DOW Down 250 Points. Is There a Bottom Anytime Soon?

i thought obama hadn't decided between 20% to 28% yet. also, i am pretty sure the div payout rate has gone up since the div tax was dropped. 5% is a pretty big div yield.

 

Am I reading correctly that BAC is currently yielding > 10%???

$0.64 quarterly div on $25 share price? Can't be. Have they announced a cut?

 

they will cut it. any stock you see with a div that looks too high will likely be cut. if you see another stock post here and i will tell you if it is likely to be cut.

 

AIB is yielding about 9%. AIB has very little subprime exposure, but it does have a lot of exposure to the Ireland real estate market, which has its own problems. While no dividend is safe, AIB's dividend seems a lot safer than BAC.

 

just remember subprime isn't the only issue. alt-a is going to be a bigger problem than subprime. further i wouldn't suggest any financial's dividend was safe. if it was a latin american financial then it is likely ok but euro and american financials are trash. anyhow...with the AIB trading at the valuations that it is at there is certainly some significant fear about their earnings. it's trading 4 bucks below book value which means people are expecting big losses. i don't see a great reason to rush in there and be a hero.

 

don't need to be a hero with leh either. avoid leh and mer. if you have to buy an investment bank then buy goldman. maybe look at blackrock (blk) on this mer offering. mer needs cash so they are selling their best asset in blackrock. could be a nice time to look to buy.

 

Even though they might cut it, they have increased their div every year for the last 20 years even when their stock priced tumbled in 98. The haven't cut div even though most every other bank has.

 

i think i got it from briankagy. i dunno where it originated from but i like it.

 

and we just keep treking along down. oil is just flat out strong and the dollar is not. the one worrisome thing is that panic really hasn't set in yet. the VIX index is finally starting to perk up but is nowhere near panic levels suggesting further downside to come.

 

i think a good buying op could arise if the ECB decides to raise rates on thursday. it would cause a nice panic spike in oil and might get a wash out in the market.

 

What do you blue skyers think will be impetus to change the earnings outlook or consumer confidence? Even at single digit PE's there needs to be projected growth to move stock prices up.

Look at the S&P from 1969 to about 1979; flat for a decade.

http://stockcharts.com/charts/historical/spx1960.html

The average PE for this period of time was about 10.

http://www.lowrisk.com/image/sp500pe.gif

I'm not going to say it's going to happen again now, but it does happen.
When the banks are losing money, the Fed has no ammo, the life blood of your economy is controlled by outside and possibly hostile forces, taxes have already been cut, the government has no money for economic stimulus, immigrant labor is looking like it will be regulated; you don't really manufacture anything for export, your service economy doesn't really create value; where is earnings growth going to come from?

Invention and innovation I guess, you just can't predict what though.

 

Doomed

 

If you follow these steps, you can do well even in a bear market: choose your stocks wisely; buy mostly small-cap value stocks; do not try to time the market; and hold for the long-term.

 

You could have gone long on short stocks, but I think at this point it is better to go long. Just space out your buys.

 

My opinion on the future of the stock market is that it is unpredictable. I have always thought it is more a function of psychology than true economic understanding. Holding a fortune in high tech stocks on March 11 2000 tends to give one some self reflection about one's own motivation.

My opinion on investing is and has been for a year or more, it's time to hunker down. At this point I'll trade the chance at a big upside for limiting a big downside. Paying down non-deductible debt is probably your best return on your capital. Tighten up your lifestyle to cut down on your expenses. Try to make your position indispensable or change to a more insulated type of job because if the recession gets worse or lasts longer business will be cutting jobs. Live beneath your means because it may be the level you have to get used to living at.


Use Short/long hedged funds to try and get some positive returns in any market. Use some foreign bond funds to generate a little positive cash flow. After that look for trends, more than likely outside the US.


Or, this could just be the panic and compilation that makes an opportunity to buy equities and make 12% a year for a few years. How do you know?

The idea I would like to see is for the US to set a limit on how low the price of imported oil can go with a 100% tax for anything under say $100 a barrel. With a set value to compete against I would bet on American ingenuity to fire up an alternative energy industry that could be massive. The problem right now is OPEC can play the 'give a hitchhiker a ride trick' with alternative energy. Let them spend all their money on development and infrastructure and then undercut the price of oil just in time so that they go bankrupt, then start the price of oil back up again when there is no competition.

If we do that then alternative energy just might be the disruptive technology to fuel another generation of a bull market.

 

Resident market smarty-pants:

So my domestic mutual funds are killing me. I'm holding my own in other investments, but is it a good idea to cut my losses and jump to something more conservative?

(the main one kicking my financial nuts is my Fidelity Freedom 2045 fund (FFGX) - I could punch the representative who got me invested in it originally)