Session of 03/01/2007

[nullzero]

The catalyst is that there was no legitimate catalyst for the downswing in the first place.  Once people realize that (and I think it is happening) our little bull run will continue.

There never is. Or tell me, do you expect a recession to start and then the market goes down? Would a terrorist attack be a legitimate catalyst? (not for me).

What was the catalyst for the bear market that started in January 14th, 2000? What were the news on that month, or in February, that could lead to such a huge sell off?

There were none. The reasons came after.

So true the market leads the way to a recession. Once the market responds it can set the rest into play. The market was the catalyst to the great depression it was lead on buy HIGH debt taken on by consumers and stock market players highly leverage we are close to the same situation today. The debt for consumers is higher then before the 1929 stock crash.

http://www.marketoracle.co.uk/Article307.html

[David Randolph]

I am fully down with the correction theory. however, the subprime and carry trade story is already played enough. by now everybody knows it already. we might have 5% more downside, but the economy is fine as of now.

Sure the economy is fine. If it were bad I would be a bull. And that is my plan, to be a bull when the economy is bad and stock valuations are very attractive.

The market is always looking ahead, into the future, not to the present. The present is past for the market.

[buddjas1]

...What was the catalyst for the bear market that started in January 14th, 2000? What were the news on that month, or in February, that could lead to such a huge sell off?

There were none. The reasons came after.

The catalyst was that the market was overvalued.  Incredibly so based on historical valuations.  Everybody knew what was coming, the only question was when.

[dnickers]

There were none. The reasons came after.

But David, it seems as if everyone is claiming to know the reasons right now.  Recession, housing market, subprime lending market, geopolitical instability.  Aren't these the reasons we're considering a switch to a bear market?  Doesn't that mean we already know them?   Wouldn't they be priced in?

And wasn't the sell off in 2000 due to the incredibly overinflated multiples stocks were carrying?  It doesn't seem like that is the case now. 

[kpunarc]

I am fully down with the correction theory. however, the subprime and carry trade story is already played enough. by now everybody knows it already. we might have 5% more downside, but the economy is fine as of now.

Sure the economy is fine. If it were bad I would be a bull. And that is my plan, to be a bull when the economy is bad and stock valuations are very attractive.

The market is always looking ahead, into the future, not to the present. The present is past for the market.

David...why would you be 'bull' if the economy was bad??

[David Randolph]

DSTI  On Fire!   I will be requesting this tomorrow 

Good observation metrom129!

Despite the market movements and possible turning point, which always causes a lot of nervousness, I should just keep doing my job of covering stocks. There are 11,000 or so stocks outthere that I want to know or know better.

Everybody here read my article and knows my position, so I don't need to keep pressing the same button. And everybody feel free to disagree and take opposite views (of course), that is what makes a market!

So, starting tomorrow we'll go back to those polls and I'll just cover stocks. Maybe not 10 because I'm afraid that way I wont know the companies well enough. But 5 analysis per day sounds great!

I just want to say that right or wrong, win or lose, I feel great joy in talking to you about the  markets. 

For all, thank you

[ravenquork]

DSTI  On Fire!   I will be requesting this tomorrow 

Good observation metrom129!

Despite the market movements and possible turning point, which always causes a lot of nervousness, I should just keep doing my job of covering stocks. There are 11,000 or so stocks outthere that I want to know or know better.

Everybody here read my article and knows my position, so I don't need to keep pressing the same button. And everybody feel free to disagree and take opposite views (of course), that is what makes a market!

So, starting tomorrow we'll go back to those polls and I'll just cover stocks. Maybe not 10 because I'm afraid that way I wont know the companies well enough. But 5 analysis per day sounds great!

I just want to say that right or wrong, win or lose, I feel great joy in talking to you about the  markets. 

For all, thank you

ASTI is also on fire

[David Randolph]

David...why would you be 'bull' if the economy was bad??

Kpunarc, market history explains that. Let me give you 3 examples:

1) Russia, 1998. The Russian market there went from 700 points to 40 points!!! At 40 points, there was a run for the banks and the economy entered a deep recession.

My God, I wish I bought when the economy was that bad, right on when people were on the streets and at bank doors to take the money out and put it under the mattress. The Russian stock index is above 2,000 points now

2) USA, 1991. Recession. War in Irak. Bottom of the market, shot up 300% in the following 9 years.

3) Germany, recession in 2003. The DAX was at 2,200 then. Now? At 6,700 or so ...

Be a bull when the economy is in a recession.

[realcoolhead]

Let me try to answer this first and see if David agrees with me or not:

1. What doesn't seem overinflated multiple now might be indeed overinflated when companies start to report downward future earnings.

2. If we agree the bull marketed started in 2002/2003 is a cyclical bull in a large secular bear market context, the next bear market wouldn't need to start at a very high valuation.

3. The last recession never brought earning multiple down to its historical low and I think the next bear market will do the trick.

Just my 2 (or 3?) cents.

There were none. The reasons came after.

And wasn't the sell off in 2000 due to the incredibly overinflated multiples stocks were carrying?  It doesn't seem like that is the case now. 

[Se7en]

I just want to say that right or wrong, win or lose, I feel great joy in talking to you about the  markets. 

For all, thank you

No problem David, maybe you can give everyone an applaud! 
This way I'll sooner make it to 100! 

[dnickers]

I wanted to add that despite my gut feeling about where the market is headed (I'm not convinced we're in a bear market yet), I have nevertheless followed David's recommendations thus far and have a lot of respect regarding his opinions.  Thanks again David - and keep up the great work.

[Jim897]

SVN is on fire today.

[David Randolph]

There were none. The reasons came after.

But David, it seems as if everyone is claiming to know the reasons right now.  Recession, housing market, subprime lending market, geopolitical instability.  Aren't these the reasons we're considering a switch to a bear market?  Doesn't that mean we already know them?   Wouldn't they be priced in?

And wasn't the sell off in 2000 due to the incredibly overinflated multiples stocks were carrying?  It doesn't seem like that is the case now. 

Those aren't the reasons. At least not my reasons.

People are bullish due to the strong growth the global economy is having. That strong growth is highly based on the BRIC countries, Brazil, Russia, India and China. The problem is, especially India and China, are growing at this very fast rate for more than 20 years now (at least China is, I'm not so sure about India, which is a lot poorer than China).

If China falters, the whole theory of a strong world economy and strong profit growth will go down the tube. And why would China have a recession? For two reasons:

1) It has been growing at an average annual rate of 10% a year for more than 20 years. All economies have boom and bust cycles, especially a new "capitalist" economy.
2) China relies heavily on the US consumer, since roughly 40% of China's GDP is based on exports. The US consumer is too far stretched into debt, there's no disposable income growth to keep things going without a washout.

But the primary reason is the market itself. It tipped its hand with that one day big sell off on huge volume. To me it was a key reversal day.

But I can be wrong. Time will tell

[Jim897]

VII is also on fire, rising as I write.

[dhiraj19]

David,
As you are bull on gold, can you see CGR?
Thanks,