finetrader Posted August 7, 2011 Share Posted August 7, 2011 Another freaking day? http://money.cnn.com/2011/08/07/markets/world_markets_downgrade/index.htm Link to comment Share on other sites More sharing options...
Cardboard Posted August 7, 2011 Author Share Posted August 7, 2011 Regarding Buffett, he is still on limb predicting that their will be no recession: http://www.bloomberg.com/news/2011-08-06/buffett-says-s-p-s-downgrade-mistaken-still-doesn-t-see-another-recession.html I sure hope he is right this time around vs completely denying/missing the housing bubble... at least publicly. Who knows what he really thinks these days. Trading last week has been awful and reminiscent of the fall of 2008 when stocks kept plunging day after day without much of a rebound. The trading feeling is the same, but I think that the reality is quite different this time around. First, everyone will be paid in full. I see no one missing an interest payment from their treasuries due to this debt ceiling debate fiasco. Second, no one saw a major hair cut to the value of their holdings in treasuries or should see one even after the S&P downgrade. With all the talk about a potential recession, they actually should be in position to book major gains. Stocks look very attractive on an earnings yield standpoint vs treasuries and many stocks have dividend yields exceeding 10 year treasuries at 2.56%. Compare that with 2008 when banks and institutions saw a large portion of their mortgages stop paying interest and when subprime mortgages and CDO's became near worthless. That is enough to create a panic and force major selling of other assets (stocks) to raise cash to avoid a balance sheet destruction. On top of that you had money market funds breaking the buck! Then you had a complete freeze of liquidity and a recession ensued cutting earnings in half. So what the market needs to price in this time around is the possibility of another recession and I can't see that debate ending now with the little amount of data being available. There is simply no justification for the market to go into a complete free fall as we have seen in 2008. Sure, there should be fear and volatility with the downgrade and the European situation, but what really counts or the materialization of a recession should be resolved in months and not days by the market or via a crash. Cardboard Link to comment Share on other sites More sharing options...
DCG Posted August 7, 2011 Share Posted August 7, 2011 I'd really love to see a massive short attack on McGraw Hill shares, and downgrades of their stock from all the analysts who cover them. Anyone else think it's pretty mind boggling that a single for-profit company (not even a single company...basically a single division of a single company) is able to have such an enormous effect on the entire country? Link to comment Share on other sites More sharing options...
Myth465 Posted August 8, 2011 Share Posted August 8, 2011 I'd really love to see a massive short attack on McGraw Hill shares, and downgrades of their stock from all the analysts who cover them. Anyone else think it's pretty mind boggling that a single for-profit company (not even a single company...basically a single division of a single company) is able to have such an enormous effect on the entire country? It is interesting. S&P is late at the switch. I would have downgraded the US when politicians talked openly about preferring to default on the debt. There is just no room for crazy talk like that. We have earned this one. I still predict there will be blood, and it will be on S&P. If there is one entity you dont want pissed at you, its the US Government... Link to comment Share on other sites More sharing options...
Guest Hester Posted August 8, 2011 Share Posted August 8, 2011 It is interesting. S&P is late at the switch. I would have downgraded the US when politicians talked openly about preferring to default on the debt. There is just no room for crazy talk like that. We have earned this one. I agree. Many politicians, one being a leading presidential candidate (at least represented by polls), openly state that they will not do anything but vote against raising the debt ceiling, and thus refuse to do anything but default. This fact alone makes me think that currently the US isn't perfect credit quality. Link to comment Share on other sites More sharing options...
Smazz Posted August 8, 2011 Share Posted August 8, 2011 If the futures are the indicator tomorrow (only a few hrs now) markets will get Beotch smacked again to the tune of 2.5-3% ....hold on, where are my confusious notes............ Link to comment Share on other sites More sharing options...
Parsad Posted August 8, 2011 Share Posted August 8, 2011 If the futures are the indicator tomorrow (only a few hrs now) markets will get Beotch smacked again to the tune of 2.5-3% I'm ok with that. The more the markets get hammered, the more money patient and rational investors will make over time. That's why it's so hard for many people to do. It will once again clear out some of the "professionals"! One third of them disappeared after 2008/2009, and new ones popped up and replaced them in 2010. It was very funny to watch last week as Ron Insana was brought on to CNBC as an analyst, yet his fund collapsed in eight months when he launched it in early 2008! Everyone is panicking, yet nothing at all...not in the slightest...has anything changed in what Ben Graham and Warren Buffett have taught us. Nothing at all. Cheers! Link to comment Share on other sites More sharing options...
moore_capital54 Posted August 8, 2011 Share Posted August 8, 2011 Parsad I fully agree with your assessment. here is no doubt that even if tomorrow is the first "Black Monday" since 1987, buyers will do extremely well over time deploying capital aggressively. Link to comment Share on other sites More sharing options...
Smazz Posted August 8, 2011 Share Posted August 8, 2011 If the futures are the indicator tomorrow (only a few hrs now) markets will get Beotch smacked again to the tune of 2.5-3% I'm ok with that. I never said it was a bad thing ;) Link to comment Share on other sites More sharing options...
moore_capital54 Posted August 8, 2011 Share Posted August 8, 2011 US Futures rallying here, Europe is up nicely, this may be the bottom. Link to comment Share on other sites More sharing options...
Packer16 Posted August 8, 2011 Share Posted August 8, 2011 I agree with Sanjeev. The fundamentals of US firms are great and I am able to find low single digit FCF multiple firms continuing to decline in what appears to be indescriminate selling. So I am pondering selling 10ish FCF multiple stocks to buy 3 to 5 multiple stocks. Packer Link to comment Share on other sites More sharing options...
ERICOPOLY Posted August 8, 2011 Share Posted August 8, 2011 US Futures rallying here, Europe is up nicely, this may be the bottom. The quotes for C, BAC, AIG seem to be down about 5% -- they seem to be trading on foreign markets and Interactive Brokers is giving those quotes. I never get up this early (being in Seattle) but today I'm particularly eager in a greedy way. Link to comment Share on other sites More sharing options...
DCG Posted August 8, 2011 Share Posted August 8, 2011 US Futures rallying here, Europe is up nicely, this may be the bottom. Huh? US futures are currently down over 2%. Link to comment Share on other sites More sharing options...
Valuebo Posted August 8, 2011 Share Posted August 8, 2011 US Futures rallying here, Europe is up nicely, this may be the bottom. Huh? US futures are currently down over 2%. They were at -0,5% then I believe. ;) Volatile markets! Link to comment Share on other sites More sharing options...
ericd1 Posted August 8, 2011 Share Posted August 8, 2011 This is crazy...Oil trading down below $85 a barrel -- BKR-B pre-mkt below $70... Link to comment Share on other sites More sharing options...
jjsto Posted August 8, 2011 Share Posted August 8, 2011 1) I am starting to think warren buffett is placing more emphasis on the data collected from his companies as a general economic leading indicator. The problem is, almost by definition, his companies should be outperforming the "average" company during downturns. I am pretty sure he was talking about 7% unemployment approaching the elections in 2012. And, that almost seems like wishful thinking at this point. But, what do I know? 2) Regardless, I havent been this excited about a market opening in a while. I rarely even care about the market opening. But, today I've got my coffee, a couple of croissants, and I am sitting here staring at my spreadsheet trying to figure out which of the juicy bargains I will be buying. Like a kid waiting for christmas morning.... Link to comment Share on other sites More sharing options...
Cardboard Posted August 8, 2011 Author Share Posted August 8, 2011 I believe that what we have here is manipulation. Given macro data has been weak recently, 2nd quarter earnings report were terrific and completely forgotten because of this stupid debt ceiling debate. I recall that something like 80% of S&P 500 firms did beat earnings forecast while we were supposed to see much more misses and forecasts revised lower. Growth in earnings remain strong and the S&P is now yielding 8.5% or a P/E of 11.7 and some call that expensive??? IMO, big funds have been shorting this market into oblivion while some funds got stuck with margin calls. I also suspect that some big boys got wind of this S&P downgrade ahead of time and took advantage of it. Look at this chart and you will see what I mean. You have sell on the rumour and buy on the news. Clearly the futures got cheaper Friday morning than they have been since the downgrade was announced. http://money.cnn.com/2011/08/08/markets/premarkets/index.htm?iid=Lead Based on all the fundamentals, this looks like a buying opportunity. It takes some stomach I must say. Some people have introduced panic and it sure looks like it has worked so far. Expect them to take profits and try to ride the rebound while mom & pops are being screwed once again. Cardboard Link to comment Share on other sites More sharing options...
Valuebo Posted August 8, 2011 Share Posted August 8, 2011 This is crazy...Oil trading down below $85 a barrel -- BKR-B pre-mkt below $70... Only -0,35% now and because of the euro/dollar drop I am actually in the plus for today. Holding 80% in brk is crazy but this sure feels better than having a bunch of cash (while being scared to deploy it) or being invested in things that go down 5%/day. :-X I am thinking of trading in some of my FFH for DELL if FFH stays up enough. Not sure if I should act already... Link to comment Share on other sites More sharing options...
prunes Posted August 8, 2011 Share Posted August 8, 2011 My BRK order got filled at $70 ;D Next up $65 Link to comment Share on other sites More sharing options...
DCG Posted August 8, 2011 Share Posted August 8, 2011 Good little blog post by James Althucher: 10 insane things about the downgrade August 8, 2011, 9:51 AM COMMENTARY By JAMES ALTUCHER - The S&P forgot to downgrade thousands of derivatives in 2007 but has no problem downgrading America in 2011. I guess now the agency thinks it’s the cool kid in the high school. - The S&P made a $2 trillion dollar mistake in its model but, heck, who needs math? Let’s downgrade the strongest economy in the world anyway. - The U.S. Treasury Department actually tweeted its response to the S&P. - The city of Syracuse, N.Y., has a higher debt rating than the U.S. government. - Irony moment: There will probably be a “flight to safety” across the world as a result of this. What’s the safest asset? U.S. Treasury bills. So yields will probably go down as a result of this. - The U.S. owes almost $2 trillion to … itself. The Federal Reserve owns $1.6 trillion in T-bills. The U.S. can roll this debt over forever. The S&P ignores this. - Alexander Hamilton, the first Treasury secretary, had to deal with an inflation-adjusted $1 trillion in debt. The U.S. has always been in debt and had a much worse debt-to-GDP ratio issue after World War II. The U.S. pays back debt through economic growth. - On Twitter someone asked me, “So, do you compare Hamilton with Geithner?” I guess they were being sarcastic. My response: Geithner opposes slavery. - Regardless of this debt downgrade, more people will buy iPads from Apple this year than last, more people will make Google searches this year than last, more people will buy cars from GM this year than last, and more people will buy gas from Exxon-Mobil this year than last, more people will have Sirius-XM radios installed in their cars than last, and more prostate-cancer patients will extend their lives with Denderon’s Provenge than last. I’m sure that’s true for several thousand other companies as well. - “Debt ratings” of the most highly liquid bonds on the planet should be determined by one thing only: Yield (in the absence of other information about our ability to default). That makes U.S. bonds the safest AAAAA+ bonds in the world. Disclosures: I own zero U.S. debt. I own DNDN stock for a short-term trade. I own America wherever I can. <a href=”http://twitter.com/jaltucher“>Please follow me</a> on twitter for more comments throughout the day on the downgrade and the future upgrade of U.S. markets. Link to comment Share on other sites More sharing options...
Guest Hester Posted August 8, 2011 Share Posted August 8, 2011 1) I am starting to think warren buffett is placing more emphasis on the data collected from his companies as a general economic leading indicator. The problem is, almost by definition, his companies should be outperforming the "average" company during downturns. I am pretty sure he was talking about 7% unemployment approaching the elections in 2012. And, that almost seems like wishful thinking at this point. But, what do I know? Good point, you may be right. I believe that what we have here is manipulation. Given macro data has been weak recently, 2nd quarter earnings report were terrific and completely forgotten because of this stupid debt ceiling debate. I recall that something like 80% of S&P 500 firms did beat earnings forecast while we were supposed to see much more misses and forecasts revised lower. Growth in earnings remain strong and the S&P is now yielding 8.5% or a P/E of 11.7 and some call that expensive??? IMO, big funds have been shorting this market into oblivion while some funds got stuck with margin calls. I also suspect that some big boys got wind of this S&P downgrade ahead of time and took advantage of it. Leave it to the Corner of BRK/FFh to interpret a 15% market fluctuation as massive short seller manipulation of the entire market. Stocks sometimes go down guys. Something tells me S&P wouldn't risk their entire company and well being so the Sith Lord could short stocks today and make 3%. Link to comment Share on other sites More sharing options...
S2S Posted August 8, 2011 Share Posted August 8, 2011 Leave it to the Corner of BRK/FFh to interpret a 15% market fluctuation as massive short seller manipulation of the entire market. Stocks sometimes go down guys. Something tells me S&P wouldn't risk their entire company and well being so the Sith Lord could short stocks today and make 3%. +1 BAC, another forum favorite, is collapsing today. Steve Cohen must have got up on the wrong side of his bed. Link to comment Share on other sites More sharing options...
Smazz Posted August 8, 2011 Share Posted August 8, 2011 Shoot, it feels like someone gave me their credit card :D Link to comment Share on other sites More sharing options...
Smazz Posted August 8, 2011 Share Posted August 8, 2011 Holding 80% in brk is crazy but this sure feels better than having a bunch of cash (while being scared to deploy it) or being invested in things that go down 5%/day. :-X Nothing wrong with holding 80% FFH but it too is going down 4-5%. Over time you will be ok though.... Link to comment Share on other sites More sharing options...
Valuebo Posted August 8, 2011 Share Posted August 8, 2011 Holding 80% in brk is crazy but this sure feels better than having a bunch of cash (while being scared to deploy it) or being invested in things that go down 5%/day. :-X Nothing wrong with holding 80% FFH but it too is going down 4-5%. Over time you will be ok though.... Nope, got 20% in FFH and 80% in BRK. ;D I didn't expect FFH to take such a big hit and the plan was to switch half to something else, now I am not sure I should. And if this isn't over I definitely don't want out. Link to comment Share on other sites More sharing options...
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