Comments on: Is the U.S. stock market close to bottoming? http://www.creditwritedowns.com/2009/03/is-the-us-stock-market-close-to-bottoming.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2009/03/is-the-us-stock-market-close-to-bottoming.html#comment-4200 Edward Harrison Fri, 06 Mar 2009 14:02:24 +0000 http://www.creditwritedowns.com/?p=6711#comment-4200 Terry and econophile, it is definitely just a guess on all our parts as to how much lower we could go because much of this has to do with investor psychology and the policy response to this banking crisis. Obviously, if the crisis does not stabilize, earnings will suffer even more and we could go much lower still. However, as Terry says, I do think we are much closer to the bottom than the top. I should point out as well that, even though I tend to take a macro top-down approach, my thesis has been for the past few months that the broader market is irrelevant. As stocks go lower an increasing number of opportunities are presenting themselves and one has to take a bottoms up approach and ignore the broader market in order to have the stomach to buy as everyone else is selling. Terry and econophile, it is definitely just a guess on all our parts as to how much lower we could go because much of this has to do with investor psychology and the policy response to this banking crisis. Obviously, if the crisis does not stabilize, earnings will suffer even more and we could go much lower still.

However, as Terry says, I do think we are much closer to the bottom than the top. I should point out as well that, even though I tend to take a macro top-down approach, my thesis has been for the past few months that the broader market is irrelevant. As stocks go lower an increasing number of opportunities are presenting themselves and one has to take a bottoms up approach and ignore the broader market in order to have the stomach to buy as everyone else is selling.

]]> By: Terry http://www.creditwritedowns.com/2009/03/is-the-us-stock-market-close-to-bottoming.html#comment-4199 Terry Fri, 06 Mar 2009 13:29:50 +0000 http://www.creditwritedowns.com/?p=6711#comment-4199 I, too, agree with you, but I'd add that I think we are now nearer the bottom than the top on either an absolute or percentage basis. At this point, my problem is less with valuation--some stocks are well worth looking at--than it is with the nature of any post-bottom (economic & market) recovery. Frankly, I think both will see either a very lazy "U" or a flat "L" recovery. The prospects for capital growth on the other side of the bottom over the next 3-7 years is just not that attractive. I would make sure that any investments made in the near future were not only in "good" companies, but ones that pay--and still promise to pay--good dividends. They are likely to be the only stocks that offer any kind of meaningful total return. I hope otherwise, but I think that's where we are and where we're headed. I, too, agree with you, but I’d add that I think we are now nearer the bottom than the top on either an absolute or percentage basis.

At this point, my problem is less with valuation–some stocks are well worth looking at–than it is with the nature of any post-bottom (economic & market) recovery. Frankly, I think both will see either a very lazy “U” or a flat “L” recovery.

The prospects for capital growth on the other side of the bottom over the next 3-7 years is just not that attractive. I would make sure that any investments made in the near future were not only in “good” companies, but ones that pay–and still promise to pay–good dividends. They are likely to be the only stocks that offer any kind of meaningful total return.

I hope otherwise, but I think that’s where we are and where we’re headed.

]]> By: Econophile http://www.creditwritedowns.com/2009/03/is-the-us-stock-market-close-to-bottoming.html#comment-4197 Econophile Fri, 06 Mar 2009 05:19:23 +0000 http://www.creditwritedowns.com/?p=6711#comment-4197 Ed, While I agree with you, you are guessing. I think this is one of the problems with Wall Street: people guess when they don't know it. Yes, I follow Nasim Taleb, von Hayek and their ideas on epistemology, which I believe you have studied. Caveat emptor. Ed,
While I agree with you, you are guessing. I think this is one of the problems with Wall Street: people guess when they don’t know it. Yes, I follow Nasim Taleb, von Hayek and their ideas on epistemology, which I believe you have studied. Caveat emptor.

]]>