reply to post by wutone
An overvalued market is based on confidence. A fundamental market is based on fundamentals. Right now we are seeing confidence disappear, and as a
result, the overvalued market is falling apart. At some point (imo 7300-7500) we will see the fundamental market come back into play. The overvalued
stocks will now be at value or even, in many cases, undervalued. The fundamental market players will then start buying.
Warren Buffet made his fortune off this sudden switch from overvalued stock market to fundamental stock market in 1987 and the time after. This is the
time for the Warren Buffets of the market to make their fortune. Having good knowledge of when the stock have become undervalued is going to be a huge
benefit for people investing.
A sad fact of this market is that most in it are always a step behind. They are going to be a step behind while this market goes from overvalued to
fundamentals. They will be selling because they are playing the confidence market.
A good quote I just heard not too long ago was this. "Many people, regardless of the fundamental changes that go on, are scared and want out. I say
let them out." Why? Because they are the suckers who didn't realize that the market is making a transition back to fundamentals from a confidence
Why the change? Credit. Credit is basically confidence in the form of money. Right now credit is basically gone, or very limited, so confidence is
gone as well. When confidence disappears, all you have is fundamentals on how the company is doing.
Realizing that change has occured, and when, is the decider on whether you become a big time investor, or another sucker who sold at the wrong
The kind of bad news you are talking about is unlikely. Bad news right now will bring the market down, but not any lower than where its going to be
Like I said, we are headed for a recession, definately. How long the credit crunch lasts will determine how long the recession will last. They are
directly connected to eachother. I think that the credit crisis will be solved in less than 6 weeks, 8 at the absolute most.
Because of that, I think the recession will last, at worst, most of the fiscal year of 2009. (the 4th quater of 08, IMO, is headed for negative growth
regardless.) BUT, this recession is just a good time for those who are already out of the market, to find opportunity, and trust me, there will be
PLEANTY of it. More than any of use can imagine.
Many companies, possibly close to all, will see their lows between these last couple weeks and the next half a year to year. That means they will be
ridiculously undervalued, and thus, great deals.
You are taking a very unlikely approach, then building upon that, another unlikely event. You are saying that the sole lack of confidence will
completely destroy the market. That isn't possible. Right now we have a credit/confidence crisis. This would have to last right into 2009, a good
deal of it too, if the situation you are talking of were to unfold.