SeekingAlpha posted my “A Severe Recession Is Now Priced Into Stocks” (Top Gun FP, Friday October 24th) and it seems to have gotten a pretty good readership. More than 400 readers have followed the link from that article to my site and it generated about 30 comments on SeekingAlpha itself.
Notably, most commenters were extremely bearish. Here are some excerpts:
Dude – this article is RUBBISH.
Sure, if you want to catch a FALLING KNIFE, buy stocks. If you want to lose even more money, buy stocks. Thanks for the advice, Greg.
past p/e multiples do not apply. we are in the midst of a cyclical deleveraging not seen since the 30’s, and on a global basis. you cannot expect future profits and p/e’s to be valued the same moving forward.
We are looking at something much worse than the Great Depression. You’ll think the Dust Bowl days were the good ol’ days when this sucker goes down.
I’ll play devil’s advocate. I think stocks are still overpriced, and that earnings are likely to crash worldwide.
The vast, vast majority of America and the world still have no idea about the true scale of the crisis.
– Adam Sharp
i have nothing to gain by advising you to be in an asset preservation mode until this plays out….. past economic principals may or may not apply.
– The hand
When will all the worshipers stop bowing down to their god, Warren Buffet?
Does anyone with a brain really think that anything this guy says at this point means squat?
– You’re Kidding
The reality is that the S&P 500 might not have much at all in the way of 2009 earnings…. My earnings targets are $25 in 2009 and $35 in 2010.
Greg, there is at least some good news in all this. First of all, before all of this is over, you will actually learned something about what a depression feels like because you clearly have no clue today. Second, you will likely lose a few pounds because a reduction in food quality and quantity is on its way to all of America.
– Did U Think The Ponzi Scheme Would Last?
Now I could stand to lose a few pounds so there could be something in this for me if I’m wrong. But this kind of sentiment from retail investors, combined with extreme pessimism among professional investors, suggests to me that most of the selling has already taken place.
Back in April I wrote a post arguing that Freeport McMoran (FCX) was overvalued. At the time, Freeport McMoran stock was ripping, trading for around $118 a share. SeekingAlpha put the post up and the comments were extremely bullish.
Six months later, Freeport is off 79% to $25 a share. The crowd was wrong then. They could be wrong now too.