DOW 600? – Moon of Alabama

March 6, 2009

DOW 600?

For incomprehensible reason, WaPo interviews Jim Glassman, one of the authors of the book DOW 36,000 first published in November 2000.

The guy is totally nuts:

Do you still think it will hit 36,000?

I have no doubt about that. I think that is absolutely true. But I'm not going to tell you what date.

…
[Y]ou don't feel the need to apologize to someone that read your book, went in and got creamed?

Absolutely not.

With this prediction record, and no need for apology, let's ask where stocks will go.

How did your stocks do last year?

I took a major hit last year, about the same as the market as a whole. I plan to start buying again soon. …

So Glassman plans to buy "soon". Which means that one is certainly better off not to buy for a long time.

But where will the stock markets go from here?

In November we looked at the breakdown of a huge double top formation in the SPX.

Standard & Poors 500 index (SPX weekly), 1970-2008, via bigcharts.com
bigger

When I posted that the SPX was a bit under 800. It is now at 680. I see support at 620, maybe a short but hefty rally there, and then a break down to around 420 at the end of the year, the same level as 1994. That would be 74% off from the top. The equivalent level for the DOW is about 4,000.

So DOW 600 seems unlikely to me. But who knows? Markets often overreact. Both when going up and when going down.

This deep fall in the stock markets creates a big social problem. Many individual retirement investments are now falling apart. Not only all the 401k's but also all the pension funds which usually have 60% of their reserves invested in stocks:

State government pension fund assets in the U.S. fell 30 percent in the 14 months ended on Dec. 16, losing $900 billion, according to the Center for Retirement Research.

That is another trillion taxpayers will have to cover. And if the markets go down another 33% from here as I expect, those pension losses could double. Oh and the FDIC now needs $500 billion and the bailout is in the trillions and and and.

It seems that for the next years all savings will be needed to buy up treasuries. There will be little money left to go into stock markets. When they finally stop to drop, they will likely stay flat for a longer time.

Posted by b on March 6, 2009 at 13:48 UTC | Permalink

Comments

Looks like
Denniger agrees with you:

The bad news is that you won’t have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.

Posted by: Hamburger | Mar 6 2009 15:17 utc | 1

Dow 600 is a real possibility if the U.S. or Israel attack Iran, an act which would remove life support for the U.S. economy ($ 500/bbl oil, a multipication of U.S. deaths in the region, global anti-U.S./Israel reactions and even boycotts of U.S.-Israeli goods) and trigger civil war in the U.S..
This, by the way, is why I’ve argued on other threads that, no matter how hard the Neocons and Zionists try, they will not succeed in persuading Obama to attack, or sanction an attack on, Iran. The U.S. economy is worse than fragile, so I believe the U.S. has read Israel the riot act.
Regarding Dow prognoses, my own take after watching and studying the markets for 4 decades is that we’re very close to the bottom, if not there already, because markets tend to begin their recovery 6 – 12 months prior to the end of bad economic news. I’m betting on 6 months in this particular instance. Why? Because a) QIV 2009 earnings will look good in comparison with corresponding YoY earnings, b) a DOW 4000 has become conventional wisdom, and c) there is genuine ‘capitulation’ already, with outstading stocks being thrown out to satisfy margin calls and immediate financial needs.
Anyone who buys the largest, best run and most well capitalized global corporations TODAY (there are loads of them but I’m not recommending any) will triple his/her money in 2 years.
JMHO.

Posted by: Parviz | Mar 6 2009 17:33 utc | 2

P.S., I know, Debs, I’m a ‘capitalist tool’, but I didn’t post the thread 😉

Posted by: Parviz | Mar 6 2009 17:34 utc | 3

b, I posted 2 comments 5 minutes ago but only one appeared, then that too was deleted. Are you having IT problems?

Posted by: Parviz | Mar 6 2009 17:37 utc | 4

Paviz-
I agree that a well-picked stock could make a poor bastard like me start looking for flashier digs in four or five years. But that is only if the current economy and status quo is continued. I’d have a hard time investing my imaginary dollars in a market that is hooked to this current mess. If the feces begin to fly there are years of internalized anger that might be released. Remember that few americans have lived through a civil war… They have no idea of the destruction they themselves can create by shitting in their own bed. I’m a fatalist in my view and I recognize this.
I will say that if the economy can be pulled back from this brink without any popular uprising, than I give full marks to the lucky folks who make it happen, be it Obama or Mao…
I don’t know what to believe, but I’m really glad I live in the sticks.

Posted by: David | Mar 6 2009 17:55 utc | 5

Well b, maybe Glassman will start buying in the market soon, but buying into something like this!

Posted by: Rick | Mar 6 2009 21:17 utc | 6

How about Dow 360? or Steve Bell this morning

Posted by: Dr. Doom | Mar 7 2009 1:32 utc | 7

Buck Rogers Goes to Mars
$600M we’ll never see again, to look for the pimple of Jesus on the butt of Satan, or something. Plus the launch they crashed into Antarctica last week, that’s $838M, poof, we’ll never see again, on top of the $35,000M we pay NASA every year to entertain us with old Apollo moonshot footage from 30 years ago, when a space launch cost $10M. “The Right Stuff” takes on a sinister apartheid meaning.
“The Kepler Probe really attacks some very basic human questions that have been part of our genetic code since that first man or woman looked up in the sky and asked the eternal question: … Are we bankrupt yet?”
Geithner Testifies on a Very Important Program to Launch Eco-NeoZi’s Crawling Up Your Ass
20% per year increase in utilities. $400 a year extra on vehicle license renewals.
Elderly on fixed incomes freezing to death, starving to death, unable to afford utilities or vehicles. Eco-NeoZi’s, with flashlights up your ass and your business plan.
Gotta have something for all those returning troops to do.
Have them manufacture wood stoves? Pellet Power? Hardly, that ain’t how it works.
Global War on Climate.
Department of Climate (Job) Defense.
Department of Homeland Climate (Job) Security.
National (UpYour) Ass Surveillance Administration: NAssSA
Transportation Climate (Job) Safety Administration
They won. We lost. It’s just (Defense Socialism) business. Get over it.
This is the end of the Era of Innovation, and beginning of the Era of Implosion.
Make sure to stop by the Church of Carbon Cap & Trade on your way home tonight.
Dow 0. Nuklur Winner. All Hail Sweet Baby Bejeezus.

Posted by: Bubba Gum | Mar 7 2009 15:49 utc | 8

The twin peaks of S&P crashing, look like the Twin Towers falling, look like the twin contrails of the Challenger exploding, look like the forked tongue of Satan laughing. Britain nationalized Lloyd’s Bank, America will nationalize Citi. http://www.youtube.com/watch?v=ng5XKOhByXM

Posted by: Casus Belli | Mar 7 2009 16:06 utc | 9

Parviz @2
Um Parviz, you are referring to THAT forty years, which are the PAST. I worry about the next twenty (since I’m old and won’t care after that) during which I expect we’ll be playing an altogether different game. You should have noticed that the old rules have already been discarded.
I confess I have no idea how to play now or what the new rules will be.

Posted by: rapt | Mar 7 2009 20:31 utc | 10

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