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» mdorsey - A Textbook Bear Rally
A Textbook Bear RallyAs in any bear market rally worth its salt, bulls are saying it’s a new bull market and bears are worried that the market is not following their script. In our view all of this is perfectly normal. Bear market rallies are often sharp and deceptive, and sometimes come to a sudden end. Every bear market has endured one or more steep rallies that have fooled the majority of investors, even at times when the general public was not as heavily invested as now. We recently pointed out the big jump in the major averages from this year’s March bottom to May top, and there were similar counter-trends in other post-war bear markets. Even the infamous 1929-to-1932 debacle was punctuated by six big rallies with respective jumps of 48%, 16%, 23%, 29%, 35% and 25%.
In our view the current rally will prove to be just another counter-trend move that is doomed to fail. Our reasons are as follows: 1) The market remains highly over-valued with the S&P 500 selling at 44 times this year’s estimated reported earnings, and 25 times normalized earnings. 2) Unlike the period from 1998 to early 2000 when investors were making the case for a period of unparalleled growth and unending prosperity, we are now faced with recession, increasing unemployment, poor profits and a return to a more normal level of productivity, thereby undermining the case for permanently higher multiples. 3) The recession is probably not ending soon as the recent minor upticks in some economic numbers is only a return to some semblance of normality after the virtual shutdown following the terrorist attack. 4) The massive imbalances built up during the prior economic and financial bubble are not likely to be rectified by a mild garden-variety recession, as corporations continue to lay off employees and cut capital spending. 5) Hoping for consumers to rescue the economy by maxing out their credit cards when they already have record debt burdens only indicates how serious the economic situation is. 6) Investors are complacent and optimistic, and are attempting to hop on the bull market train before it leaves the station. This is not how bear markets end. At major market lows, the majority of investors regards the market with disdain or fear, and would rather keep their money in anything but stocks.
-- posted by mdorsey
» Happy - Re: A Textbook Bear Rally
In response to message posted by mdorsey:It's funny how the bears always seem to have the best arguments, at the very bottom. What you say may very well all be true. But, this has already all been factor into the market. At the moment, we have only the unknowable future. EMT rules.
-- posted by Happy
» Felipe - Doug Cliggott
Is anyone familiar with Doug Cliggott's success as a market strategist before 1999? I'm quite familiar with his bearish views since early 1999 but have not found any sources for his performance during the years prior to 1999. Anyone know? Anyone know of a site that has this information?
P.S. Happy (AKA Norman), it's all coming back to me now. I knew mdorsey as a kid. He was on my baseball team. He dove for the dirt on every pitch, even before the pitcher released the ball. When we asked him why, he explained that the next pitch might be fast, high and inside -- he just didn't want to leave anything to chance. Of course he never struck out swinging, which was a great source of pride for him. 
-- posted by Felipe
» Rande - Re: Doug Cliggott
In response to message posted by Felipe:Felipe,
Here's some Cliggott just before the great 95-00 bull market run. You be the "judge":
Newsday, November 23, 1994
Doug Cliggott, senior investment strategist at Merrill Lynch, said that until recently, stock investors figured that rising corporate earnings would support stock prices and make up for the poor dividend yield. "We're starting to see a shift in perceptions where the big fear isn't a resurgence of inflation anymore, but rather that economic activity slows down and earnings don't turn out as expected," he said.
-- posted by Rande
» Kirk - Re: Doug Cliggott
In response to message posted by Felipe:http://biz.yahoo.com/rf/010917/n17342174...
Monday September 17, 9:32 am Eastern Time
J.P. Morgan's Cliggott Cuts S&P 500 2002 target
NEW YORK, Sept 17 (Reuters) -- J.P. Morgan Chase & Co. chief portfolio strategist Doug Cliggott on Monday cut his 2002 year-end target for the Standard & Poor's 500 Index to 1,100 from 1,200.
(EC: Today we are at 1,157.42 a nice gain from the post terrorist attack level when he gave his downgraded target. Funny how we are $57 bucks over his 2002 target only months after his revised numbers... Of course we were heading down on Sept 17th...
<img src=http://chart.yahoo.com/c/3m/_/_spc.gif>
and the S&P500 was getting close to $950 and people like him were heading to the hills!)
Cliggott cut his 2001 operating earnings per share for the index to $36 from $44.
``The current freeze on U.S. air traffic and the sharp slowdown in retail and financial commerce will likely push corporate earnings down in the third quarter,'' Cliggott wrote in a note to clients.
Slower consumer spending and weaker export growth will keep profits down ``for at least the next quarter or two,'' Cliggott said.
-- posted by Kirk
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