I just got done reading a thread on Google Finance forum and read a very good entry by a poster named Bonerici. I hope he doesn't mind me taking his post and posting it here! The thread was about a 10% correction forcast by MSNBC and how most people thought it was bull-malarky, considering that MSNBC also states that the market will rise at the same time. Talk about covering your back! Anyway, Here's Bonerici's post: "if you look at the p/e ratio, the average p/e is like 15 for the s&p 500. but after a really bad bubble, typically markets overshoot and it will drop by a factor of 5 or 6, and then return back to 15. Right now it's at 17. That's impossible. What are the odds that the stock market after a bubble went down to EXACTLY the average and didn't overshoot and will now turn into a steady bull market for the next 20 years. The only thing that makes sense is for the market to drop another 50%. So when CBNC talking heads say 10% pullback they are praying that's what it is. Because deep down they all know this is all fake, no jobs, the banks are still holding toxic assets and due to mark to market changes, all these assets worth 5 cents on the dollar are currently valued at 100% there are more real estate foreclosures to come, somewhere around 30% of the real estate market is currently underwater and all of these people will eventually walk away from their homes when it becomes clear that they are unable to refinance (the banks can't refinance because that would ruin their books -- it's better to let the homeowner walk away, keep the house at 100% valuation and never sell it, use the capital to leverage OTHER assets, like chinese financials which they can buy and then pray these other assets pull them out of the hole). they know the entire finance system stinks to hell, and it is not fixed and won't be fixed and when they say "We have a bottom" it's a prayer, not anything based on real life. What happens the first time the fed raises rates? Are they going to keep rates at 0% for the next decade? We are in an impossible situation. The big banks have to be dismantled by the FDIC, thrown into bankruptcy and broken up into bits that are safe to the economy, and nobody in washington has the balls to say no to goldman sachs and the masters of the universe. " I'm sorry if I offended anyone by posting someone else's thoughts, but I thought this guy was quite articulate and knowledgeable. Moderators, please erase if I've broken any plagarism or legal rules. The whole thread is: http://finance.google.com/group/google.finance.983582/browse_thread/thread/e15e8b96cddaf1f9
the guys on urban survival are saying pretty close to the same thing, that the market is in for a major correction. and they are saying it's might drop WAY down.
