Where next?

[Grieve]

U.S. stocks close at 2009 highs; S&P 500 tops 1,100 for first time since October 2008

So I was right about my buying the DXD (short DOW) options - it meant the market would immediately shoot higher.

Question is, where next? A lot of talk about funds rushing to get "winners" on their books by year end, and that there will be a big sell off as soon as the new year starts. Meridith Whitney also said on CNBC earlier that she had "never been so bearish", and we were heading for a double-dip recession. Are you staying long into the near year, or taking profits?

[Thudz]

I will continue to invest in brass and lead at the same rate.

[Vanraw]

Its a great question. If I look around at the environment I ask a few questions about what I think. I had a old investing friend that gave me some good advice. Invest in what you know. Look around and see what real people are thinking. That's your real leading indicator.

For my take I think the dow will hit 12000. if for no other reason then the shorts will have to cover. I think it will then see a correction in 1Q to high 9kish. and then it will resume its bouncing around for 2 quaters.

I dont think we will see a double dip receision because I dont know that we are realy out of this one yet.


Here are my questions.

Q. What will the xmas season be like in America.

My A. I think it will be good in that it will be better than 2008, but perhaps not as good as 2007. So I chalk the xmas retail sales up with the whole " beat expected earnings / crappy but better then expected" feeling. I think what that means is that retail will move the market very little up or down.


Q. When will unemployment percentage start to dip. Its 10.2 It may have started to flaten, but when will it drop to the low 9.x or below 9.

My A. We might not see this until begining of 2Q or later. This means "no impact on the market". I think it will flatten

Q. What will energy prices do?

My A. I dont think we will see any change in energy cost beside some normal seasonal shifts and a possible spike related to Iran, until 3Q10 or later.

Q. Am I in fear of losing my job, and is it impacting my spending? On a scale from 1 to 10.

My A. On a scale of 1 to 10. Fear of losing job = 6 out of 10. Impacting spending = 8 out 10 (meaning no not really, I am spending about the same.

Q. What good news or bad news will move the market for the first 3 quaters of 2010?

My A.
- Banks will be paying of thier loans at increasing levels.
- Health care will pass, and depending on the version passing, will boost or hurt existing heath care stocks.
- China will do or say something stupid that will cause the market to drop.
- Iran will do or say something stupid that will cause energy prices to go up.
- Apple will see sales of the iphone slip the ponzy scheme expectations of "forever growth", and tech will take a huge fast dump and then slowly come back (except apple with will come back down to the mid 150ish to 120ish level (yes Grieve that one is for you .
- Telecommunications stocks in America will drop 20% because of price pressure in the wireless markets and cheaper and cheaper VOIP cost.
- GM will launch Volt and will sell like hot cakes and get great press. If they are smart they will time this with the "Iran said something stupid news)
- My prediction, The dow will hit 12000 before it takes a nice little correction down to the 9000 area in mid January and early February.

[Grieve]

Q. What will the xmas season be like in America.

I heard an interesting segment on CNBC this morning, pointing out that something like 60% of spending is done by those earning $250k or more, and with the stock market roaring back the way it has, those people are feeling flush with money. So it could be quite a bit better than expected.

Q. When will unemployment percentage start to dip. Its 10.2 It may have started to flaten, but when will it drop to the low 9.x or below 9.

I think it will peak in Jan or Feb, start to noticably dip around May or June, and probably won't get below 9% anytime in 2009.

Q. What will energy prices do?

I think oil will hit $100 again at some point next year, with gas at $3 or $3.50. The better the economy and stock market does, the higher oil will go. If we do have a double-dip recession, I think it will slump back down to $40. If Israel or the US bombs Iran, though, all bets are off. $200?

Q. Am I in fear of losing my job, and is it impacting my spending? On a scale from 1 to 10.

Too late - I already lost mine. Luckily I just got a new job (the same week my first child was born - eventful few days!), so hopefully I can hang onto that for at least six months...

My spending? More accurate would be my wife's spending, which I can confirm is as high as ever!

Q. What good news or bad news will move the market for the first 3 quaters of 2010?

- Residential and commerical real estate will hit banks hard - not only will they stop paying back the government, they may need more!
- Health care will pass, but very watered down. Health care stocks will go up.
- China, Brazil and other emerging markets will continue to outstrip the US in their recovery (or at least I hope so, I'm long EDC).
- Apple will announce their new tablet and updated iPhone, stock will hit $300 (take that, Maul!!)
- GM's Volt will be delayed to 2011. However, as gas prices rise hybrids and plug-ins will again rule the world.
- My prediction:The Dow will test, but fail to pass, 11,000 by the end of this year. In 2009 it will correct back below 10,000, before resuming a slow rise. 12,000 by the end of the year.

[Dustie]

I predict that some of your predictions will be right and some of your predictions will be wrong. =)

[Thudz]

Unemployment, #3, will reach %12.5 before Summer next year. If healthcare deform passes it will reach higher.
The number of banks who received bailout and are paying it back will be dwarfed by the number who need more.
Commercial real estate will be the news in 2010, not the good kind.

[Jakensama]

Fire and brimstone coming down from the skies, rivers and seas boiling, forty years of darkness,earthquakes, volcanoes, the dead rising from the grave, human sacrifice, dogs and cats living together... mass hysteria.

[Slamz]

I do think there's a big unknown in how business reacts to health care and cap and trade. Can't really predict anything there since it's not known what, if anything, the final bill that actually passes may require companies to do. That doubt alone is probably slowing growth. How can a company plan for the future if they don't even know what it's going to cost them to operate next year?

[Grieve]

I don't really buy that argument, because there can be changes anytime in legislation. Taxes can go up, taxes can do down, rules can change, new rules can be introduced, etc. Just as economic conditions can change. If companies constantly sat around waiting to see how things pan out, they would never get anything achieved. The should act based on the way things are now, and adjust accordingly if and when things change.

[Slamz]

That's why I think the best business comes from a deadlocked government -- Republican president, Democratic Congress, or vice versa. Their inability to pass major new legislation = boom times for businesses, who can plan long term without any big surprises popping up. If the President and Congress are in cahoots (both Republican or both Democrat) and can pass anything at any time then businesses have to "expect the unexpected" and keep more leeway in their future planning.

Or so I imagine. Not being a CEO myself I can only guess at the impact of legislation on business planning but I can see where it could be substantial. Nobody raises or lowers taxes by half a percent. If changes happen, it may be game changing.

[Hoofhurr]

Interesting but doesn't it make more sense that each party has fairly predictable policy agendas so you could plan for those eventualities? It's actually rather fascinating that the best business environment is the status quo. Anyone out there opposed to change? :lol: Legislation is certainly a game changer. With the stroke of a pen, subsidies for entire market sectors could evaporate and that turns a business plan upside down.

[Dustie]

http://online.wsj.com/article/SB125832961253649563.html

But Chief Executive Jeffrey Immelt now has his eye on a huge new pool of potential revenue: Uncle Sam's stimulus dollars. Mr. Immelt, a registered Republican, quips about the shift in thinking in the nation's corner offices: "We're all Democrats now."

"The government has moved in next door, and it ain't leaving," Mr. Immelt said at the International Economic Forum of the Americas in Montreal in June. "You could fight it if you want, but society wants change. And government is not going away."

When the stimulus package was rolled out, Mr. Immelt instructed executives leading the company's major business units "to put together swat teams to get stimulus money, and [identify] who to fire if they don't get the money," says a person who heard him issue the instructions.

Just one data point. Companies probably do very similar things to GE, look at how government action will hurt or benefit them. Then they look to capitalize on the benefits. In either case, it adds a lot of risk. If the "West Virginia Coal Miners Party" (I'm making that up) wins the next election, all investment in renewables could become wasted.

[Vanraw]

If the "West Virginia Coal Miners Party" (I'm making that up) wins the next election, all investment in renewables could become wasted.

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