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To: Dale Baker who wrote (105060)10/15/2011 4:25:30 PM
From: Jopps
of 118673
That's the problem. Looking at other boards and this one, every amateur investor (the little guys) is convinced this rally is not going to last. Meanwhile, big investors are betting on decreasing volatility and buying blue chips. If the little guy is short and bigger funds are growing optimistic, this rally could go much higher. As amateurs give up on their bearish viewpoints and start entering the market, we'll see another green week.

There was already lots of short covering this past week (explains sharply up indexes on anemic volume), this could continue. The only way this rally will run out of steam is if we hear bad news and lots of it. The Spain and bank downgrades was barely a speed hump last week. Two weeks ago, this downgrades would have sent the indices spiraling downwards.

Based on the fundamentals, I think we'll come crashing down at some point. But the trend is up, if you're short, get out of the way.

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To: IRWIN JAMES FRANKEL who wrote (105056)10/15/2011 4:28:58 PM
From: Jopps
of 118673
Seasonal flows are fine if you're not headed for another recession. What would have happened if you had bought during the fall of 2007, or 2008?

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To: stevenallen who wrote (105059)10/15/2011 5:07:08 PM
of 118673
I am looking at a longer period, more like October to May.


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To: Dale Baker who wrote (105060)10/15/2011 5:10:58 PM
From: Sultan
of 118673
While the big picture of the forest looks fuzzy with the wind storm, once you start to focus on a tree with it's strength and weakness, you might see that although it was shaken up, it is no where near toppling over... If anything, some small caps are behaving better and if it is true that small investors are too worried and not in the market, it is all the more impressive... FWIW..

I am a tad annoyed to be sitting on cash and missed a whole bunch of bottom fishing opportunities, such as MHR under 2.50 etc..

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To: Jopps who wrote (105061)10/15/2011 5:13:54 PM
From: E_K_S
of 118673
Hi Jopps -

<Based on the fundamentals, I think we'll come crashing down at some point>

I really do not see this based on both (1) the current earnings being reported and (2) the intrinsic value (denominated in $US ) that many of these large cap companies have. If the "worst case" scenario occurs, would you really want to be in cash holding worthless $US? I want to own an asset that generates a lot of worthless $US (ie free flow cash) and/or a company that owns a lot of hard assets (that increase as the $US falls).

Therefore, in the Long Term I do not see these very large companies "crashing down" at some point but in fact moving higher.



Summary of Reported EPS for Third Quarter of ’11 for S&P 500
(as of October 11, 2011 4:27 PM EDT )

Excluding financials, earnings are coming out ahead of expectations. Consensus estimate S&P 500 are $24.68 for the third quarter, representing a 17.1% increase over last year's third-quarter EPS of $21.89. For 2011, the S&P 500 EPS are estimated to be $99.28, which would represent 15.9% growth over 2010's $85.81.

Prof. Schiller and CAPE, Maybe Correct Generally, But Specifically Wrong: The Market is Currently Cheap,_Maybe_Correct_Generally,_But_Specifically_Wrong_The_Market_is_Currently_Cheap/

The article makes the argument that many large cap companies are "undervalued" and represent some of the best values in years. The premise of their argument is that many are not (or will not) be effected by the cyclical slowdown due to recession and Schiller & Cape over estimate the impact to future earnings from this. The article looks at Oracle Corporation (NasdaqGS: ORCL), Wal-Mart Stores, Inc. Common St(NYSE: WMT) and Pepsico, Inc. Common Stock (NYSE: PEP) and shows that when viewed over the last 10 years, these stock are undervalued at today's prices perhaps by as much as 20%.

One Example: Wal-Mart Stores, Inc. Common St(NYSE: WMT)

Our second example looks at Wal-Mart Stores, Inc. (WMT), a potentially faster growing recession-resistant company, over the same 1995 to October 10, 2011 time frame. After becoming excessively overvalued over the period 1995 to year-end 1999, Wal-Mart's share price went sideways before finally reverting back to fair value by the end of September 2007. Consequently, what had been a dangerously overvalued blue-chip company for many years, has finally and recently become an attractive investment opportunity. Today's current undervaluation with a blended PE ratio below 13 represents an extraordinary opportunity to invest in this king of retailers, in our opinion. Followers of CAPE would be denied this tremendous opportunity.

Conclusion from the article:"..Therefore, we believe that some of our finest and highest quality businesses are currently priced at the best valuations that we've seen in many years. Low valuations, like we see today, represent an excellent opportunity for investors. As Warren Buffett has wisely advised:“Be fearful when others are greedy and greedy when others are fearful.” With so many people afraid today, there's a cornucopia of quality common stocks available. This article highlighted but a few....".


I do know that the Financial companies are broken and probably bankrupt. The Government continues to rack up huge budget deficits and LT debt. These things will be fixed over time. As they do, the current undervalued large caps will eventually become overvalued but not for some time.

Finally, if the end game is to "debase" the U.S. dollar (due to a non-manageable LT U.S debt ), these large Cap money machines will become that much more valuable based on the hard assets they own and/or the free cash flows they generate. Why hold worthless dollars when you can own a company that generates tons of free cash flow and/or holds a large amount of hard natural resource assets (ie like Oil & NG).


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To: Jopps who wrote (105061)10/15/2011 5:37:19 PM
From: Keith J
of 118673
Curious. Many people have noted both short covering and low volume this past week or so.

If so, it seems like many are still staying on the sidelines (i.e., limited buying interest).


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To: E_K_S who wrote (105065)10/15/2011 6:37:50 PM
From: Spekulatius
of 118673
>>Therefore, in the Long Term I do not see these very large companies "crashing down" at some point but in fact moving higher.<<

Depends on your timeframe for LT. LT we are all dead.

The market players are anxious and many including the supposedly smart money like hedge funds looks at all the other players to see what they are doing. A lot of those players are willing to sell on bad news in a NY minute no matter the fundamentals. hedge funds are fighting redemptions based on their customers being scared so even if the hedge fund operator is no panicking it won't matter because their customers are bailing and they have to sell.

My sense is that the reasons for the panic are still there and that is why I expect more selloffs going forward.I think there are a lot of folks out there trying to outrun the others, which means, steep rallies and steep selloffs.

Somebody said it well: "If you want to panic, better panic early (before everybody else does)!"

The interesting story that has not played out is the Chinese economy slowdown and the collapse of the shadow credit market, which has shades of Lehman Y2008. We do not know yet if the shadow credit market in Chinese is a small side story or if it's major - based on the huge credit volume expansion in China, it could be major. What is already clear is that major financial institutions (insurance companies, Chinese banks etc.) are involved too, via trust but we don't know the extend either. Based on how this plays out, it going to be a small splash in the water or the equivalent of Y2008 credit crunch playing out in China - take your pick.

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To: Sam who wrote (105053)10/15/2011 7:06:15 PM
From: caprice_87
of 118673
Sam, I'm with you. Too many bears on the wrong side of this move or sat on cash. At the end of the day price is truth, you can't buy anything with volume. Under invested here myself, but startled at the overwhelming (this is 2008 again) bearishness. Gut tells me we continue to chop around in a wide range.

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To: Sam who wrote (105053)10/15/2011 7:16:36 PM
From: Sam
of 118673
I see the one year chart of II sentiment numbers didn't show up. It is here:

I have had sporadic problems posting charts ever since the Big Change a couple of months ago. Don't know why they work sometimes and not others.

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To: caprice_87 who wrote (105068)10/15/2011 7:25:39 PM
From: Sam
of 118673
Gut tells me we continue to chop around in a wide range.

My gut reflects that choppiness very well....

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