I just finished reading Barron's "Hang On Tight", which was their semi-annual roundtable of investment gurus. It was pretty sobering reading. These guys essentially think we're going to "hell in a hand-basket". We're in a classic bear market rally and the market will drop to single digit P/Es. They say the current estimate for S&P in 2009 is $60 (which could be high). The S&P is at 890 right now. Single digit would be under 600, another 30%+ drop from where we stand. The single digit P/E is where we went in past recessions in 1982 and 1974.
Of course they also comment on how the market is treating different stocks differently. Some (like Amazon) are still at a very high P/E, while others are extremely cheap.
One guy said to buy gold... gold you can hold as well as gold stocks as gold could eventually go to $2,000 an ounce. I can't say that I disagree. I have been kicking around the idea a lot myself as well as I think inflation may go through the roof down the road.
I am also watching a piece on the Madoff scandal. Just amazing that it happened. I don't know how some big (and supposedly sophisticated) investors gave him 100s of millions without do proper due diligence. I understand from what I have seen that there were plenty of red flags.
Not sure what to do with my money. It is tempting to take some off the table, I have had a good run lately... though frankly still have a lot of ground to make up... but it is of course unrealistic to expect to make it up in a year. I have been moving towards more conservative stuff... you know, preferred stocks, bonds and gold. I'll still keep some in MFI, but may pull back a little.
Oh well, probably time to hit the hay. Very busy, will be moving next week and this is my busiest time at work... likely I will not be posting for a couple weeks.
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3 comments:
don't get too spooked by talking heads. i think buffett's made 7 market calls since he started long back. he's been right every time with the exception of 1979, when he was right, but it took three years and volatility. buffett went from treasuries to 100% in his personal account around mid-october when the spy was around 950. in this madness of talking heads, i'd put my trust in buffett before anyone else. he's still making sharp moves as evidenced by his cash takeaway in the ceg deal and various bond and preferred moves. in addition to buffett, the guy i most pay attention to in the hedge fund arena is john paulson, who made 500% shorting during the financial crisis and is now going long subprime and financials.
It's amazing how much CSKI has retreated since you wrote about them Marsh. I own it in two accounts, and it had been up around 50% for me just a week or two ago, but is now down overall. Crazy spike, and then a similarly crazy fall. I've found that this has happened a number of times with these MFI stocks, and wonder whether I shouldn't sell some of them on a big spike with the thought that I might be able to re-buy them on a subsequent dip...
Marsh,
I hope Barrons are wrong. Anyway I do't have any options so I must be patient. My Chinese stocks have been abolutely crushed lately. The profits have evaporated. This just goes to show you how negative the the sentiment. Even companinies with low valuations and positive earnings get taken out to the woodshed and clubbed. Eventually the market will come to its senses.
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