Shiller says Dow may go down to 4000

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SoonerSunDevil
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Post by SoonerSunDevil »

I expect the S&P 500 to rise by about 20% within the next 6 months. I'm not saying the S&P will go up by 20% and not retreat lower, but I think there's a 20% jump waiting to happen in the market.

In the interest of full disclosure, I am long on SPY calls and XLF calls :)
manhattanfinance
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Post by manhattanfinance »

"The real reason stocks are falling so dramatically has nothing to do with deleveraging or economic distress. The real reason is that no one trusts the insiders who have been milking companies dry with huge salaries and massive corrupt stock option plans. At the same time they play games with earnings and balance sheet. Witness Lehman's huge 100-million-dollar bonus just before declaring bankruptcy. The atmosphere between shareholders and management is downright hostile. For years, my refusal to buy any share in which there has been insider selling, especially the repeated cashing in of huge stock options, has saved me from experiencing the pain that other investors have experienced. And even though stocks appear "cheap" or "fairly valued", this doesn't changed my opinion or my actions. I refuse to play games with these people. Furthermore, people who blindly buy index funds like the SPY are grossly contributing to the problem."
Last edited by manhattanfinance on Sun Oct 12, 2008 8:59 pm, edited 1 time in total.
nonnie
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Post by nonnie »

gummy wrote:
I had to try that meself, comparing with the worsest years ...
http://www.gummy-stuff.org/DOW-weakly.gif
Gummy, can you do that with the best years or years after the biggest declines? One of the things we always hear about risks of market timing is missing the rebounds and I'd really like to see what the years after the "worstest" look like and how quickly the market has recovered.

Nonnie
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gummy
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Post by gummy »

nonnie wrote:Gummy, can you do that with the best years or years after the biggest declines? One of the things we always hear about risks of market timing is missing the rebounds and I'd really like to see what the years after the "worstest" look like and how quickly the market has recovered.
Nonnie
I got a bunch of charts 'n stuff here:
http://www.gummy-stuff.org/meltdown.htm
Do I gotta do this full disclosure thing? I own DRYS and EXM.
I like 1937-1938, 1969-1970, 1977-1978, 2002-2003 and I especially like 1931 (down 53.5%) and 1933 (up 78.9%). :lol: :lol:
Image

P.S. I have a bet (made yesterday over thanksgiving dinner) with my two brothers-in-law:
#1 bets the DOW will be up 400 points on Monday (today).
#2 bets it'll be up 150 points.
I bets it'll be up 300 points.
shelanman
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Post by shelanman »

gummy wrote: I got a bunch of charts 'n stuff here:
I especially like 1931 (down 53.5%) and 1933 (up 78.9%). :lol: :lol:
I just wanted to point out that after suffering a 50% decline, you need a 100% increase just to get back to where you were.

After a 53.5% decline, you'd need 115.1% increase to get back to even -- and the 53.5% decline was surrounded by other significant years of loss.

In the end, even in the early 40s, you were still below '29 levels.
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daryll40
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Post by daryll40 »

Not if you rebalanced. You were more than whole by 12/31/1935.
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tadamsmar
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Post by tadamsmar »

Here are some interesting books:

http://www.amazon.com/s/ref=nb_ss_gw?ur ... =dow+30000

Dow 36,000

Dow 40,000

Dow, 30,000 by 2008 Why It's Different This Time
KritonD
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Post by KritonD »

dothemontecarlo wrote:
bullie1976 wrote:I think it's possible for the DOW to go to zero. I need to write a book or something. When there is fear on the street, you will hear all kinds of possibilities.
I'll make sure I keep $1 set aside in cash, so when the DOW goes down to zero, I can buy it and own all the publicly traded companies.
Well I'll keep 2 dollars aside and outbid you, oh, guess that means the dow isnt at 0 anymore!
nonnie
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Post by nonnie »

gummy wrote:I got a bunch of charts 'n stuff here:
http://www.gummy-stuff.org/meltdown.htm
Do I gotta do this full disclosure thing? I own DRYS and EXM.
.
I bets it'll be up 300 points.
Thank you very much. so-- who won the bet-- do you let it ride until someone gets within 300 points :D ?
gassert
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Post by gassert »

As usual I am happy gummy is around. Thanks.

And SPY calls we a great buy - sooner - I was in a day or 2 early, but happy to "bet" on the bounce with play money. Nice job
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dothemontecarlo
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Post by dothemontecarlo »

KritonD wrote:
dothemontecarlo wrote:
bullie1976 wrote:I think it's possible for the DOW to go to zero. I need to write a book or something. When there is fear on the street, you will hear all kinds of possibilities.
I'll make sure I keep $1 set aside in cash, so when the DOW goes down to zero, I can buy it and own all the publicly traded companies.
Well I'll keep 2 dollars aside and outbid you, oh, guess that means the dow isnt at 0 anymore!
Be careful. If we start publicly disclosing our bidding strategies, we'll be accused of rigging the auction to buy the DOW on the cheap!
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gummy
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Post by gummy »

shelanman wrote:I just wanted to point out that after suffering a 50% decline, you need a 100% increase just to get back to where you were.
After a 53.5% decline, you'd need 115.1% increase to get back to even -- and the 53.5% decline was surrounded by other significant years of loss.
In the end, even in the early 40s, you were still below '29 levels.
Aah, too true!
However, I reckon one should consider sleep a financial strategy:
If you had bought the DOW five years before the '29 crash and fell asleep until five years after, you'd have made money.
http://www.gummy-stuff.org/1929-crash.htm

If you had bought the DOW in Jan, 1987 and fell asleep thru' the '87 crash, until Christmas, you'd have made money.
nonnie wrote:Thank you very much. so-- who won the bet-- do you let it ride until someone gets within 300 points?
I was sure I'd win with a prediction: "DOW up by 300 on Monday".
Reluctantly, I pronounced brother-in-law #1 the winner (with a "up by 400" prediction) and awarded the prize:
Image
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gummy
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Post by gummy »

Were we talkin' about sleeping through a DOWnturn?
Here's a neato chart:
Image
Y'all want 95%?
Sleep fer 52*20 weeks = 20 years.
:lol: :lol: :lol:
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daryll40
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Post by daryll40 »

Sorry that I can be somewhat of a moron, but I cannot figure out what the above chart is saying. Yeah, I get it that Gummy is saying that a "blind trust" mentality is the way to go. But the chart itself is not speaking to me.
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gummy
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Post by gummy »

daryll40 wrote:Sorry that I can be somewhat of a moron, but I cannot figure out what the above chart is saying. Yeah, I get it that Gummy is saying that a "blind trust" mentality is the way to go. But the chart itself is not speaking to me.
Maybe the explanation here is a mite clearer:
http://www.gummy-stuff.org/sleep-strategy.htm
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daryll40
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Post by daryll40 »

AH! Now I get it! Thanks Gummy! Your stuff is always good...going back to your early stuff on MOTLEY FOOL'S Retire Early boards with Intercst.
Thanks again.
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bob90245
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Post by bob90245 »

gummy wrote:
daryll40 wrote:Sorry that I can be somewhat of a moron, but I cannot figure out what the above chart is saying. Yeah, I get it that Gummy is saying that a "blind trust" mentality is the way to go. But the chart itself is not speaking to me.
Maybe the explanation here is a mite clearer:
http://www.gummy-stuff.org/sleep-strategy.htm
What happens when you reinvest dividends? You do know that there are TWO Dow indices: one for price only (the one you're using) and one for total return (reinvests dividends).
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gummy
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Post by gummy »

bob90245 wrote:What happens when you reinvest dividends? You do know that there are TWO Dow indices: one for price only (the one you're using) and one for total return (reinvests dividends).
Actually, the DOW values I used, from djindexes (also available at Yahoo) are adjusted for reinvested dividends.
See, for example, this:
http://www.djindexes.com/mdsidx/index.c ... wAvgMethod
and elsewhere on the djindexes site:
Cash dividends are reinvested in all current index component stocks based on their weight in the index as of the ex-date of the dividend.
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