Down goes the Dow

The S&P 500 is down just over 7 percent from its May high, but the average stock in the larger S&P 1500 was down 24 percent from its high as of yesterday's close, according to new research from Bespoke Investment Group. A bear market is defined as a decline of 20 percent or more, meaning the average stock has already reached that threshold.

Live by the FANG, die by the FANG

S&P 500 -2.33%

FB -5.22%

AMZN -4.21%

NFLX -3.99%

GOOGL -3.09%

Valuations on these stock don't matter?

Ghost of Igloi wrote:

Live by the FANG, die by the FANG

S&P 500 -2.33%

FB -5.22%

AMZN -4.21%

NFLX -3.99%

GOOGL -3.09%

Valuations on these stock don't matter?

if I found four stocks with PEs of 15 or lower down the same 4-5% would you retract?

Re: China the big question is if their economy is growing slower, stagnant or actually declining. According to official numbers, they grow at 7% but we all know that is probably a lie. So how fast are they growing?

One way to look at it is to look at electricity consumption Y/Y, and that is at 0.1%.

Also, keep in mind that at a growth rate of 7% (compared to about 2% in the US), the Chinese economy is growing slower than the American in absolute $ terms. In other words, the $ gap in the economies is actually widening.

agip,

My view is they will all go down but the FANG in the end will be a whole lot more. The two most ridiculous valued stocks AMZN and NFLX will be halved by the end of this cycle.

WMT by the way +1.90%.

Igy

vix up to 25 - still not as high as the August freakout but among the 2-3 highest readings we've seen in the last five years. (if we include entire freakouts as one episode)

If it hits 30 I'll start buying

some mightily terrified people out there

puppy sell-off now...big dog sell-off comes later....look for the Najerian brothers to retire...Cramer gets called out again.... then it is safe to buy

Igy

Cramer...I just turned on the tv during lunch, and he was on, mid-day. They must have called him up to rally the troops.

The guy I know and posted about who sold everything and converted to cash not long ago is looking pretty good at the moment. He has no plans to buy back in, even at 15k. Below that, he doesn't know, that's sea monsters for him.

"Government demand" in growth calculations is IMO total bullcrap. Of course, much of the Chinese Miracle was just such government demand. They used to be able to fire it up whenever they wanted, but something very basic must have changed. They have rushed healong toward the cliff, and maybe they have arrived.

I think that the difference between them and us is that they are facing a cliff UP.

Fun times, I didn't think that we would see 16.5k again so soon. I did figure we would see the market fluctuate between 16k and 18k from now until the election; I will be very surprised if we see an under-16k blip at this time. I did not anticipate the severity of the Chinese market and traders. They're all over the place, they seem to have no self-control. Their fluctuations, along with the oil situation, will drag things down.

A friend asked me last night if he should short the Yuan. I told him I had absolutely no idea.

Maserati,

Funny seeing the Bulls hedge their statements and you can see the look of shock. Which to me is so surprising because the market is so stretched, and they have been in the business awhile. Fear and greed are not only strong emotions but they cloud judgment.

You may get to your under 16k sooner than you think.

Igy

Maserati wrote:

I think that the difference between them and us is that they are facing a cliff UP.

.

When the world gets panicky, money goes to the U.S. Humans, for whatever reason, still "believe" in the U.S. economy.

Nutella1: Please state your source regarding electricity consumption, China. China holds more than 1.2 trillion of US debt. China is a very significant trading partner for US. US & China are in "this" together.

ironside wrote:

Nutella1: Please state your source regarding electricity consumption, China. China holds more than 1.2 trillion of US debt. China is a very significant trading partner for US. US & China are in "this" together.

This is an older article, says it has come down from 12% to 2% and now 1%. This is consistent with the numbers regarding slowed manufacturing and construction. Basically, officials are arguing that increased consumer spending picked made up for that slowing growth and the rate is still 7%.

US exports to China are very low. Us heavily imports Chinese goods which now become cheaper. This by itself is a good thing.

Of course, there are other factors, e.g. the European economy (mainly Germany) heavily relies on exports to China (heavy machines etc). A recession in Europe would also hit the US eventually.

Sorry, forgot to post the link:

http://blogs.wsj.com/chinarealtime/2015/10/20/powering-down-chinese-electricity-demand-stalls-amid-slowing-growth/

Ghost of Igloi wrote:

Live by the FANG, die by the FANG

S&P 500 -2.33%

FB -5.22%

AMZN -4.21%

NFLX -3.99%

GOOGL -3.09%

Valuations on these stock don't matter?

Apple -4% PE 10

JPM -4% PE 10

BAC -4% PE 11

CAT -4% PE 13

HPQ -4% PE 4

valuations on these stocks don't matter?

(look, I appreciate value as much as anyone, but you think about this valuation thing too linearly. Value is not automatically good and expensive it not automatically bad)

Nutella1: US is one of the worlds largest exporters. Through 2013, US 2nd biggest world exporter. Countries to which US exports the most: 1) Canada, 2) Mexico, 3) China. In 2013, US exported over 130 billion to China. There is a trade imbalance with China, but you're wrong to state US exports very little to China.

agip,

AMZN PE 900, FB PE 100, NFLX PE 300, GOOGL 34

If you think that doesn't matter...I can't help you.

Igy

ironside wrote:

Nutella1: US is one of the worlds largest exporters. Through 2013, US 2nd biggest world exporter. Countries to which US exports the most: 1) Canada, 2) Mexico, 3) China. In 2013, US exported over 130 billion to China. There is a trade imbalance with China, but you're wrong to state US exports very little to China.

Well, export is like 7% of the US biz, and 15% of US exports or so go to China, so basically the exports to China make up about 1% of the US biz. That is significant in terms of $ but not %.

agip,

My comments:

JPM, BAC...financial stocks have low PEs because there growth is dependent on other people's money

CAT and HPQ are experiencing margin compression after periods of PEs being too high way too high...GOOGL will be the same

APPL earning and PE are fine, but the stock is over owned and investors think the future is same as the past

Igy

Ghost of Igloi wrote:

agip,

My comments:

JPM, BAC...financial stocks have low PEs because there growth is dependent on other people's money

CAT and HPQ are experiencing margin compression after periods of PEs being too high way too high...GOOGL will be the same

APPL earning and PE are fine, but the stock is over owned and investors think the future is same as the past

Igy

well of course there are reasons for things. There are reasons for FB's high valuations too.

I just think you see valuations as too important a tool. They are a blunt instrument at best.

Growth stocks at high multiples can and do perform better than cheap stocks for years and years and years.