Are stocks cheap now? The common sense answer...

We still don't know how far we'll fall. I suspect we'll fall more after Christmas when we hear just how bad sales really were.

people keep pointing to low P/E ratios. that's nonsense. the "E" in those ratios is the big unknown, although everyone knows it will go down. Negative in the case of many companies. I'm both long and short right now.

Yeah, it's a hoot the way the talking heads on squeek blab try to push stocks every day. They are nothing but pimps.

The market will not go straight down. There will be bull moves in this bear market. Do not get whip sawed by one of these. This is a very difficult market to trade even if you are a pro and know how to hedge it. If the damn thing gaps open then it's a disaster and nothing one can do but take some lumps. Been there, done that.

Fed meeting minutes released yesterday said they expect 2010 before normal growth resumes fwiw.

You are much more optomistic than I am. The credit markets are indicating that the defaults will be greater, percentage wise, than in the great depression.

Corporate AAA commercial mortgage spreads are at extreme wides, standing at over 700 bips; added to reference this means that super senior AAA commercial mortgages now yield more than 10%. Given the level of credit enhancement in these deals this forecasts default rates of more than thirty percent in this space. Similar extreme spreads are found among both the "high grade" and "high yield" corporate bond markets.

The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand. That we are headed for unemployment north of 20% on the U6 (broad) measure, and GDP contraction of twenty percent cumulatively from top to bottom.

Unemployment...very very high.

So far the credit markets have called every turn right while Hank and Ben have been full of it on every call. Who you gonna believe?

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The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand.

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The DJIA hit 3000 for the first time in 1991. Granted that could have been a bogus 3000 just like we had a bogus 10000+, but do you really think that our economy is less productive now than it was in 1991 before the Internet? Our productive capacity has not taken a hit, it's not like we got bombed into the stoneage and have to rebuild everything from scratch.

I think you guys are greatly overstating my optimism. My first comment in this thread was that Christmas sales would be bad and we'd fall more after those sales figures are announced. Then I said that Christmas 2009 is the earliest possible point to know if we've stopped falling, which was in response to the comments about the "experts" trying to be positive and pushing stocks TODAY. I think it's entirely possible we keep contracting for 2-3 years and once we hit bottom it will take a while for us to get back up. It's bad, I just don't think it's economic armageddon.

Our productive capacity is not in question. We have morphed into mostly a service economy. Consumers are cutting back. Production means nothing if people are not buying. Services go unused if people are not spending. A very large part of any recession is the psychology of the consumer. Right now the consumer is afraid. Why is the consumer afraid? They are afraid because they are losing their homes, their jobs and their access to credit has been reduced or is gone completely.

What good is lots more productive capacity if it is unused? That is more pushing on a string. It takes producers and it takes buyers with access to affordable credit to make an economic engine run.

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AJ tranche, the most subordinate of the AAA rated tranches closed at 1979 bp

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LINK

Bond markets have been slowly re-disintegrating since last week. They accelerated this week and went all out today. 30 yr swap -60 and long bond yield 3.17%. Yikes.