If You Don't Believe Me....

You have no idea how refreshing and relieved it was to see the below response to an article in the News and Observer this morning. (see link at the end of this post)

If you haven't believed, or wanted to believe, or hoped I was just a crackpot, maybe hearing it from a respectable source will help. Sure, he may be as crazy as me... but his targets and his timing of events is exactly what I've been saying... I'm sorry to say. But if you're prepared for it, you can survive what is likely to be coming.

The bottom line is this... the expected 2009 earnings as they stand right now for the S&P 500 is $42. With a P/E of 15 that puts the S&P at 600. During a bear market the P/E is historically 10 or less. At 10, that puts the S&P at 400!!! (It closed Friday at 890) These numbers don't lie! Sure, earnings expectations could rise, but do you actually see that happening soon? Do you think that companies will suddenly find new revenue they didn't expect? Do you think people are going to suddenly start spending again? Look at this chart showing the earnings estimates for 2009 and how they keep being reduced. Cut in half since the first estimate was released. https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmynArI5HACZjSCzSdkU-xU26feyyNqTa8fp-xs6BvhYBWJOaGQlzVQP-gXZJ7hHvS-UXr-qQ6FNghGBxrWAGucqrHYsA2VG-Bv536YYWr0bhjhCKYpQuaFQWP1oDB4eqV57HFYq1WMZx3/s1600-h/S&P-Earnings-2009.png

The jobless and unemployment numbers yesterday were ugly. They were expected, but the unemployment number was expected to come in at 7.0% but came in at 7.2%. That's huge. But one number buried in all of that was one that looks at the average number of hours worked in a week. It dropped to 33.3 hours. The lowest reading since it was recorded in 1964. This is an indication of further layoffs. Potentially massive layoffs. Employers are trying everything they can try to save jobs... cutting 401k contributions, cutting off overtime, reducing work weeks. I give these companies credit for trying. They're doing what they can to avoid hurting their employees. But this camels back is bending and that final straw is on the way for many companies. Read the headlines... January is going to be filled with layoff announcements. Again, a lot of companies didn't want to layoff during the holidays out of kindness. Unfortunately the cold winter will feel colder for many.

If this sucker rally to 10,000 on the Dow (1000 on the S&P) shows up in the next month or two, GET OUT.

Have you received your Q4/Year End statements yet? Mine have been drifting in the mail the last couple of days. Don't ignore them, look at them and if you watch CNBC and the only thing the cheerleaders are saying is "Well 2009 can't be as bad as 2008 was!" That's not exactly what I would call analysis or an educated assessment. That's like tossing a coin in 2008 and it coming up tails and therefore it must be heads when you flip it in 2009.

http://www.newsobserver.com/print/sunday/work_money/story/1362370.html