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This can't be another 2008 - right?

edited February 2016 in Fund Discussions
That sure is the consensus. We hear it all the time from the talking heads that no way is this going to be a 2008ish market. Other than of course from the usual suspects in perma bearland who think another 2008 and 1973/74 is always around the corner. Anyone here think we could be in for another 2008? I don't because my bias and conditioning is that events like 2008 and 73/74 are generational occurrences. But who knows.

Idle thoughts - GILD and CELG are getting a nice bid today amid another woeful day for biotech due to a nice write up in Barron's. Will they be the leaders on the next rally? JNJ hanging tight too. I wish there was more fear in the markets instead of the don't worry be happy I am seeing. Whoever thought the 10 year Treasury would be below 1.80% this year? As for the another 2008, Black Swans can't be seen ahead of time (or can they) So not sure if we do have another 2008 it would be because of the effects of oil ala defaults in high yield/banks etc. Would it be from the fear of who is elected President later this year? From a contrarian point of view (where we don't get close to another 2008) maybe what we need are more mainstream analysts and investors coming over to the opinion that yes, another 2008 is upon us. Or maybe just more fear ala the VIX over 40 for a few days.

Sorry for the philosophical ramblings about nothing.
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Comments

  • I feel like there would have to be a big credit problem in the US to knock our market down 50%+ ala 2008.

    China and commodities seems to be strong headwinds, and we're probably overdue for a bear market of some sort, but I still think there would need to be a domestic credit market problem to cause us to go that extreme.

    In 08 it was the subprime market. It doesn't sound like that's an issue currently. It could be junk/energy, but it sounds like many of the companies are still profitable enough with oil in the $30's to not cause a blow up.
  • We're getting very close to the magic 20% correction, but I don't think it's 2008 revisited.

    But I think there are going to be a lot of companies in the oil patch who won't make it, and the question will then be with their banks. The revised capitalization requirements will turn out to be a plus.

    As I write this, there's a hold on Chesapeake....for a reason not yet disclosed.
  • PRESSmUP said:

    We're getting very close to the magic 20% correction, but I don't think it's 2008 revisited.

    I don't think so, either. But if it is, there's a huge disconnect between Wall Street and what I see happening around me....lots of tourist activity, homebuilding, etc.

  • I don't know any more than anyone else but I DO think this will be similar to 2008.

    1. The commodities price collapse will cause whole nations to become insolvent along with half of the energy industry;
  • 2. Deflation causes a collapse similar to what happened in the great depression;

    3. Central banks unable to stop it with interest rates already near zero;

    4. Currency devaluation in China and elsewhere causes trade to slow;

  • 5. Market prices in equities and fixed income built on record levels of debt, leverage, share buybacks and derivatives held by the top 5 us investment banks
  • RUT is down 30+% from the high.
    How much more does it have to fall to mean something?
  • Too much violence and turmoil. Once the Syria and ISIS threat is sufficiently contained or ended, we need a new Marshall Plan. And it should start HERE. But YESTERDAY.
    https://en.wikipedia.org/wiki/Marshall_Plan
  • @Joe, you keep saying that and you say you are an insider. Any specifics? You said oil companies will collapse earlier. Which companies outside frackers and why? If just fracking industry, why would it be such a big deal outside of a few states in the US? I asked this question earlier.

    You say countries will default because of it. Which countries? Nigeria? Venezuela? Russia?

    Commodity producing countries aren't running deficits with debtors financing it like Greece was to default on that would pose systemic risks through the financial system. Saudis aren't going to collapse any time even if they won't be able to spend as much. Countries that are printing money without oil revenues instead will face inflation but won't put debtors in jeopardy.

    Any black swan event would have some spreading systemic risk. Not that they don't necessarily exist. But without evidence for or against, I find it hard to take such a definitive stance that it is going to be really bad or it is going to be all OK. There is a third alternative that we just don't know and won't know until it happens or doesn't.
  • Crash said:

    Too much violence and turmoil. Once the Syria and ISIS threat is sufficiently contained or ended, we need a new Marshall Plan. And it should start HERE. But YESTERDAY.
    https://en.wikipedia.org/wiki/Marshall_Plan

    The USA could use a Marshall Plan.
    The original was from the USA to Europe. What outside country will be providing the $?

  • The talking heads, economists, CNBC, etc., are greatly underestimating the financial crisis occurring amongst the major European banks, e.g., Deutsche Bank, Credit Suisse, UBS, etc., and their balance sheets are a mess. Several of these banks are (theoretically) reaching the point of insolvency and will need bailouts from their central governments to stay afloat, imho. This will, inevitably, spill over into our markets and, frankly, I think OUR major banks and global financial companies are facing their own liquidity crises - which everyone is conveniently ignoring or underestimating.

    Bottom line: We have a long way to go to the downside before the true nature of this deja vu financial crisis is fully understood and market valuations adjust appropriately. The only sane financial commentator that fully understands this is Joe LaVorgna, the Managing Director and Chief U.S. Economist for Deutsche Bank Securities.


  • Bottom line: We have a long way to go to the downside before the true nature of this deja vu financial crisis is fully understood and market valuations adjust appropriately. The only sane financial commentator that fully understands this is Joe LaVorgna, the Managing Director and Chief U.S. Economist for Deutsche Bank Securities.

    Depending upon what analysis you look at -technical, fundamental, micro or macro economics - you will come up with different reasons; which will be wrong.

    My way of thinking is what I have posted in the past we are in a sea change that people are not talking about - free trade, population growth, robotics, AI, free movement of money and movement of mfg to lower cost areas causing deflation and hardship for worker.
    So, I'm expecting a slow grind - years.
    The EU can show us what to expect a VAT to deal with the debt (for awhile) and social programs, a smaller fragile middle class etc.
  • If you are making a case for The Great Depression (1929 to 1939) Part Deux, I disagree. I see this as "just another bear market" - one that will (typically) last between 18 to 24 months, one that began in May/June 2015 in which we are now about 9 months into. We are in agreement that the markets will grind lower but we differ with regard to duration. I see another 9 to 15 months whereas you seem to be saying that we have many years remaining.
  • edited February 2016
    DlphcOracl you have been as spot-on as anyone here so far. For purely selfish reasons I hope your prescient analysis continues unabated. The more blood in the streets the better where no one wants to ever buy again. One place I differ is the duration of the bear. In my 600 worthless trading/investing books (now culled to around 300) it was said the typical bear lasts around 10 to 11 months. Remember, we have had a lot more bear markets than just 2008/early 09 and 73/74. Here's something I dug up from google Over the past 66 years, there have been 13 bear markets, lasting an average of 14 months and declining a total of 24.6% before recovering. By contrast, the 14 bull markets since 1949 have lasted roughly 44 months on balance, each growing an average of 117.3%.

    Regardless kudos to you and remain flexible and open to changing conditions to your scenario. Price always leads us out of the bear as the bearish data is at its peak months and months after the bottom. For instance, junk bonds bottomed in December 2008 and that was many months before the actual default rate topped.

    Edit: Before you respond I can almost read your answer. i.e this last bull was not typical and ran for a lot longer than 44 months and hence this bear will also last longer and run further than 14 months. I am sure many wouldn't disagree with you on that.
  • If you are making a case for The Great Depression (1929 to 1939) Part Deux, I disagree. I see this as "just another bear market" - one that will (typically) last between 18 to 24 months, one that began in May/June 2015 in which we are now about 9 months into. We are in agreement that the markets will grind lower but we differ with regard to duration. I see another 9 to 15 months whereas you seem to be saying that we have many years remaining.

    Technically, it will look more like what you are saying because you are looking at it from a stocks point of view. The new reality will be lower stock growth rates BUT people look at things relatively. In the past if 8% looked good, now 5% will look good.

    I am looking at it from a macro point of view. That will overshadow the stock environment. Profits will be harder to grow in most areas. Fewer individuals will have $ to put into stocks.

    This is not a depression, not stagflation, just stagnation.

  • Dex said:

    Crash said:

    Too much violence and turmoil. Once the Syria and ISIS threat is sufficiently contained or ended, we need a new Marshall Plan. And it should start HERE. But YESTERDAY.
    https://en.wikipedia.org/wiki/Marshall_Plan

    The USA could use a Marshall Plan.
    The original was from the USA to Europe. What outside country will be providing the $?

    ...What outside country will be providing the $?
    When the Marshall Plan was implemented, the world was a wreck. Only the USA had the resources to get it done. Syria needs to be rebuilt from the ground-up. But apart from that, even though Europe is not literally in ruins, everything ELSE, in economic terms, IS in ruins. The USA has squandered a great deal of what made it a super-power. Have we still got what it takes, though?
  • Crash said:


    Have we still got what it takes, though?

    No.


  • Junkster:

    "This last bull was not typical and ran for a lot longer than 44 months and hence this bear will last longer and run further than 14 months."

    And there's the rub.

    Here is a link to a 10-year chart of the S&P 500:

    http://finance.yahoo.com/echarts?s=^GSPC+Interactive#{"range":"10y","allowChartStacking":true}

    Glancing at this chart two things are obvious:

    1. The long-term bull market trend line starting from March 2009 to late 2015 has been decisively broken to the downside. Once broken, it does not easily regain its footing and cross back above it quickly.

    2. We have a LONG way to go to the downside.

    From trough of 666 on March 9, 2009 to peak of 2134 on May 20, 2015, this represents
    a 220% gain in the S&P 500 index over a six-year period. A bear market correction will not end at 1820, 1810, 1780, etc., levels that the talking heads are fixated on. These levels are potentials to play a short sharp oversold bounce in a continuing downtrend. Frankly, I am not smart enough, nimble enough or unemotional enough to play these.

    Simple Fibonnacci retracement levels (38% and 50% ) of the total 6-year bull market gain from the high of S&P 2130 are 1575 and 1400 respectively. That is where I think we are heading sometime between now and March/April 2017 and THAT is the fat pitch I am waiting to swing at.

  • edited February 2016
    15th attempt today to answer. Bugs I guess ...
    Can't even remember what brilliant thought I wanted to share this morning.

    NO. I don't think it's a repeat of '08. But if "Bill" shows up again (or someone like him) I might change my mind.:)
  • I suspect 1600 is a likely bottom. But why worry? Our fund managers will protect our funds. (They will, won't they?).
  • Dex said:
    Dex, a bit off topic but have you seen the 2016 muni leader? Not our high yield munis but California munis.

  • Junkster said:



    Dex said:
    Dex, a bit off topic but have you seen the 2016 muni leader? Not our high yield munis but California munis.

    Junkster,
    I haven't looked. I'm still in HY munis at 100%.

    When I do move out of them it will be

    High Yield Corp. Bonds
    Technology - dividend paying
    Health Care
    Emerging Markets Bonds
    US Small Caps DIV
    REIT


  • edited February 2016
    @Junkster.
    Would it be from the fear of who is elected President later this year?
    The market does seem to be inversely correlated to Bernie Sanders' standing in national polls.

    Off topic: I'll probably be voted off the island for writing this, but I think Sanders is a refreshing breath of fresh air to the national political debate. And, I'm a registered Republican that campaigned for Reagan at the Infinite Corridor in 1980 ... although a bit embarrassed to admit that given those in office and running recently ... Sarah Palin, Donald Trump, Ted Cruz, etc. Fear the party as I/we once knew it is on verge of collapse.
  • Charles said:



    Off topic: I'll probably be voted off the island for writing this, but I think Sanders is a refreshing breath of fresh air to the national political debate.

    Yes, bf and I are planning to go back to college...for free!;)

  • edited February 2016
    Dang, Even Bloomberg has succumbed to the ratings game. Screaming End of the World all morning. Lengthy David Stockman interview. What I think the little weasel said:

    World recession/depression upon us - similar to the 30s.
    China's growth last decade was mostly illusion.
    Banking system will collapse owing to oil related securities.
    Massive run on mutual funds and ETFs about to happen.
    $20 oil here to stay.
    Central banks will break down completely.
    Buy gold.

    Isn't it curious every time the stock market takes a few lumps these networks roll out the bears?
  • Yea, I saw that. I thought OMB directors were level headed.;)
  • Stockman's been calling for another Great Depression, starting now, for at least five years and quite possibly closer to twenty. He was never level-headed. He's the guy who brought magic asterisks to the federal budget back in the 80s...
  • vkt
    edited February 2016
    hank said:


    Isn't it curious every time the stock market takes a few lumps these networks roll out the bears?

    Not just on TV. In the forums too.

    This thread will be a good one to revisit in 6 months.
  • Charles said:


    Off topic: I'll probably be voted off the island for writing this, but I think Sanders is a refreshing breath of fresh air to the national political debate. And, I'm a registered Republican that campaigned for Reagan at the Infinite Corridor in 1980 ... although a bit embarrassed to admit that given those in office and running recently ... Sarah Palin, Donald Trump, Ted Cruz, etc. Fear the party as I/we once knew it is on verge of collapse.

    You won't be voted off the island unless you bash every one equally. But I hear you. Here is my problem:

    1. Bernie Sanders - Nice guy, has a good heart. Beat up Wall Street isn't going to grow economy. Will be too distracted with too many things to carry out his agenda against Wall Street and pro consumer things (not that these are necessarily bad things), to do the highest priority things needed. Has no clue of the future technology and how to accommodate/leverage it.
    2. Hilary Clinton - Able to do what is needed to win but will be long on rhetoric short on action if elected. Too much politicking, not enough eye on the ball.
    3. Donald Trump - Shrewd businessman but every deal he has made has only benefited himself and has crumbled soon after for others. Is the political equivalent of the financial engineering CEO. Not a team player. Ego can't share the stage with anybody so his team including the VP will be some airhead yes-men/women with him micromanaging. Most likely to send US into cultural or economic bankruptcy after window-dressing deals.
    4. Ted Cruz - Is going to look like fish out of water when he realizes he has to deliver and can't just blame somebody or tear down things to get support. Will likely find polarizing things to rant against and distract people from his own inability to deliver. Immigrants, almost every other foreign country will be fair game.

    Ugh. How did we get here on the greatest country on earth?
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