Dow Jones to be $0 in 3.4 months!!!

Originally posted by TheRedneck
You forgot to add in the fact that the lower stock values go, as long as someone thinks there is a chance of recovery, they will at some point decide the price is so low it's too good a deal to pass up. That will stop the fall if enough of it happens.

AIG is 35 cents, technically ready to be delisted.

CITI is $1 and used to be $50 a share, almost ready to delist.

Who is buying ?

I know there are lots of other good companies that have REAL products,
just saying some sectors could REALLY get hammered badly.

Hehe.


[edit on 8-3-2009 by Ex_MislTech]

the current 30 corps which make up the DOW...may very well have $0
zero-dollar-value in your 3.4 month timeframe.

but in the interim, which i'm sure you know, there will be a new & revised
members list in the DOW...


i've heard that Hormel, the food processor, will be replacing one of the three contenders on the verge of dismissal, ouster from the DOW.


How very appropos to have 'SPAM' as the national entree de jour, after
decades of excess gluttony & extravagant consumerism.

~~~~~~~~~~~~


here's a thought from a Karl Denninger article,
where he states before the collapse in equities:

source, www.321gold.com...

" ....Expect at least 20% of the S&P 500 to fail within 12 months
as a consequence of the complete and total lockup of all credit markets
which The Fed will be unable to unlock or backstop....."

The point here is that 1/5th of the S&P will be replaced by surviving companies during the next year (his estimate)


I'd go on to say that things like national or even regional 'pawn shops'
might be in those companies that will flourish as the markets & economy
slide into depression & eventual collapse




~*~
Thoughts:


a daily temperature will go up or down ... but we wouldn't be wise to extrapolate that the high of the day will be 10,000 degrees at noon,
nor drop to absolute Zero by midnight,

the temperature normally varies extremely at sunrise or sunset,
or if one is in proximity of a fire or a waterfall,

The fact that there are sectors of the economy are getting hammered is a reflection of a lack of faith in the leadership of those firms, a lack of certainty in what the plans will do or when they will get enacted, the fact that there are better places to invest at the moment and the fact that trillions are sitting on the sidelines in cash, waiting for the above to resolve itself.

Take Citi for example. Citi has a massive retail bank and owns Smith Barney. The value of those deposits and assets to manage are worth more than the current stock price and that does not begin to factor in their realestate, with 4000 SB branches and 2000 Citi retail branches. Then you go into the rest of their physical assets, data centers, call centers, etc. The firm is not trading at a reasonable level. It is trading low, as a financial services firm because the government does not have a plan - or at least has not articulated a plan.

GM is another example. At $2/share the price is way under valued. If you think that GM will go bust, buy GM stock. The physical assets alone, coupled with their inventory are worth more than that. If GM goes bankrupt and you have an orderly unwinding of the firm, you will make 4-5x on your money.

The real problem here is a lack of confidence in the administration, their plans and the folks who they have to execute those plans. We currently have a treasury department with no under-secretarys because no one will take the job is case in point.

As soon as the government gets their heads out of their kiester and stops attempting to exploit this problem to advance their agenda, money will crash back into the market. The real worry here is that should this situation go on for an extended period, the market will lose total confidence in the administration and its ability to manage the economy and then, while the markets will begin to recover, it will be a very slow one.

reply to post by dolphinfan

On City the real problem is leverage. What you say about C Does not take in to account all the debt they have, For every good loan C has one bad loan wipes out at least 7 of there good loans, Also consider the HELOCS and Seconds and bad car loans and CC there our going bad everyday. That's why Its a buck a share. Same with GM way to much debt they can't make money in this market. We all have to change the world is not the same has it was 2 years ago.
With respect Pocamp.

reply to post by pocamp


I understand about the debt, but in the case of Citi, they are acribing no value to the assets and only looking at the debt, which is not a true reflection of the value of the firm. The debt is also very misleading. The assets securing the debt are considered as having zero value due to the "mark to market" accounting rules. Were they allowed to normalize the debt and structure it against the actual value of the asset, be it car or home, they would not be in nearly as bad a condition.

With both firms, an orderly bankruptcy would still bring about a value greater their current stock price.

I have no doubt that these firms are in trouble, I'm just saying that there some artificial elements to the current situation making them look worse than they really are

Originally posted by NickT916
According to my scientific calculations, the Dow J was falling at about $98 average in the past 25-30 days... and if at this rate it continues, withink 3.4 months it will hit $0!! surely economy will crash before it hits $0... but it seems as we are not just rolling downhill, we are free falling..... and its part of the plan

Apparently the Wall St. took your calculations seriously and organized a rescue mission today -- like $380 up.