Incredible opportunities in stocks - too much bearishness here. It was inevitable

[aspergris]

I got a little bit of crap (but that's ok) for saying this bear market in stocks was an INCREDIBLE opportunity to catch some longs.

And that oil was at least short term overdone.

Look at these moves.

Freddie Mac up EIGHTY TWO PERCENT in TWO DAYS

Wachovia Bank up 50% in two days

The gloom and doom here monday was frigging ridiculous.

Whenever the retail (general public) gets overly bullish or bearish, that's almost always a contrarian signal.

And it worked perfectly.

HUGE pops in the bank index. Huge drops in oil.

You got bigger moves in 2 days in many stocks than you see in YEARS in a normal market.

Like I said, buy their panic, and sell their euphoria.

Or just dollar cost average (nice philosophy LONGTERM to build wealth)

[hobbit709]

1. And you think this has anything to do with the real world?

The haves get more and the rest of us have less. Gas and groceries are still sky high. Jobs are still going down and the pay gets lower.

[Tandalayo_Scheisskopf]

4. While you are correct on the disconnect...

aspergris is mostly in commodities, where those movements DO affect us directly. He has been the source of some very sage market advice here and knows of what he speaks. He is worthy of your attention.

[aspergris]

5. The capital markets

Are PART of the real world. And are open to ANY individual investor who wants to take part in buying into great companies.

I have said it before, I will say it again-

There has never been a 20 yr period IN HISTORY where dollar cost averaging into the stock market hasn't been a good investment. I'm a trader as well, so I do a lot of short term stuff (trades that last from 3 seconds to a matter of weeks or months)

But Just like in 1987, when we had that huge drop and all the chicken littles were saying "it's the end of the world" there were HUGE opp's for those willing to get their feet wet.

BUY panic. SELL euphoria.

[hobbit709]

11. My REAL world capital investment is

Do I fill up the gas tank or the fridge. I don't have the luxury of excess assets. I haven't had a real job since 2001-I'm too disabled to work full-time and not disabled enough to get disability. My wife got terminated in Feb from her job of 32 years. She gets a whopping $311 a week in unemployment. Luckily our house payment is only $495/mo with about 5½ years to go. We have about $600 in credit card debt-down from about $1500. We have a 22 year old car and a 16 year old truck. we have $4K+ in our savings-from a insurance settlement.

[wtmusic]

12. A good sign to buy is when posts talk of stocking food and buying ammo.

You are spot on. :thumbsup:

[aspergris]

15. JP morgan

iirc, famously got out of the stock market just before the 1929 crash.

His major reason?

He overheard an elevator operator talking about what a KILLING he was making in the stock market.

When elevator operators (or insert your minimum wage worker here) are making a KILLING in the stock market, there ARE no more greater fools left to buy

start sellin'

Contrarily, when it's THE END OF THE FRIGGING WORLD and people who don't even own anything beyond 10 shares of GE they inherited from uncle morty are saying SELL SELL SELL
... I look to buy.

I'd love to see more downside longer term. More opportunity. But I always look back at old bear market charts and say "man, I wish I had bought XXX when it was YYY" and realize the reason so few people do is that they are scared @#(@#(@(# in bear markets to buy anything.

They get in years later, when it's up 50%

and the cycle continues :)

[Hannah Bell]

35. will my profits make up for the taxpayer cost of bailing out fm/fmac?

[aspergris]

39. the question is

do the cost of bailing out FNM FRE outweigh the costs to umpteen people if they didn't

don't know.

[Hannah Bell]

46. who cares? this is a capitalist country, & fm/fmac are privately owned,

correct?

the question is, who are those "umpteen people"?

they should pool their spare $ & bail out their own company.

[aspergris]

47. generally speaking, I agree

FNM and FRE are private, but not wholly private. Kind of a hybrid entity.

Regardless, I generally agree. I don't like govt. bailouts. I also didn't like the loose money policy in the first place.

I am just sayin' there was HUGE money to be made on the downside and huge money to be made on the upside

I can't dictate govt. policy. I can control my trades, my emotions, and my investments.

When opportunity presents itself - take it.

[The Gunslinger]

59. ANY indivdual investor.................

Just not those who work paycheck to paycheck to pay bills. The stockmarket can be through the roof, but if wages are down and prices are up, the economy is going to suck for the normal people out there.

[Tandalayo_Scheisskopf]

2. If you were in oil...

(And I don't know if you are), would you be shorting it today or waiting for a signal for a move? Right now, it just seems to be hovering in a tight range.

[aspergris]

7. My only oil position

NOW is my spread trade, that I mentioned a week ago

Long Gold, and short Oil, in equal dollar amounts.

The spread (+GLD -USO) was -24

is now -14

So, the spread has closed for 10 pts. I am just going to trail my stops.

I see resistamnce in crude near 140 and would be willing to lean against it short into any strength up to that zone

Support is 130'ish.

Right now, I am trailing stops in the bank index, and I bot a little DXD (double inverse - iow short the dow) fund today when dow futures hit the globex hi , which was 11305 area.

Yesterday was a huge pop, so I am willing to short strength in the indexes, and continue to look for value in longterm plays

[Tandalayo_Scheisskopf]

9. Right now...

I am seeing quite a battle at 134, on oil. Someone REALLY does not want oil to drop below that, and that seems to be a real resistance point. If it breaks 134, it might just break 130 by tomorrow.

On edit: Gas and HO up, on larger supplies reported yesterday. Are they expecting another "supply bottleneck" within the next 4 weeks?

[aspergris]

10. yes, if we could see a flush below 130

I would expect some stops to be hit, and hedgies capitulating their longs.

It is a support area, so I would want ot see STRONG selling on a break of that area.

[Tandalayo_Scheisskopf]

13. What I am not getting...

Is I expected to see some more downside today, on the Iran diplomatic mission news, instead, it just moved up. Someone really wants the upside and is not afraid to throw money at it.

[aspergris]

14. I always remember

in the short run, price action rules. Markets do what they want to do, not what they should do.

Also, on a pure price action basis, it was short term oversold. All them late shorts gotta cover.

If you use the USO contract as a oil proxy, look at this Island Top

The support there is 106.

6/10 6/19 6/25 and yesterday. On all 4 of those dates, that support held. It has not breached that level ONCE

It gapped up above there on 0606. It has never broken that since.

[wtmusic]

16. Is not "speculating in oil" helping to drive the price up

for people who can least afford it? :shrug:

[aspergris]

17. arguably yes

but if you look at COT reports, the VAST majority of participants in the oil market are commercials, not spec's

And it's prudent for the individual to hedge their risk

If you are a large consumer of gas, for instance (I don't commute but some do), then going long oil can hedge your exposure.

if prices go up, your investment position offsets the increased price at the pump

that's one way ot play it

[wtmusic]

19. Probably why I'll never be rich

If the participants in oil are "commercials" and I buy into an energy fund, I'm also a participant, and driving up the price for people who can't afford it.

Same thing with defense stocks -- I see a moral issue here. Am I way off the mark?

[aspergris]

21. not at all

I have no problem with people who are invest socially consciously.

there are a # of mutual funds that run funds that do this too

Some people won't buy MO (altria aka phillipp morriss) cause tobacco sux.

Other might eschew GE (defense contracting) etc.

That's the great thing is that it's free choice.

You can invest in green stocks if you want (solar, etc.), companies whose policies you agree with (like if you like costco vs. walmart), etc.

it's really pretty open ended.

Personally, i do NOT trade socially consciously. For me, that simply won't work. But I respect those that do. I prefer to use my money for causes I believe in. But when it comes to picking stocks or investments I want to buy what's best, not what is in line with me politically.

[On the Road]

3. It Is an Opportunity

or will be. Lots of good valuations. Of course, those valuations are based on historic profits which have been drying up due to oil, general inflation and negative growth.

Problem is that the market has been driven lately by oil prices, so in some sense it's betting that the price of oil will continue to drop. That's a little harder to predict.

[NightWatcher]

6. my family's plan, buy homes (convert them to green) then rent them out

More and more people are unable to afford to buy a home and the rental business is booming. We are currently researching plans for multiple grants/rebates for solar collectors on rental homes. We are converting a few homes from the 70's to be much more energy efficient. IF the market should ever turn around, we'll have numerous places to sell, but until then we expect the rental market to pay the mortgages and put a small amount in our pockets. When I went to school, I never thought I'd end up as a contractor.

[aspergris]

8. I would LOVE

to buy some real estate if and when Seattle area gets a real pullback.

We are one of the areas of the country that as of now has seen VERY little pullback in prices. Iow, the housing market crash has not happened here...

yet.

The sellers have not capitulated. Inventory is massive, and houses are sitting on the market a LONG time w/o selling

When and if we get a 20%+ pback in prices, I will look for some opp

I sold a house in july that I bot in 1999, and am waiting for pullback in this market. Right now, I just have my primary residence.

Housing market here frigging ridiculously strong, but JUST starting to show weakness, thankfully.

Get more rationality into the prices

I agree about the green stuff. That's a market that is expanding from niche to mainstream

From a stock angle, I've always liked ESLR (solar)

[leftofthedial]

18. ah yes, the capitalist circle jerk/death spiral

I was rich on paper once. I wasn't as happy though. Or as healthy.

[aspergris]

20. lol

sure, DEATH SPIRAL.

the market has gone up and created wealth for scores of millions of people

and there has never been a 20 yr period where investing wasn't a good idea

but it's "death spiral"

lol

way to ignore data

[leftofthedial]

22. even "wealthy" people need a planet to live on, don't they?

[aspergris]

40. which is relevant how?

We shouldn't invest in the greatest wealth creation engine known to man because we live on a planet?

fwiw, there are plenty of companies you can invest in that are working to better the planet

[TexasObserver]

23. Spoken like a guy who wasn't around in 1987

The problems are much, much deeper than a few days of the cork bobbing up and down. Excessive deficit spending by the government and excessive consumer credit spending have created a US market that full of AIR.

As the talks with Iran signal a lessening of tensions about oil prices, those numbers are coming down. That also favorably impacts the markets, but the few hundred point recovery is but a sip of water in the middle of the desert.

[wtmusic]

24. In 1987 the Dow had rebounded within a year

to its previous level. I don't see anything inconsistent with these predictions, and I remember those who bought in when there was blood in the streets profiting handsomely.

[TexasObserver]

26. tell that to everyone who lost their asses in the interim

Your comment suggests you were not around in 1987, and are merely pointing to a historical fact that you think ameliorates the horrific losses.

Banks failed. Savings and Loans failed. When they failed, all who had invested in them lost their equities. The government put together sweetheart deals for the big banks, who then took over the economically feasible parts of the failed banks and S&Ls. The result was the big banks got bigger and stronger, thanks to Uncle Sam, and the smaller banks got wiped out.

The real estate losses of the 80s were not recouped for years. There were mountains of bad paper that was sold and resold by the RTC.

You are making the mistake of looking at the US markets as a whole, and assuming that if you invest in it, you will do as well as the AVERAGE. You may, or you may not. Half must do worse, just as half must do better.

If you had taken all your cash in 2002 and placed it in gold, or any precious metals, or the EURO, the value of your holdings today would be far in excess of those you would have if you bought the DOW, or the NASDAQ, in 2002, and simply rode those markets.

You are buying into a fool's gold philosophy. The 11.3K at which the DOW stands today would be well below 10K if it were pegged to the 2002 EURO versus the US dollar. That US dollar you have in the stock market is doing nothing but losing value.

[wtmusic]

27. In 1987 you only "lost your ass" under two conditions

1) you had invested heavily in a savings and loan which failed; or
2) you panicked and sold your stock on October 19th instead of riding it out

OP is saying that panic sellers will lose their hard-earned money, and he has been proven right time and again historically.

Who cares about the Euro? Unless I'm traveling to Europe I pay my bills and buy my groceries in dollars. And gold, predictably, is valuable today with uncertainty in equity markets and inflation. Should I buy now, as investors did in 1981, and lose 85% of my investment over the next 10 years?

[TexasObserver]

28. your US dollars are buying less each month

If you don't understand why the EURO advancing while the US$ declines affects your buying ability, OK.

[wtmusic]

30. Only if you're in Europe, or buying items made in Europe

Why would I give a rat's ass?

When oil is priced in Euros I'll worry about it.

[TexasObserver]

32. If that's what you want to believe, fine.

Gasoline is over $4 a gallon. It would be $3 a gallon if your US dollars had not been devalued over the past 5 years.

The DOW at 11.3K represents US dollars. Those dollars buy less every day.

The Euro is a currency, and you can buy it as an investment, just as you can buy the DOW or the NASDAQ. As an investment, the EURO has far outperformed the DOW or the NASDAQ. If you don't understand why that's important, I'm not going to spend hours trying to convince you it is.

[wtmusic]

34. Not true.

Oil is traded in dollars and the devalued dollar does nothing to the value of oil in the US. It does make oil more affordable for Europeans.

"These dollars buy less every day." Maybe, unless what I'm buying was bought and paid for in dollars. A rising/sinking tide raises/lowers all ships.

Euros would have been a good investment, although the dollar is rebounding of late.

Frankly if you're going to try to convince me of something you need to understand it better.

[TexasObserver]

36. Sorry, I didn't realize you were an amateur at this.

We're done. You clearly have zero understanding of the role the devalued US dollar plays in your energy costs.

[wtmusic]

37. Please, explain it to me.

I love to learn.

But I don't think you can. :shrug:

[TexasObserver]

38. As the US dollar devalues, more dollars are required for purchases.

If the US dollar had held its value the past five years, you would not be paying $4 per gallon of gasoline. You might be paying three, if that.

Because each US dollar buys less than it has in the past, each dollar buys less petroleum. Part of the price you think of as the price of oil per barrel is a reflection of devaluation of the US dollar. As each dollar is worth less, it takes more dollars to buy products.

Do this. Go to Canada. Get a room. Let's suppose the cost is $150 Canadian, which is about $150 US. Five years ago, you would have paid $100 US for that same room. That Canadian product has increased a cost of 50% in US dollars because the US dollar has lost ground against the Canadian dollar. This drives up the price to Americans of all Canadian products, not just that hotel room.

The same is true for Europe, as the Euro advances against the US dollar.

The buying power of the US dollar determines how many of US dollars you will need to buy a barrel of oil. The stronger it is, the fewer dollars needed per barrel of oil. The weaker it is, the more dollars needed to buy that same barrel of oil. Your stock market holdings are in US dollars. You have the illusion that the DOW is maintaining in the mid 11k range, but if you look at the buying power of those US dollars represented in the DOW average, you will see that you're maintaining dollars that are losing their purchasing power.

Like I said, your gains are fool's gold.

[TheWatcher]

45. But TexasObserver haven't you HEARD?

The Dollar is not being devalued! Such talk! Why, Stammerin' Hank HIMSELF said that the US has always had a "Strong Dollar Policy!"

:sarcasm:

[TexasObserver]

55. Yeah, the US dollar has lost 40% of its value against the Canadian dollar, but don't worry!

The OP doesn't think it matters!! He doesn't understand how much trade we have with Canadian, or how the US dollar devaluations cost Americans money on imports, which includes OIL.

This OP is the kind of crap that you see weekly from the likes of Jonathan Koenig, on Fox News Business.

[wtmusic]

53. Only in relation to other currencies.

If I have $4.50 in my pocket it buys a gallon of gas at my local station.

Whoops, tomorrow the dollar goes down 12% against the Euro! Guess what -- my $4.50 still buys a gallon of gas at my station.

It's more complicated than that, of course, because a devalued dollar has international effects in terms of supply and demand.

But your implication that somehow a devalued dollar has a *direct* impact on its buying power -- not in Canadian hotel rooms, but on items priced in dollars here in the US -- is just plain wrong.

[Hannah Bell]

50. it might be true that the value of the dollar didn't matter so long as

you bought american goods priced in dollars, if all production & resource extration used to produce those goods were in the us, & if capital couldn't enter & exit the us.

But it's not the case, which means:

1. producers must pay more for resources located outside the country
2. domestic resource producers will charge more for theirs knowing this, since they can sell overseas & get more
3. foreign investors will come to buy "bargain" US assets, such as land & productive assets; the increased number of well-heeled competitors raises prices
& competitors with less money are priced out

[aspergris]

41. lol`

the same moron chicken littles who sold AFTER black thursday crash, and lost out on immense gains afterwards...

were saying monday it was the end of the world.

like i said, BUY panic.

sell euphoria.

we've had two straight days of euphoria. this evening was when I lightened longs into strength, etc.

plus ca change.

retail opinion is almost always wrong. thanks for being a contrarian indicator for me

and nobody said the bear amrket is OVER. I said it offers IMMENSE opportunity.

and it has already.

I 've been a bear fwiw since Christmas.

June was my best month in 2 years cause of my short positions.

[TexasObserver]

54. LOL, indeed.

When you learn how to write your thoughts in sentences, please get back to me. This gibberish you're talking is uneducated nonsense. Clearly, you need to listen to Fox Noise Business channel more, to get your talking points down.

[aspergris]

56. there is no talking points here

just your ignorance of price action, and crowd psychology.

i don't watch ANY teevee business crap because it's entertainment. It's visual crack, but doesn't provide useful investing OR trading info.

The true test of one's market knowledge is their performance. I lost many thousands of dollars learning to understand the market.

That was then. This is now. successful trading comes from watching and listening to the market, not talking heads, and god forbid not nattering nabobs of "the american dream is over" and other such piffle we see here from people who freak out cause their IRA's are down.

One of the things that I have learned (among many) is that naysaying ignorant chicken little'ism is a great contrarian indicator.

Thanks for providing it.

[Bluenorthwest]

58. If you are calling others ignorant

You should review your own writing skills. You will have time to do that soon from what I read of your financial knowlege. " There ARE no talking points here". Are. Not is.
Is our children day trading again?

[aspergris]

60. oh noes

my grammers and spilling need halp!

[kentuck]

25. Sounds so.....

Republican...

[TheWatcher]

29. THANK GOD The Economy is SAVED!

Thanks to you, we can all now go back to sleep.

:eyes:

[TheWatcher]

31. Delete.

So not even worth it.

[taught_me_patience]

33. You're about to get owned

from this bear market rally. This was a coordinated effort by the fed to roast shorts in the financial sector. Watch this "rally" fade quickly and the downtrend to resume. Do you really believe the economy is strong?

[TheWatcher]

43. Shhhhhhhhhhhhhhhhhh.

Don't disturb his high. Maybe he didn't see MSFT and GOOG lay eggs after the Bell.

As for your assessment, you are correct, but prepare to be raked over the coals by some of the resident "Economic Experts" on DU for being conspiratorial and kooky.

Repeat after me. The Economy is sound. There is nothing to see. This is all perfectly normal market activity. The Banking system is "basically sound." This is the buying opportunity of a lifetime. Stocks are cheap. CNBC never lies. I should be fully invested in the Financials.

And don't forget to pick up your Chocolate Rations. :rofl:

[mudesi]

42. Yes, but you didn't catch it

The probability of you buying at the bottom is next to zero. This rally could have happened 2 days from now, 2 days ago, next week, or next month.

There was no way to predict that it would've happened today, and there is no way to predict what will happen tomorrow.

The people who bought Freddie Mac on Monday have not broken even yet. The ones who bought last Tuesday are still down 30%. I doubt they're thinking it an "opportunity" just yet.

[TheWatcher]

44. If you think like a criminal you can get lucky and time these things correctly

Especially when you have the Magic Wand of GOD, um, I mean the Fed, to assist you.

Every time the system is on the brink of a major precipice of Crisis, something like this happens.

Example? Back in January during the Bear Stearns debacle, The Fed trotted out and gave us the usual happy-talk and jawboning, a Parade of Rate Cuts, JPM bought Bear Stearns for a song, the Stimulus checks arrived and we were told to all hold hands and go buy a Plasma, and once again the "saved the day".....

For about six months.

And now we find that things are even worse than they were six months ago. Major banks are in danger of failing, IndyMac goes under, and The Credit Crisis, which we were told the Worst Was Over, is even worse and more widespread. Add to that the prospective demise of FNM and FRE

Enter Helo Ben, Stammerin' Hank, King Boy George, and the usual Parade Of Propagandists, the wave of the Magic Wand, and all of a sudden they claim again that they have altered the course of reality, time, and space itself.

It's all about Perception.

Because Perception is about the only thing holding up this House Of Cards.


People make money on moves like this not because they are smart, but because the House is more than happy and able to rig it for them to that end.

And it will lather, rinse, and repeat as long as it works.

Until it doesn't.

Oh, but I know, nothing is real, nothing exists, everything is normal, and there is nothing to see. It's all just kookery.

[mudesi]

52. I wish

If only I had access to the insider information that makes people rich on a daily basis. I remember that story a few years(?) ago where Jim Cramer admitted to manipulating the markets just to make a quick buck back in the day. The people who made an 80% return in 2 days were the people who knew it would happen, not the people who guessed.

Long term investors will be fine, of course, but the people who think they can be short term traders without access to the right information will always get burned. They may be lucky every once in a while, but for the most part they may as well just head to their local casino.

[aspergris]

57. price action is always about perception

ultimately, because price IS opinion

that's how 2 way auction markets work.

[high density]

48. If you're talking about "catching longs," why are you looking backwards at 2 day returns?

Set an asset allocation based on your risk and investment timeline and fulfill it using cheap index funds. Then stick with it whether the market is up or down over an hour, day, two days, week, month, or year. The fact is that most people who time the market and try to find "opportunities" get burned and have vastly lower returns than those who ignore individual stocks and stick with their asset allocation through the good and the bad.

[Eurobabe]

49. The stock market is about as sure a bet as Vegas n/t

[TheWatcher]

51. Vegas has more Integrity and Credibility At This Point.

[Eurobabe]

61. seriously.

most of my money is in the bank, which is not so secure either. It's getting moved ASAP.