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Topic: Stocks poised for 10 percent drop
| Author | Message |
| UGoGirl | Posted – 7/16/2007 10:53:40 AM | show profile ... thinking of reducing your risk in the stock market? Now might be a good time to make some changes... get out before the exodus begins... only suckers will be left sticking it out. *** Stocks in U.S. Poised for 10 Percent Drop, Options Bets Show Bets in the options market against the Standard & Poor's 500 Index have exceeded wagers it will rise by a 2-to-1 margin for a month, the longest since Bloomberg began compiling the data in 1995. That's seen as a warning sign the market is due for a decline of 5 to 10 percent after the S&P 500 rose to two records last week, say managers of almost $1 trillion at Morgan Stanley Global Wealth Management, National City Private Client Group and Russell Investment Group. The Leuthold Group, whose flagship fund has beaten 99 percent of similar funds over the last five years, expects the S&P 500 to slide as much as 19 percent by the end of the year. The options market is "a bell ringer," said David Darst, who oversees $728 billion as chief investment strategist at New York-based Morgan Stanley's private banking unit. "On a short- term basis, the market's ahead of itself and could have a pullback." Darst, who cashed in some stocks in the past 12 months, said the market could drop as much as 10 percent. ..."People are starting to realize that in the second quarter we're not going to have blowout earnings," said Nick Raich, Cleveland-based director of research at National City, which manages $34 billion. ..."No one really has a firm grip yet how much this subprime issue is going to mushroom or morph into something that's completely different and much more extensive," said Quinlan. ...A ratio tracked by Leuthold of U.S. companies reporting year-on-year profit increases compared with the number posting earnings declines is already the ninth lowest in the 23-year history of the firm's data. "The best times are really behind us, and going forward you're going to see probably more and more disappointments," Engel said. Leuthold took out so-called shorts that equaled 12 percent of assets in its core fund about five weeks ago. ...The length of time since the last market decline of 10 percent or more only increases the likelihood of such a slump, according to Morgan Stanley Global Wealth's Darst. Bloomberg |
| mailbag | Posted – 7/16/2007 3:32:20 PM | show profile | email poster Even if it does drop 10, still up 20 for the past 12 months no? I think corrections are part of the whole. More worrisome to me at least is that I see very little cause for the DOW to even be has high as it is. Should still be between 10,000 and 11,000. I'd call that mark - stable. I think the new rise in hedge funds (and instant promised billions in return) are going to do far more harm in the long run because the cannot be sustained on falling dollar value. |
| catlondon | Posted – 7/16/2007 6:22:04 PM | show profile The real worry I see for the market, barring any unforeseen disasters, is 2010, when the current limits on capital gains taxes are set to expire. If there's a smart person in office, he or she will let those limits expire and tax capital gains at realistic levels. However, there are people like me, who got in the market when it was still reeling from the internet bubble burst, who plan to take their money out before those limits expire. So whoever is setting policy 2 1/2 years from now has to balance what's needed in the long-run for the fiscal good of the country with a sudden big sell-off to limit tax liabilities. Perhaps a grandfathering in of stock purchased before a certain date or a gradual increase in the taxes. My portfolio (which has one really big loser that I hang onto as cautionary reminder) is up 40%, so while 10% sucks, it wouldn't really hurt. |
| mailbag | Posted – 7/16/2007 6:39:30 PM | show profile | email poster I hedge cat that those in power will be in your shoes as well... so I wouldn't worry. Consider yourself in the good crowd. lol. |
| UGoGirl | Posted – 7/16/2007 10:19:58 PM | show profile Yes, all of this may be true. To be honest, I am 100% amatuer when it comes to the stock market. Very conservative investments (other than a bit in energy and gold funds, because the data tells me energy will increasingly be scarce, and gold funds because the dollar is falling). We're holding our own but not doing great. But hoping not to lose a lot when things get ugly as they will at some point. |
| mailbag | Posted – 7/16/2007 10:35:42 PM | show profile | email poster Read up on gold ugo. Do you subscribe to Kitco? I report on these metals (not for them though.) Stay informed and you will feel more comfortable about that side of investing. I'm rather stuck with my Edward Jones... they don't do commodities (darn.) |
| UGoGirl | Posted – 7/17/2007 9:10:22 AM | show profile On gold, it's just one of those hedges... we have a little money in a gold mutual fund rather than actual gold though. Just another way to diversify our investments ... but we're not exactly gold bugs. |
| mailbag | Posted – 7/17/2007 9:13:52 AM | show profile | email poster Here is a hint ugo - watch what Indians do with gold (in India.) One billion people can't be wrong in my book. :-) |
