10 reasons to shun stocks till banks crash

[2Design]

http://www.marketwatch.com/story/10-reasons-to-shun-stocks-till-banks-crash-2010-12-07

Wall Street is a loser. Stocks are Wall Street’s ultimate sucker bet. And it’ll sucker you again. You’ll lose, worse than in the last decade. Wake up before Wall Street banks trigger the next meltdown, igniting mass bankruptcy.

Here are 10 more reasons not to bet at Wall Street’s casino … wait till after they implode:

[Statistical]

1. Meh that guy is almost continually wrong.

From August 17th: "More bad news ahead. Welcome to a bleak second half 2010, worse for 2011"

Since August 17th the S&P500 is up 13%. If 13% in less than 6 months is bleak man I will take all the bleak I can get.

Another good one:
http://www.marketwatch.com/story/sell-bonds-now-feds-qe2-is-doomed-to-fail-2010-11-02
Since this announcement bonds have risen about 5%, treasuries (the target of QE2) have risen nearly double that.

If he believes stock market is impossible to win why is he recommending 10 stocks less than a month ago.
http://www.marketwatch.com/story/10-buys-12-sells-for-a-slow-growth-decade-2010-11-16

Also he seems to either miss or intentionally mislead on simple concepts:
http://www.marketwatch.com/story/seven-lean-years-no-recovery-till-2016-2010-08-31

"Third: What's ahead for the seven lean years? Wall Street will keep losing. Argersinger: "Grantham predicts below-average economic growth, anemic corporate-profit margins, and other severe obstacles for the stock market. Over the next seven years ... U.S. stocks as a group will deliver annualized real returns between 1.1% and 2.9%. That's less than you might get putting your money in a CD."

The term "REAL" means adjusted for inflation. So 1.1% to 2.9% assuming 3% inflation is 4% to 7% gross. Someone tell me where I can get a CD yielding 7%. The conflation of low "real" numbers is designed to mislead the reader into thinking the projection is that the market will underperform risk free CD. The reality is that a CD earning say 1% in 3% inflation environment would have a real return of NEGATIVE 2%. Even if the lean times prediction is right I would much rather have 1% to 3% real growth than negative 2% real growth.

[happyslug]

5. He is betting that this is a Sucker's Rally, like November 1929 till March 1930

People tend to forget that the Depression had many starting dates, The Earliest was 1927, when the Rural America went into a Recession. The Actual Market Peak was in the summer of 1929, then it stalled and went into a slight decline. The October 29, 1929 Crash was dramatic, but by March 1930 almost all of what had been lost on October 29, 1929 had been made up. The problem was the Country then went into a steady decline that saw almost every bank in America close by March 1933. That is how bad it was, but the real problem was NOT the Stock Market Crash of October 1929, but the slow decline that did NOT set in till March 1930.

The present Stock Market Boom is like the Sucker Boom of November 1929- March 1920, a golden time, but you have to get out before the market starts to decline (as it did starting March 1930). What this author is saying is we are in a Sucker's Rally, best to stay out for when it drops it will drop. Given the complexity of today's market this may take more then the six months it lasted in 1929-1930, but when it hits it will take a lot of people with it.

The problems with "Sucker's Rallies" is that it brings in the investors who missed losing everything on the previous collapse and then take their money. The market gain is as great or greater then it had been in the previous boom leading up to the Crash. The problem was once the Sucker's Rally ended in March 1930, the Stock Market fell along with the Banks till March 1933. Worse it took till 1954 for the Stock Market to get back to 1929 numbers, that is how bad the March 1930 to March 1933 decline was. That is the fear he is expressing, not that the market is not booming now, but it is an unstable boom for its is a Sucker's Rally and will lead, in the long run, for a lot of people to lose a lot of money.

The only question is when will the decline kick in, no one knows, but the Stock Market prices are unstable much like they were from the Summer of 1929 till March 1930, when the Markets went into a tail spin.

[cbdo2007]

2. Do they mention how most stocks have recovered since the last crash??

I can't shun stocks now, I'm making too much money on them!!!

[brooklynite]

4. AAPL...bought it at $4 (effective price), now at $320

Will probably gift some shares to cover my charitable giving, to save on the Capital Gains.

[Swede]

3. The only folks who lost,are the ones that bailed out.

It's the only place where you will get more than a 3-4% return.