tag:blogger.com,1999:blog-6798074091942701235.post8399390298254595594..comments2024-03-27T11:08:31.557-04:00Comments on Can Turtles Fly?: Market has fully priced in the recession... question is valuationSivaram Vhttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6798074091942701235.post-42137538390534030662009-03-06T01:40:00.001-05:002009-03-06T01:40:00.001-05:00Pessimism is overwhelming right now.s We have awfu...Pessimism is overwhelming right now.s We have awful economic data.s The economic slowdown is worldwide.s Public debt is crowding out private debt.s Over on Calculated Risk they have a chart that shows this stock market sell-off to be the second worst in a century.<br />s<br />So I figure that a depression is currently priced in at these levels.s We have far exceeded the peak to trough drops of past recessions.<br />s<br />I am not necessarily convinced that we'll see a big bounce though in the next couple years.s Banks will continue to be stretched thin, and capital scarce.s I suspect that commodities will slowly tick higher, and stocks may continue to lose ground in real terms.<br />s<br />Of course, I'm not a macro guy, but it's fun to try to decipher the future.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-31932574873481669462009-03-05T10:00:00.001-05:002009-03-05T10:00:00.001-05:00i have to agree.ss if you buy based upon value and...i have to agree.ss if you buy based upon value and not price, you can find lots to buy now.s i have been valuing companies on a 5-10 year average earnings basis and assuming very very modest growth and they are still trading below the value i come up with.ss<br />s<br />who knows when the market turns, but if you buy businesses for less than they are worth, you will prosper.s eventually.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-75506805220910657462009-03-04T11:15:00.001-05:002009-03-04T11:15:00.001-05:00I think you'll get a rally but the question is wha...I think you'll get a rally but the question is what happens in the long run. Will prices fall much lower or will they gradually inch their way up? I think if you are buying undervalued stocks, you'll be fine as long as you are satisfied with the fundamentalsreturns (e.g. if a normalized earnings yield is 10% and you are happy earning a maximum of 10%, you'll be fine).<br />s<br />Where I see risk is with an investor hoping for valuation increase. For instance, if a stock is undervalued but you need the market to price it better (e.g. say p/e is 10 but you expect it to be really worth a p/e 15) then it is risky. I use P/Es but replace it with whatever else (DCF, etc) that one likes using.<br />s<br />sAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-43492010750131590792009-03-04T01:38:00.001-05:002009-03-04T01:38:00.001-05:00Im just going to stick to my guns and keep buying ...Im just going to stick to my guns and keep buying as prices go down. Im getting killed here holding onto my long positions but am confident that I'll do well if there is a rebound.Anonymousnoreply@blogger.com