Happy 牛 Year! 另加一点回顾与展望.

银河金星

The stock market has been working its way higher since its late November lows. A somewhat positive ending to what was a very dismal year. The Dow was down 33.8% in 2008. To put this year's performance in perspective, today's chart illustrates the 15 worst calendar year performances of the Dow since its inception in 1896. As today's chart illustrates, the Dow's performance in 2008 ranks as the third worst on record. Only 1931 and 1907 endured greater declines. It is of interest that major banking crises occurred in 1931, 1907, 2008, and 1930 – the four worst calendar years on record in terms of stock market performance.

Here's a look at the worst 10 bear market years and the results the following year after these historic declines:

Note: the final data for 2008 is -33.8% instead of -35.80% as showed in the following table (when it was created). Also I edited
the original messages for the updated data.




What you notice in the table above is that 2008 is the third worst DJIA loss since 1900. The depth of the decline certainly raises concerns about what difficulty may lie ahead for the economy, but as you know, the stock market is a discounting mechanism that will tend to lead the actual economic data by 6-9 months usually.

While some may see the data as cause for concern if we are heading into another Depression era, with the 2 losses in subsequent years following the 1930 and 1931 declines (若08年如1930年, 那就太惨了, 还有的跌), we prefer to play the odds that the other 80% of years following these big declines were positive, in many cases substantially so. Many have compared the financial chaos of 2008 with the Panic of 1907, which resulted in a strong 46.6% gain in 1908.

More significantly, even with the 2 losing years included, the Dow Jones Industrials still average a +25% return in the following year after these top 10 losing years! Based on the Dow's close at 8776.39, this average gain would place of target at the end of 2009 at DJIA 10,970.
At the same time, our charts (omitted) as you'll see below still anticipate another test lower as we start off in the first quarter of 2009, so the eventual upside opportunity will be significant off the lows once they are eventually seen.  So be prepared for plenty of volatility, and as a result, plenty of opportunities to prosper in the new year, on both sides of the market, first down, then later back up.

firefly8

<奇怪, bigbadwolf blog一篇结论基本相反么. 区别, 下面的看第四quarter, 是比你列举的早一年的年底.)

========

ZT Very Bearish New Year

2009-01-02 13:57

Very Bearish New Year

JOHN K. HARRIS, Ph.D.

The year 2008 has been a most challenging test for buy-and-hold investors and financial planners who advocate that strategy for their clients. At the end of November, the S&P 500’s year-to-date decline was 39.0%. Nearly half of the loss occurred in October and November. Since the S&P 500 was established in 1928, the two worst years prior to 2008 were 1931 and 1937, with full-year declines of 47.1% and 38.6% respectively. After the S&P 500 has taken such a beating this year, is it too late to exit the stock market?

A syndicated columnist recently wrote that the investor who has stayed in the stock market this year and exits now will become “the poster child for buy high, sell low.” While that advice might seem intuitive, history indicates it is not too late to exit the stock market.

To make an informed decision of whether to exit the stock market, consider how the S&P 500 performed in the years following a 4th quarter that lost 10% or more. For 1928-2007 (80 years), eight 4th quarters met this condition. And 2008 will be the ninth case.

Table 1 lists the years that had a 4th quarter loss of 10% or more. The right side of the table indicates how far the S&P 500 declined to its low in the following year and whether or not the U.S. economy was in a contraction phase.

 

Ranked

Table 1
4th Quarters Losing 10% or More, 1928-Present
S&P 500 used to calculate the percentages.
Dates in bold are bear market lows.
		The Following Year
	4th Quarter		Year-to-Date	(n=80 years,	Economic
Year	Decline	Date of Low	Decline at the low	1928-2007)	Contraction
1929	28.9%	12/16/30	32.7%	5	Aug-29 to Mar-33
1930	17.5%	12/17/31	49.7%	1	Aug-29 to Mar-33
1931	16.4%	06/01/32	45.8%	2	Aug-29 to Mar-33
1932	14.7%	02/27/33	19.7%	16	Aug-29 to Mar-33
1937	23.3%	03/31/38	19.4%	3	May-37 to Jun-38
1941	14.8%	04/28/42	14.0%	28
1973	10.0%	10/03/74	36.2%	4	Nov-73 to Mar 75
1987	23.2%	01/20/88	1.8%	58
2008*	25.6%	?	?	?	Dec-07 to ?
*through Dec. 24th
Average				27.4%
Average when economic contraction in progress				33.9%
Source of economic contractions: National Bureau of Economic Research.

The eight completed cases have a repetitive pattern that could be useful in forecasting the S&P 500’s low for 2009. In the following year, the average decline at the low was 27.4%. The range of those lows was wide: 1.8% to 49.7%. However, adding the condition that an economic contraction was in progress decreases the number of completed cases to six (that is, 1942 and 1988 are excluded). It is noteworthy that all of those contractions were during either the Great Depression or severe recessions. Considering only the six cases, the average decline at the following year’s low was 33.9%, with a much narrower range of 19.4% to 49.7%.

The rankings of declines at the year’s low for the six years—among all the years during 1928-2007—are amazingly high. They ranked 1st, 2nd, 3rd, 4th, 5th and 16th! Moreover, the lows for five of the six years were bear market lows.

This year’s 4th quarter will lose more than 10%. And the National Bureau of Economic Research recently declared that a recession officially began December 2007. Indications are that this recession will be severe (or worse). Although the six cases with the same characteristics as 2008-09 are a small sample, this slice of history clearly tells us that it is not too late to exit the stock market. Actually, that history says the current bear market will decline much further before it reaches its low in 2009.

Even the bearish picture in Table 1 might not be compelling to the buy-and-hold crowd. After all, at its low on 11/20/08, the S&P 500 had fallen nearly 52% since the bear market began 10/9/07—a decline just slightly less than the most severe bear market that has occurred after the Great Depression low on 6/1/32. To help evaluate this view, consider an additional statistic for the cases under study. It is the percentage derived from dividing the S&P 500’s December low by its November close. Table 2 presents those percentages.

Table 2
The Years in Table 1 With an Economic Contraction on Progress, Analyzed Based on December's Low Divided By November's Close
S&P 500 used to calculate the percentages.
		December Low	Ranked
	December	Divided By	Lowest to Highest	Economic
Year	Low	November Close	(n=81 years, 1928-08)	Contraction
1929	12/20/29	96.4%	20	Aug-29 to Mar-33
1930	12/16/30	87.1%	2	Aug-29 to Mar-33
1931	12/17/31	81.3%	1	Aug-29 to Mar-33
1932	12/03/32	98.6%	40	Aug-29 to Mar-33
1937	12/28/37	92.8%	7	May-37 to Jun-38
1973	12/05/73	96.0%	16	Nov-73 to Mar-75
2008	12/01/08	91.1%	5	Dec-07 to ?
*tentative

Again, the rankings are amazingly high, with four of the years in single digits: 1930, 1931, 1937 and 2008. For purposes of the exit decision, a key point is that the high-ranking percentage for 2008—while tentative because December’s low cannot be finalized yet—is based entirely on post-11/20/08 data. The fact that 2008 will finally rank 5th or higher certainly questions the view that the current bear market ended 11/20/08.

From the history in both tables, the prudent action called for is: use a wealth preservation strategy of exiting the S&P 500 by the end of 2008 and, before re-entering, wait for a year-to-date decline in 2009 of, say, at least 15%. If history repeats itself, the investor who follows this strategy will become “the poster child for sell low, and buy lower.” [ 本帖最后由 firefly8 于 2009-1-5 01:50 编辑 ]

银河金星

原帖由 firefly8 于 2009-1-5 01:40 发表 <奇怪, bigbadwolf blog一篇结论基本相反么. 区别, 下面的看第四quarter, 是比你列举的早一年的年底.)========ZT Very Bearish New Year 2009-01-02 13:57 Very Bearish New Year JOHN K. ...

是的, 下一年涨跌的几率是相反, 不过如你言两者统计,比较的是不同的时段. 我给的统计是很大的几率2009年终收盘
高于2008收盘(不管2009最底点), 平均+25%. 关键要看08年是如1907还是1930, 原作者看好如1907年, 俺到没有
那样乐观, 应(prepare for the worst)做好应对如29-32大萧条的准备.

firefly8

有人说这次应该会比29-32好, 因为这次有失业救济金, 这样老百姓还能消费. 29-32那时没了工作就没了一切. 我很赞成这观点.

WildWolf

小兵

狂顶!:

DARKSTONE

stone

could you share the blog address? Thanks.

原帖由 firefly8 于 2009-1-5 01:40 发表 <奇怪, bigbadwolf blog一篇结论基本相反么. 区别, 下面的看第四quarter, 是比你列举的早一年的年底.)========ZT Very Bearish New Year 2009-01-02 13:57 Very Bearish New Year JOHN K. ...

银河金星

原文又臭又长, 仅引用一节节相关的:

The Year Ahead: Will deleveraging remain the 2009 focus?
By Gene Inger, IngerLetter.com
Monday, January 5, 2009

Why forecast this like the ‘1907’ bust; rather than ‘1929’ crash?

And by the way, for those that want to know why (back early in 2007) I had decided to compare it (the then-forthcoming financial catastrophe) more to 1907 than to 1929; it’s simple: in Wall Street lore, 1907 was known as ‘The Bankers Panic’. Given that I knew all the big bankers were overloaded with leverage and CDO’s, CMO’s, etc.; the expectations were that this would not be a typical bear market or demand-based consumer decline but a financially-originated panic within the banking and securities industries. Largely as we saw it as the ultimate penalty for abrogating Glas-Steigal and other long-lived protections separating banking, brokerage, insurance or so on, it had to be centered in the financial heartland itself; and that meant a Wall Street and Bankers collapse.

There are two characteristics that typically precipitate financial crises: complexity and leverage. Our forecast ‘Panic of 2007’ and ‘Crash of 2008’ contained both these viral aspects. Diversification is meaningless when the effort is global in nature; particularly when the implementation of essentially common strategies dominates world markets. When that happens, you get everyone heading to the exits simultaneously; and you’d be lucky to avoid precisely what we suspected would be the outcome these 2 years.

I don’t relish having been right; nor warning that this remains a process; not easily to be rectified by a new Administration (though at least they won’t be frozen in disbelief, as occurred to the outgoing group too often, and in too many cases to their own type of financial shock & awe; because the entire scenario was clearly beyond their depth) even though we at least have a Fed and incoming Treasury that will be hopefully be a bit more proactive, rather than reactive, or implementing unneeded excess rules in some areas, rather than just enforcing those already on regulatory books, but largely ignored. Governments typically fight the last war (sometimes actual wars that way for too long, and through too many casualties before finally getting it right) in any crisis.

银河金星

Is the U.S. government going broke?
By John Nyaradi, Wall Street Sector Selector

How long can it go on?

The list of corporations and financial entities being bailed out by the U.S. government continues to grow. This week, the Big 3 carmakers, this time driving hybrids instead of riding in their corporate jets, returned to Capitol Hill, hats in hand, to ask the government and U.S. taxpayer to save them from years of bad business decisions and management practices.

And they’re just the latest in the long line of corporations that are now owned or backstopped by the U.S. government and American taxpayer. I recently read a political cartoon that said, “Banking, Mortgages, Insurance, Car Makers. Obama’s a Socialist? He better hurry up because there’s not much left.”

Regardless of your opinion of the pros and cons of government intervention in these core American businesses, one must now certainly ask, “How long can this go on and who is going to bail out the U.S. government if and when it goes broke?”

Think that can’t happen? Think again. It happened recently in Iceland and not so long ago in Argentina.

Sure, the government can just keep printing money, everyone knows that, but it turns out that, Uncle Sam, just like every individual and every financial entity has a credit rating, and Old Uncle could, in fact, lose his good credit and with it put a huge dent in the “full faith and credit of the U.S. government.”

Here are some of the gory details:

• * The credit limit of the Federal Government is currently just over $11 Trillion, and more than $10.5 Trillion has already been used.
• * Since 2000, the national debt has grown nearly 70%.
• * 2008 deficit spending was about $400 billion up sharply from last year’s deficit of $160 million.
• * The government will have to float enormous quantities of new Treasuries next year to finance its debt and doubt is growing as to the
• demand for this increased supply. If demand is insufficient, interest rates will have to rise which will further depress economic activity and recovery.
• * 2009 deficit spending is expected to exceed $1Trillion.
• * This week, a new bailout emerged, the TALF, Term Asset Backed Loan Facility, which is $200 Billion for credit card, auto and student loans, as the next credit crisis is expected to be in default of consumer credit as the recession widens and unemployment grows.
• * Federal borrowing has averaged about 3% of GDP but is forecast to exceed 6% next year.
• * President Elect Obama’s economic team is planning a $700 Billion fiscal stimulus package over the next two years.

• 
  

When you add up all of this year’s bailouts, many estimates put the bill as high as $8 Trillion, and according to Bianco Research, the current bailouts add up to more than The Marshall Plan, Louisiana Purchase, New Deal, Korean War, Viet Nam, invasion of Iraq, NASA and the 1980s Savings and Loan Crisis combined!

No wonder, esteemed economist and professor, Dr. Nouriel Roubini wrote in this week’s “Financial Times,” “fiscal deficits will top $1,000bn for the US in the next two years. The Fed and the Treasury are taking a massive amount of credit risk, endangering the long-term solvency of the US government.”

So to answer my own question, I don’t know how long this can go on, but I do know that it can’t go on forever and that the Feds are steadily walking towards the end of their credit rope. Like a consumer who has maxed out his credit cards and Home Equity Lines of Credit, the options then quickly become limited and none of them are pretty.

I hope the day never comes when Standard and Poor’s downgrades the credit rating of the United States Government. But if or when that day arrives, the only thing I know for sure is that I want to own inverse ETFs before the markets open that morning.

银河金星

The WSJ on the current recession, on track to be one of the longest ever”

“The current U.S. recession, with no end in sight, threatens to be the longest since 1933, and that helps explain why investors are having so much trouble gauging the stock market.

Models developed in the more normal times of the past few decades, based on things like corporate-profit forecasts, the interest-rate environment or the length of the average recession, have failed in the current, exceptional economy. Many have signaled that stocks were cheap and it was time to buy, but stocks kept falling and got cheaper.

Since the Great Depression, only two recessions have run longer than this one, the first ending in 1975 and the other in 1982. Each lasted 16 months, according to the National Bureau of Economic Research, the government-designated recession tracker.”

银河金星

via NYT

逍遥山人

原帖由 firefly8 于 2009-1-5 02:15 发表 有人说这次应该会比29-32好, 因为这次有失业救济金, 这样老百姓还能消费. 29-32那时没了工作就没了一切. 我很赞成这观点.

我认为主要还是美国人对大萧条时代的悲惨记忆实在太深刻了，财政部和联储会发狂般地向市场注入资金就是一例。