Quote:
Originally Posted by Slava
Well I've been labelled as a perma-bull before, so I might as well wade in here again. These re-tests of the market lows are not unexpected at all. Actually this has happened historically a number of times and certainly does not mean that we are heading to zero faster than we are heading back to 15,000 points.
Most of the trading that brought us back to 9000 points in Canada was on low volumes and not broad-based at all. In other words, it was a foregone conclusion that it wouldn't last. Again this is not saying that we are doomed to ten years of this, or even that we are definitely headed for a depression. It means that the thin volumes that pushed the market to 9000 points collapsed and once the institutional investors start moving money in here the tide changes on the stock market.
None of this is to imply that we won't suffer economically over the coming months; far from that things will be painful. But the stock markets will recover in the midst of this. The news will be bad and yet the markets will gain ground almost in spite of the continued bad news.
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How can the markets recover any time soon when alot of companies that have slashed projections, are still missing them low. Untill companies start meeting projections I see nothing but more and more bad news. Nobody knows where the markets are gonna stop, but when they do it will likely only be a true reflection of the value and potential of the companies that make it up.
With a heavily debt laiden consumer base, the excess spending and market share potential driving huge profits and stock values is gone for a while. I think the markets will bottom out and stay there with little volatility for a long time.
Where is the money from institutional investors gonna come from?... Credit? Leveraging their assets? Sure there is cash around but without the "mistakes" and "creative financing" (we're only just starting to pay for) to fuel the market there is no way it goes back to anywhere near what it was at it's peak...
The average person will need to have their house in order before the market sees any real positive movement. For sure the market will move before the average person sees the end, but things have only just started to get bad, and there is a long way to fall yet. We're only 2 months from the foreclosure starting to hit Canada, and we'll see what that does to the average Canadians bottom line, consumer confidence, jobs and earnings projections...