It’s bad out there.
How bad is it?
It’s so bad that we can’t even afford consumer staples anymore. That says a lot about this current crap market. Usually, you know companies like Coca Cola and Gillette (now part of P&G, of course) will do fine.
Apparently, not this time around. Read more.
Eric Jackson - who led the campaign to bring change to Yahoo - is looking for the next target. He’s looking at notable blue chips that have taken a recent hit, namely: Citigroup, Apple, GE, and many others.
Check out the list and vote for the company you think he should open a can of whoop ass on.
Personally, I am starting to think we’re in a deflationary period (and I don’t seem to be alone) and most of these stocks can be cheaper in the next few quarters relative to where they are now.
This is especially true when you consider:
- the actual stock market performances: the DJIA fell below 8,000 to 7,500, then crept back up to over 9,000 at 9,030 but has now tumbled back down to below 8,000 to 7,950 on Inauguration Day,
- recent real estate trends: I have never seen so many “reduced prices” on home “For Sale” signs,
- softness in so-called safe havens and growth markets, you are seeing a flight to quality evidenced by the drop in low-quality online advertising CPM rates.
I don’t know, but I think a lot of the projected earnings that companies are still touting over the next 2-6 quarters will be reduced, and obvioulsy that means stock prices remain shaky at best.
Washington Post recaps the year in the markets:
- Wall Street rang out its worst year since the Great Depression yesterday, leaving shareholders $6.9 trillion the poorer.
- In Germany, stocks were down 40 percent, in Japan, 42 percent, in Brazil, 41 percent. Taken together, all of the world’s stocks lost 48% last year.
- The Dow Jones industrial average, an index of 30 blue-chip stocks, and the S&P, a broader index watched by market professionals, were down 34 percent and 38 percent, respectively, their deepest losses since the 1930s.
- The tech-heavy Nasdaq composite index was down 41 percent, its worst year since the exchange was created in 1971.
- The Dow closed yesterday at 8776.39, while the S&P closed at 903.25.
- The Nasdaq closed at 1577.03.
- The market for crude oil was simply unlike anything we’ve ever seen: after surging to $147 a barrel in the summer, prices tumbled to $44.60 a barrel on the New York Mercantile Exchange yesterday, falling 70% from its peak and finishing down about 50% for the year. Had Israel not bombed Gaza in its latest misadventure, I am fairly certain the price would be even lower. While long term demand for oil remains bullish (not that you could tell given the 2008 chart), some are fearing that it could slide all the way down to $25 if the economy gets worse.
What more can we say? Apart from very conservative and wildly diversified investment funds (that I cannot sell anyway), I sold my last stock in May and boy-oh-boy do I count my blessings.
Some of the bulls out there say that stocks are cheap (and were cheap when the DJIA crossed below 8,000) when valued relative to next year’s earnings… the problem is most of those projected earnings are straight out of Alice in Wonderland and will be cut back.
Here is a very bearish take on it, which has more to do with replacement value of assets. By that benchmark, forget Dow 7,000… we’re talking Dow 6,000!
Looks like 2008 will be a banner year, for all of the wrong reasons: here are the returns per year on the S&P500.
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