Jump to content

Another Weak End


Recommended Posts

  • Replies 380
  • Created
  • Last Reply

THE PIMPLE POPS

 

the puss of hope slowly oozes out of this nasty war rally.

 

Over at the Street is a good article on the Tobin Q ratio by Stephen Schurr:

 

Andrew Smithers told investors to dump stocks just as the market peaked three years ago. Thirty-five hundred Dow points later, he hasn't changed his tune.

 

In his book Valuing Wall Street, published in early 2000, the founder of London-based advisory firm Smithers & Co. had some urgent advice for investors: "By far the most important thing you can do with your money is get it out of stocks. What you do with it then is a second-order problem."

 

 

It might be easy to suggest this was a lucky call, if not for the q ratio. First discussed by Nobel laureate James Tobin in 1969 and modified by Smithers and co-author Stephen Wright, q is a way to measure the difference between where stock prices are and where they should be. Looking back, it arguably has been the most accurate long-term predictor of market movements.

 

What does the q ratio -- and Smithers -- tell us about U.S. stocks today? Brace yourself.

 

Because q measures the value Wall Street assigns to stocks compared with the cost of actually creating those businesses (replacement costs), the proper q ratio in theory would be 1. As of Thursday's close of 868.52, the S&P 500 had a q ratio of 1.50, meaning the index would have to fall about 33.5% to 577 to get to a q of 1. It would have to fall even further to revert to its historical average of 0.65.

 

And that folks is why we are still in a Bear market.

Link to comment
Share on other sites

Ooops wrong place.

 

This must be about the most anticipated POG rally in history considering how the PMS closed Friday. Currently messing with the $4 rule, which states that the POG is not allowed to climb more than $4 in one day. The price of gold is being held in check by powerful forces which rail against it. Fact of life! Don't get mad, get even. Buy at the lows and sell at the highs and you screw them. Do the opposite and you play into their evil hands. We are recently at low levels on the charts. Believe it.

My 60:40 scenario from this weekend's PMS gold thread is very much still valid. If Huey is still up above 125 at 10 am resist the urge to sell anything from the PMS. Otherwise if you're a short term trader consider selling a portion or all of your position and buy back in a couple of days at around 117, but jump back in on a move up thru 125.

 

That is all.

 

Hey where's Easy Al? He's gotta do some jammin'.

 

Jammin' in the name o' da Lawd

Link to comment
Share on other sites

good morning stoolies.

 

i am an old boy scout and be prepared is the boy scout motto.

 

be prepared for the bounce.

 

be prepared for the non-bounce.

 

using the numbers given by others over the weekend and in conversations with me, watch for 855 (through that in the futures) and also watch for 842.

 

be prepared for either outcome and trade safe and please be well and be happy.

 

these are trying times so do not internalize the times.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Tell a friend

    Love Stool Pigeons Wire Message Board? Tell a friend!
  • Recently Browsing   0 members

    • No registered users viewing this page.
  • ×
    • Create New...