, LessGovernment wrote:

  I think this article is right on target. The only question in my mind is when the markets fall, not if. I guess timing is everything, but the markets are too dangerous for me to navigate so I am back to sitting on cash.

  With all the talking heads and government cheer leaders proclaiming the end of the recession as some bit of great news, I simply offer this.

  Recession equals negative economic growth. Going down, as in an elevator. So if you start out on the 100th floor of a tall building, and go down in a slow elevator until you reach the ground floor, your downward path (the recession) has ended. But you are also on the grond floor, not floor 100.

  The problem I have with all the minions using gibberish (green shoots and the like) instead speaking in clear financial terms reflecting real economic data, is that they make the end of the recession sound like everything is somehow fixed. It isn't. And it wont be for a long, long time meaning years or even decades.

  Think About It - Billions to Trillions

  Our National Debt first topped $1 billion in 1863

  87 years after declaring independence from England. 1 billion per 87 years = . 0149 billion per year

  Our National debt topped $1 trillion 1982.

  It took 119 years to go the remaining 999 billion of debt to reach the magic number of 1 trillion dollars of National Debt in 1982. Average debt added per year during this 119 year period = 8.4 billion per year.

  billion per year = 8.4billion per year

  2009

  The National Debt now exceeds 12 Trillion not counting the 2 trillion hidden on the books of the Federal Reserve (a stinking money cartel). Average debt added per year during this 27 years = 407 billion per year.

  Do you see a pattern here?

  Be mindful that this debt does not include the nearly 80 trillion dollars of unfunded social security, Medicare, and government retirement that is not even being considered and is growing by leaps and bounds.

  How any sane person can look at the facts and deduce that we are not on a course to insolvency is astounding.

  To have a president and a giddy Congress now talking about creating some sort of government run healthcare without knowing what this will cost is just another case of the lunacy in Washington. How about putting the other entitlements on a funded course first Mr. Obama, or is that just too logical for the man from the bad side of Chicago?

  If the liberal mentality of feeling sorry for everyone which continually translates into the confiscation of more and more money from those that are responsible and work hard for a living does not soon change, we are doomed.

  The real problem is simply discretionary income is being wiped out due to bad trade policies over the last 30 years and socialized living expenses which are causing ever increasing payroll and income taxes. We can't afford it, so we "borrow" (a fancy word for confiscation of wealth) from our offspring in an effort to prop up our failing heavily socialized standard of living.

  The only reason we have unfunded entitlements and national debt is we have been cursed with a Congress that has the political desire to spend (Vote for me and I will give you) but lacks the responsibility to fund the expenditures.

  What we need now more than ever is more unemployed Congressmen.

  Fire them all. Never vote for an incumbent.

• Report this Comment On August 20, 2009, at 11:39 PM, FoolMx wrote:

  I'm sure this perspective is right on the money. I just don't think we are talking about a crash. I expect the market to consolidate around 15-20%, hang there for the rest of the year and continue upward in December-January. I'm all in and expect to start selling as soon as tomorrow but wothout a rush. But that's just me.

• Report this Comment On August 21, 2009, at 9:30 AM, utahgolf wrote:

  I believe this market will begin a significant (10-15%)

  correction in the next 4-6 weeks, level off and calmly return to August 09 levels next spring and summer. I am preparing to take a limited position in the "direxion small cap bear 3x call options J10's (TZAAD). I know this is a little extreme, but these are extraordinary times.

• Report this Comment On August 21, 2009, at 11:23 AM, jason2713 wrote:

  Hahahahah, this market really is drunk. So the dow is up almost 135pts today, and 200-300pts over the past couple days, this after the 189pt drop on Monday.

  All because Mr. Bernanke says so.

  Oh ok. It's so clear! The problem is Obama thinks this is a psychological Recession and are trying to reassure people its ok to spend. Big problem: Personal wealth is going down via underwater homes, 401K's, portfolio's, and losing employment. You can't squeeze a rock for blood, there's nothing to take, so all discretionary income is gone. We have to tread water trying to survive, much less forge ahead and buy those 2 pair of shoes you always wanted.

  Unemployment will continue to rise, the gov't is going to have to start laying off workers because of all these huge deficits. The feds will run out of money eventually.

  I'm short almost 50% of my portfolio (QID, DXD), and I'm sitting on the other 50% liquid. I sold everything 2 weeks ago. I have no feel for this market, the first time in a long time. Everything right now is a big gamble, I might as well take a trip to Vegas, my odds of making money are basically the same.

• Report this Comment On August 21, 2009, at 11:04 PM, burrowsx wrote:

  I am fortunate that I refused to invest in the market while George Bush was in office. I do not feel, however, that the current market exuberance, irrational or otherwise, is sustainable -- even for a relatively benign government like Obama's. I have written calls for January or sold many of my recently appreciated securities. I expect a market drop sometime between mid-Sept and Thanksgiving. Just a gut feeling.

• Report this Comment On August 22, 2009, at 1:07 PM, 2humble2fool wrote:

  My crystal ball is broken. Just as well because I'm not much into fortune-telling. I'm so old fashioned that I still believe in long-term buy and hold investing. How is it that now all of a sudden Fool Writers seem to think they can predict short-term market movements? Must be that the Gardners ordered them a crystal ball with all the money they've earned by pushing their newletters.

• Report this Comment On August 28, 2009, at 2:24 PM, stonebusted wrote:

  With people out of work, the fundamental that makes everything work, there has to be a day of reckoning. You can only sell air for so long. Of course mortgages and loans are failing. The largest part of the economy, working class people, make all the wheels turn. Until these people have the ways and means to borrow and pay back how can the underlying fundamentals really improve. The financial system had to be saved. Of course that brought out the crooks to capitalize on the situation.

  But the stimulus to the shovel, allow by whayever means, people to maintain their pride and homes and it will get better.

  We also need to stop allowing lawyers and the like to stop making superstar wages. Paying a man 5 million dollars to dribble a basketball does not make him do it better. In fact in a short time the good living sends him in the other direction.

  People need to make a fair amount. Enough to live on with reward for excelling at what they do. Not the union doctrine of take all that can be gotten with no regard for performance.

  Honestly, I don't believe we can get out of this mess.

  Make sure the kids learn Chinese.

• Report this Comment On September 01, 2009, at 6:16 AM, jimhenry0109 wrote:

  Mr. President why are the banking,and loan company not making loans as you promised they would do for the american people we are all hurting and not getting any help. Time for them to answer to you for not helping us the little people that keep them in business, maybe we should boycott their business. Check http://www.obamamortgagerelief.org/

• Report this Comment On October 02, 2009, at 12:34 PM, biotechmgr wrote:

  It's time now to play full defense. Cash only. Don't buy a dip. The real bottom is on the distant horizon.

  Good luck all.

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