iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,264 Blog Posts

How Much Lower Will We Go?

Most of you aren’t worth the ketchup on my meatloaf. Keep in mind, when I say “most,” I mean professional money managers, alongside pedestrian gaytraders.

Anyway, the zillion dollar question (not to be outdone by low-end trillion dollar questions) is: How low will we go?

I can tell you this, very simply: When the markets dip in January, they DO NOT recover right away.

Also, it’s worth noting, the fucktarded theory that states ” the market always goes higher in January,” enabling investors to celebrate by “sparking blunts,” is a misnomer.

As a matter of fact, thus far, during the 21st century, January has been an abysmal month for longs.

One thing is almost a certainty, based upon past Dow Jones performance data: when the market starts the year firing automatic rounds at bulls, it fucking dives.

Dating back to 1970, the market has endured some pretty fucked “January effects.” Take a look:

What you low ranked wrestlers know is “the market is getting killed.” However, what you don’t know, we are going significantly lower. Not because the average dip, based upon bad market starts over a 38 year stretch, is -11.5%.

Nope.

In my opinion, the economic troubles that we face today are unprecedented and deserve a “special decline.”

Keeping in mind past occurrences and utilizing time machine data, I say the DOW will get clipped to the tune of 13% by April, with hardly any real rallies or bounces. That’s almost 3x the current decline.

Do you think this is pain? You’ve not seen anything yet.

The game plan is simple: get short.

NOTE: This is your last warning.

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63 comments

  1. mdawsz

    Going to 11750 on the DJIA looks doable by midyear.

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  2. Juice

    I told you last November there would be no Santa & we were going to SPX 1050; you called me old & bitter.

    Glad to see you’ve joined the old’n bitter brigade.

    That said, we are not going straight to Hades. IMO & guessology, there will likely be a tradeable low midweek, which may hold for a month or two.

    If the market keeps dropping this week, there WILL be a rate cut before oxp exp friday.

    The PPT will not go quietly.

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  3. Tim

    Moron, 150-200bps in rate cuts, month over month and year over year CPI AND PPI data starts looking deflationary in another 4 months, housing market is rebounding before our eyes, with no homes being built inventories will be worked down throughout 08 and look for homebuilders to be very conservative with regards to how they spend their capital in years to come. i think its a bullish scenario. homebuilders will be afraid to get caught long land and will likely use cash flow to buyback stock and not waste it on potentially unprofitable land purchases. keep in mind they will likely not be profitable until 09. also average joe American will be receive massive incentives to reduce leverage (pay back his 12 home equity loans via tax breaks on income used to repay mortgage related debt. this country is not doomed loser. people still spend money like water, no problem, reduce the leverage in the system and its deflationary, take money (debt) out and assume commodity prices revert to mean for any period of time… and bam! equity markets see new highs in 3 months

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  4. wow

    Tim, do you work for the NAR?

    We aren’t but maybe halfway through the housing debacle… any government “plan” won’t be happening anytime soon. The nominees will gladly stump around the country with their plans, the current Congress will do nothing and housing prices will decline at a faster pace.

    Greenspan’s reckless policies created a pool of homebuyers and a set of products that both should never have existed in the first place. When things finally bottom with prices, we’ll find there just simply aren’t enough qualified buyers to pay for all those 100k stainless steel, granite upgrades.

    We’ve seen the beginning of the fallout of the past six years in housing, we’re just starting to see it with credit card defaults and still have no idea how damaged the consumer is. Consumer = 70-71% of our GDP and has been debting himself into housing “wealth”. Commercial real estate is just starting to fall.

    Good luck investing your 2008 Housing Bottom. Laughable.

    I will be entering short positions on real estate on any sustained bounce we get along with financials for the next few months.

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  5. Cajun

    Nice work, thanks for this.

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  6. Juice

    Tim; normally I’d say you were smoking dope, but in this case, I’d say you are wigged out on acid. I mean we are talking hallucinations, MAJOR hallucinating.

    YIKES! got any more of that stuff?

    I could use a dose of fantasy.

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  7. pablodpt

    Nouriel Roubini’s recent presentation

    In US recessions S&P500 index falls by about 28% nominal (and 21% real) as earnings sharply fall
    The stock market is now pricing a Bernanke put: hope that Fed ease may prevent a hard landing. Market rallies every time the Fed eases and/or announces future easing
    But these rallies are increasingly short-lived and running out of steam as the drumbeat of bad economic news dominates over time the effects of Fed easing
    We are at the last legs/stages of an equity sucker’s rally (as the one in April-May 2001)
    This rally will be over and a equity bear market in full swing –as in 2001-once investors realize that the Fed easing will not prevent a recession
    Foreign equity markets will also suffer as financial and real recoupling will occur and as markets are highly correlated during episode of stress and high risk aversion
    Such foreign equity markets have not priced yet the global recoupling with the US recession

    end quote

    It seems that the general consensus is
    S&P off 20%
    China off 40%
    Real State off 20%

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  8. Tim

    In 2001 this country had a recession, the only difference between the recession in 2001 and every other recession this country has had is that the prices of home appreciated during that time. now there was an obvious answer that made sense as to why this phenomenon occurred… interest rates went to record lows 01, 02, and into 03, the price of a home is like the price of anything else. its a supply and demand equation. but the price of a home is not measured in nominal terms its measured by its cost over 30 years. to an ordinary joe a 400k house @ 10% is more expensive than a 600k house @ 3% and the average joe never makes enough money to pay for his house, he rely’s on inflation to make the debt lower in real terms.

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  9. Shorticus, God of Financia
    Shorticus, God of Financia

    Excellent work, my quisling.

    Now what, exactly, is this “meatloaf?”

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  10. Shorticus, God of Financia
    Shorticus, God of Financia

    Tim,

    As I am here for a while, you won’t mind if I convert the spare bedroom into a Den of Iniquity, do you?

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  11. wow

    Tim from the NAR,

    Please tell me where/when you are investing in housing stocks so I can be there selling you the shares.

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  12. pablodpt

    Going to Tim s point
    1997-2006: Housing boom and bubble (real home prices up by 100%) driven by:
    􀂃Low Fed Funds rate (easy monetary policy) after 2001
    􀂃Low long term interest rates given global excess of savings relative to investment
    􀂃Traditional US policy of subsidization and favorable tax treatment of housing
    􀂃Lack of regulation/supervision leading to reckless lending, not just in subprime
    􀂃Financial innovation/securitization leading to reckless lending practices and loose credit standards
    􀂃Deluded expectations of permanent home price appreciation

    􀂃Housing starts have fallen sharply (more than 40%)
    􀂃But new home sales have fallen even more (over 50%)
    􀂃Thus rising glut of unsold new and existing homes that is now atunprecedented level. Glut will worsen in the year ahead
    􀂃Thus, downward pressure on prices already down 6% nominal or 10% real from peak
    􀂃Home prices need to fall 20% to 30% before they bottom out
    􀂃Housing starts need to fall another 25% to 900K or below before they bottom out and the gap between supply and demand is narrowed
    􀂃The US economy-wide recession will make the housing recession even deeper and longer.
    Sharply rising delinquencies, defaults and foreclosures
    􀂃20% (30%) fall in home prices will lead to a fall of $4 ($6) trillion in housing wealth/equity
    􀂃Subprime alone will cause up to 2.2 million foreclosures
    􀂃But a 30% fall in home prices means that 10 million households will have negative home equity, thus providing a large incentivefor such households to default on their mortgages
    􀂃This will be the worst housing recession in US history

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  13. boca

    There is more than 1 year of existing home inventory for sale in my area, could take 2 years to sell it all even if the housing market turned around immediately (unlikely). Watch for more shoes to fall in commercial real estate and small developers. We just had a deal that was in the works for a long time go under because the developer can’t get financing. The rich can afford to wait this out, what about everyone else?

    BTW the Fly got a shout out in Uncle Howard’s vlog The Naked Putz on Wallstrip yesterday. The Fly rocks.

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  14. Tim

    what happens to real asset prices during times of inflation? if a plot of land isn’t a real asset let me know what you would define it as… I’m long ITB since thanksgiving… i will also buy exp, oc, lpx, in the weeks to come

    you people assume inflation is a bad thing. it only sucks if you are poor and don’t own any real assets

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  15. boca

    That’s an argument in favor of buying the actual tangible asset (real estate), I happen to agree with that, lots of bargains out there.

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  16. wow

    Well good luck with that strategy there Tim from NAR… the reality of the situation is that historically real estate/home ownerships isn’t a great long-term investment. I guess your theory is whatever an asset’s price is, is what it’s worth. Forget all that nonsense about speculation and bidding wars on real estate. Commercial is just starting to show it’s cracks. You’re catching a falling knife, but best of luck with that ITB hope you have a sensible stop in place, there’s still at least 8 more quarters of negativity left before any bottom starts.

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  17. Pudfucker

    Seeing super defensive names like T and SVU sell off as hard as they did AFTER the indexes had already declined about 10% from their October highs is a pretty decent sign that the big swinging dicks who move stock around in size believe the economy fell off the cliff, Wile E. Coyote style, in 4Q07.

    Further confirmation came from AXP, who caters to high end consumers but had to incresse loan loss reserves. And TIF missing expectations by a mile.

    I still say just take a nap. Set your alarm for when the FED gets to 3% (probably June), then wake up and reassess. It’s too hard to short with so many sectors already down 30%-50% and with Bernanke at the helm. Destroying short sellers is his favorite sport, after combing his beard.

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  18. mrkcbill

    Pud-

    That is well said.

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  19. CubsRock

    Pudfucker and Carter Borth both less Bearish this week.

    Odd.

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  20. Sierra Water

    https://bp0.blogger.com/_wFWqWIH-WFU/R4pK-ZefZMI/AAAAAAAADYA/Z3MjPW6r6Ak/s1600-h/pricetorentratio.jpg

    Does not take a genius to understand what has happened Tim. True, there will be mass inflation, but not in home prices. Collapsing home prices will be the culprit of inflation as Central banks try to save the world from financial ruin through an unprecedent injection of liquidity. Just watch. There have been plenty of intelligent articles written on this subject.

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  21. buylo

    after watching the Putz, it is time to go long Dunkin Donuts – anybody know their trading symbol? You heard it here first, thanks to da Fly.

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  22. BOOMER

    Fly – I have a few longs to exit, stuff I bought over the last few days as a trade.

    My job is ramping up and I can’t watch my money all day.

    So, does this sound balanced to you: 40% cash, 40% basket of inverse ETFs (QID, FXP, etc), 20% GLD + SLV? Less cash?

    Advice is appreciated.

    BTW – where’s Jake?

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  23. mrkcbill

    Jake has his Eli Manning Jersey on.

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  24. Woodshedder

    Mr. LIMM’s Yoda Spankicus his weinerous a la Wang Hung Lo is taking a nap.

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  25. mdawsz

    “Destroying short sellers is his favorite sport, after combing his beard.” Funny.

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  26. gappingandyapping
    gappingandyapping

    Just bought a new car last night and these fucks are trying to unload inventory like crazy! Its almost like housing when I showed him a chart of the used car index.

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  27. TonyTheAnt

    the dow has another 15% down. peak to trough, the avg decline is 25% in a recession — we’re only down 10% from the peak. it’s extremely bearish when the mkt drops after the fed gives a dovish speech indicating they’re going to drop 50 and do whatever it takes and Countrywide gets bailed out by BofA. i have 99% confidence that we’ll be down at least another 10% but i’m very uncertain of when to build my short position. the instruments i plan to use are QID, FXP, SKF, SRS and the etf that shorts the small cap index. i build a short position on the dow at an avg px of 13,600 but closed it at the end of the year, expecting some stupid money to chase it or some kind of technical rally — that obviously didn’t happened. i started this position in august b/c i was so convinced there would be a recession. i could stab myself b/c i’m so pissed i left a fukload of money on the table.

    any opinions on when to scale back into a short position? i keep waiting for a snapback so i could short on strength. i’m hesitant to go short right now, b/c i’m concerned that as soon as i leg into the trade, the market finally has a s-t rally.

    my trade idea of the week is short oil via a long position in DUG or a short position in USO. oil will trade higher over the long-term, but the spook of a recession will drive a lot of speculation out of the trade and likely bring it lower before it goes back up to $100. a recession is bearish for oil even with all the peak oil talk and supply concerns. the same concerns existed one month ago when oil was close to $100 and nobody though we were in a recession. assuming we don’t invade iran, oil will trade lower as more traders buy into the fact that we are in a recession.

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  28. TonyTheAnt

    Tim, it’s good to hear the bull case but you are truly naive if that’s how you really see things playing out. then next year will be a shitshow. trillions of dollars of real estate wealth is evaporating on a global scale. combine declining real estate with declining stocks, a tough job market, and a difficult credit environment and those are the perfect ingredients for a good 1-yr recession.

    we need more people like Tom to create strength for the smart money to add to their short positions.

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  29. Shorticus, God of Financia
    Shorticus, God of Financia

    The Giants play the hated Boys of Crack.

    Show some respect.

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  30. SaNTa

    We are going lower because Mrs. Claus left me, and I’ve been throwing my life away, rather than deliver presents to needy children.

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  31. alphadawgg

    Jake,

    The Giants need to break Marion Barber’s legs.

    I will see what my cousin Guido can do.

    I can’t stand the Crackboys. May they lose, with extreme prejudice.

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  32. Wang Hung Lo

    Clackboys wiew roose. I wiew have my thugs thlow shahp poison tipped stahrs at Lomo.

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  33. KC Trader

    This is a bear market for sure. The cycle of war ending helps kick start the downward movement.

    The markets are set to consolidate or at best bounce a little before heading south to the confederate states.

    Earning season is upon us with the banks leading off. Too bad Joe Torre can’t make a lineup change. Hopefully those lying sacs of craps guided low so they can meet the streets expectations.

    Anyways. The scared smart money should have money working for them in safe sectors such has the health and drugs sector. DNA reports after hours Monday which should give a decent outlook how they have done. If earnings are good, then you might want to make a play in SNY. Just under $49 and should make a run to $70.

    It’s on the verge of breaking out to all time highs. Will Wallstrip’s and Howard do another SNY clip?

    Here is the old one.

    http://www.wallstrip.com/2006/10/25/october-25-2006-sanofi-aventis/

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  34. yelle

    Jake
    get back to beannies blog they need ya, btw everybody’s bearish over there now to…

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  35. Wang Hung Lo

    So fah, my poisoned tipped thlowing stahs aw wolking.

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  36. Shorticus, Demigod of Financia
    Shorticus, Demigod of Financia

    GIANTS OF OLYMPUS!!

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  37. BOOMER

    one of my posts got deleted. what’s up – BOOM insider buying was the topic

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  38. BOOMER

    now its back but edited. strange.

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  39. BOTD

    Who needs CASH? we do. you do. the banks do. we are all fucked… the USA is an over-extend, MAXED OUT, credit charging, christmas spending, overpriced, $15 lunch, $4 gas, defaulted mortgage, past due, uneducated, spoiled, unemployed, energy wasting, planet killing bunch of greedy ass PIMPS!

    http://www.BuyOnTheDip.com (don’t let our name fool ya, we are short a lot right now…..check out the short bus list.

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  40. BOTD

    p.s. why does HOWARD (naked putz on wallstrip) always mention FLY?

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  41. Woodshedder

    Why do you spam the comments section?

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  42. BOTD

    trying to make friends. answer my p.s./…..???

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  43. Woodshedder

    It would be more effective for you to sign up for the PG, write something, and if it is good, people will visit your site.

    Howard has been mentioning the FLY for at least a year. Why is inconsequential, but were I to venture a guess, it is because he is the most original of the financial bloggers.

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  44. BOTD

    cool,

    i did sign up, but didnt get the email response. i will try again.

    and whats you FAV short for next week? …. (JOE) looks like a loser. Florida real estate, hmmmmm….unless china buys FLORIDA, …JOE goes lower.

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  45. Woodshedder

    Top short pick for the week is GHM. I also like FTK, DECK, LAYN, and PCP for shorts.

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  46. BOTD

    i like the DECK short.

    p.s. check the PG, halla!!!!

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  47. > Bernanke

    Mr. Fly,
    Indeed.

    wow, agree

    Tim, Welcome to our planet.

    Mother market is bigger & badder than the Fed. Bernake is nothing more than a small speed bump on the road for a Monster truck barreling down the side of a mountain.

    Definition of a builder – a guy who declares bankruptcy every 7 years. This is the year.

    We will have deflation though –
    in housing prices & the US$

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  48. Wang Hung Lo

    Wow ! I come bahk flom da lestaulant, weah I make speciar egg dlop soup, an I see New Yolk Giants win ova Darras Clackboys. Gleat win fo Big Brue.

    My poison tipped thlowing stahs wolked goo on Lomo. I now go to wolk on Packas and Blett Falve, wit two tines poison tipped thlowing stahs.

    Palty aht Mista Jake’s. Eri in da house !

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  49. Art Vandalay

    OK, here’s the thing. It’s odd that so many on here are bearish on the market. I mean, is it possible that so many of you are right? Nooo!

    You’re all saying the same thing. As my friend, George Costanza used to say, “do the opposite of all that seems to be common sense”. The majority is usually wrong because they rely on what other people say and don’t think for themselves. Too much of this is happening. That’s why it’s called “common sense”.

    Friday was probably the final washout prior to a recovery. The market did not break the Aug lows. Now we have a double bottom potentially forming.

    Do the opposite of what so many commoners are thinking, and you will bank coin. Overconfidence is a liability. We have seen the Fly exhibit that in the past and he has paid for it dearly.

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  50. Juju bear

    Who’s the stupid cornfucker who put up FXP as a “stock” of the week? It’s an ETF, viz. “Exchange Traded Fund”, puddinhead.

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  51. Woodshedder

    Art, what’s your timeframe? You bettin’ on a bounce, or do you think this is THE bottom?

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  52. The Fly

    Juju:

    Because picking FXP, gets a discussion in all of its components.

    It’s my idea, mainly because my brain works on a higher level than yours.

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  53. The Fly

    Art:

    The problem with your theory is that it isn’t true, outside of the internet blogosphere.

    Everyone is long.

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  54. CubsRock

    I disagree Fly.

    Everyone is long only refers to ma and pa. Anyone that can move stocks has been and is short already. Don’t try to make up for your miss of the first leg down by overexerting this one. If you remain objective and still feel we are going down then go with it.

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  55. BOOMER

    IBM pre announces a win, lets watch if it sells off

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  56. BOOMER

    SHLD! Homo hammer

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  57. calvino

    Ah Shitty bank, finally announcing the layoffs, bye cows!Does anyone think Vikram Vandaloo got his lamb job because he’s not going tobe sacrificed as the most hated CEO in the history of Shitty bank? yum yum

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  58. Doodee

    Thanks for sharing

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  59. gailionge

    I’d prefer reading in my native language, because my knowledge of your languange is no so well. But it was interesting! Look for some my links:

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  60. gailionge

    I’d prefer reading in my native language, because my knowledge of your languange is no so well.

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