We're on a ferris wheel
A crazy ferris wheel
A wheel within a wheel
That suddenly reveals
The stars begin to reel
And down again around
And up again around
And up again around
So high above the ground
We feel we gotta yell
We're on a carousel
A crazy carousel.
mannfm11 wrote:Next, the Comstock stuff is really interesting and lends a lot of credence to what I have been saying all along, target under 3000 on the Dow and 300 on the SPX. I don't believe we get of easier than Japan.
EARNINGS STATS: BY THE NUMBERS
As of Friday, February 27th:
The blended earnings growth rate for the S&P 500 for Q1 2009,
combining actual numbers for companies that have reported, and
estimates for companies yet to report, fell to -31.4% from -30.6%, due
in part to downward revisions in GM and Goodyear Tire & Rubber.At the
start of the quarter, the estimated growth rate for Q1 was -12.5%.
(Data provided by Thomson Reuters)
Date 1Q Earnings growth estimate as of that date
Jan 1: -12.5% Start of quarter
Feb 20: -30.6%
Feb 27: -31.4%
mannfm11 wrote:> Next, the Comstock stuff is really interesting and lends a lot of
> credence to what I have been saying all along, target under 3000
> on the Dow and 300 on the SPX. I don't believe we get of easier
> than Japan.
> We really believe that we cannot be using government intervention
> in amy manner -- whether it's the banks, whether it's the
> automobile companies, whether it's virtually anything -- the
> housing market, especially.
> The housing market is so large right now - it was $21 trillion.
> It's now around $17 trillion. We really can't see how it's
> possible to stop a $17 trillion market from reaching its fair
> value by intervening for $75 billion or $150 billion.
> [Matt: Which banks do you think will survive this crisis?]
> Well, JP Morgan will survive it. Wells Fargo could. Two that
> are shaky right now are Citigroup and BankAmerica.
> [Bloomberg anchor Matt Miller: Discuss earnings]
> We think it's just insane what Wall Street are looking at, and
> looking at operating earnings.
> It just makes no sense. Operating earnings exclude writeoffs.
> The only way you get people coming on the air and talking about
> the market being fairly valued, or undervalued, or really cheap,
> is to look at operating earnings, which only came into existence
> in the late 1980s, and became more and more popular as everybody
> on Wall Street needed to use them, especially during the financial
> mania of the late 1990s, in order to justify the prices they were
> paying for the S&P 500.
> They should have been using reported earnings, which are GAAP
> earnings, and we have a history of reported earnings going back
> for 90 years. We have no history of operating earnings.
> [Miller: The problem is, Charlie, that if you look at reported
> earnings, expectations for this year on the S&P are about $35,
> right? And if you look at it that way, the P/E ratio begins to
> look at little bit more insane.]
> Right. Essentially we've been keeping track at Comstock - you go
> into the web site of S&P consistently throughout the year. We
> write down exactly what those earnings estimates are virtually
> every week.
> They've come down very, very sharply this year.
> For example, the operating earnigns came from $112 early in the
> year to approximately $68 now. Those are estimated earnings for
> 2009 reported earnings - they started at $73, and are now at $32.
> And they only earned $28 in 2008.
> [Miller: $32 means a P/E of 24. What do you think is more
> realistic right now? I mean, would you rather see it come down to
> 12? Because it's a huge drop for the S&P you're implying.]
> Really what we're saying, Matt, is we started a secular bear
> market in the year 2000. We believe before this secular bear
> market ends, we will reach trough levels on the operating earnings
> for the S&P 500 and for reported earnings. Definitely for
> reported earnings.
> And with reported earnings at $32, we're going to have to get down
> to essentially 320 on the S&P.
> Now what we're trying to do at Comstock is give the bulls the
> benefit of the doubt, by essentially using a trend line earnings,
> or smoothing those earnings. With those smoothed earnings, we
> come up with approximately $60. $60 at 10 times $60 is still 600,
> and that's the best case we can come up with.
> Miller: OK, that's Charlie Minter of Comstock partners, looking
> for 600 on the S&P.
John wrote: All the Washington officials, even including Ben Bernanke, talk about solving some
particular point problem -- such as saving a bank or building a
When you look at the entire problem from the top down -- the $1
quadrillion in credit derivatives -- you realize how hopeless the
problem is. We've already seem many structured securities fall in
value by 70-80% from their notional value as the credit bubble leaks.
If the $1 quadrillion in credit derivatives fall by only 5%, then
that's $50 trillion in losses. There's no bailout or stimulus that
can even make a dent in $50 trillion in losses.
People always ask me how I can be so absolutely certain that the
bottom hasn't been reached, or that there's much worse to come, and
when you look at the top-level aggregates, it's perfectly clear....
I'm very familiar with this kind of argument. When I talk about
what's coming, people almost never challenge the argument I'm making;
instead, they just say, in effect, "What you're saying must be wrong,
because the results are impossible." This is the essense of almost
every argument used against Generational Dynamics, and I've heard it
literally thousands of times.
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