consumers cut back and stocks get cheaper

Companies and economic reports were pretty consistent in declaring that the U.S. consumer is toast. Retail sales were off sharply, Best Buy and other retailers reduced their outlooks. Even Wal-Mart, one of the few companies that seem to be navigating this downturn successfully, predicted results would be slightly under previous guidance. Circuit City declared bankruptcy. Jobless numbers crossed the threshold over 500,000, a number that typically is seen during recessions.

Looking at our stock market statistics based on daily data, pretty much everything is pointing in a bearish direction. Economic reports are doing nothing to paint a picture supporting higher stock prices. With the kind of wacky market we have seen these last few months, however, that probably means stocks are ready to rally.

Stocks have held above recent lows but that doesn't mean they can continue to do so. It seems the only argument for buying stocks is that they are cheap. This begs two questions: are they cheap enough and will they get cheaper still? what do you think?

Jeordie White said:

Stocks have held above recent lows but that doesn't mean they can continue to do so. It seems the only argument for buying stocks is that they are cheap. This begs two questions: are they cheap enough and will they get cheaper still? what do you think?

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Define cheap. I mean, if main street people can't borrow cash to spend it how can the blue chips and such, get killer profits? As I see it now, only a hyper inflating tsunami could force consumers to start spending the last real bucks in hand. Folk not having such a stash of green paper, is toast, not able to pay any basic needs like rent, heating or food. Another option would be major tax increases, but too bad the government can't spend it on projects to keep the workingman going. The US debt has doubled under Bush and the interest alone would take a big bite out of these extra tax increases.

The US, the biggest consumer as we've come to know for the last couple decades, is no more. Because the debt ballooned like nuclear explosion, the only way to get to health economy is to pay off debt. And I mean, pay a hole lot of debt, which will effect the worlds economy because the pool of available money has to shrink. This most certainly means recession at the least, but I really think we're going to have a depression. Not like 1929, but half is just worse enough don't you think?

So what's cheap? Citigroup for $5,81 having a EPS of $-4.30.

But who am I to say. I'm not some fundamental expert of something. I just try to analyze this all in a logical way. If you eat a lot, don't be surprised you can't win the race with your fat ass against a hungry lean and mean pack of wolves. Now America is not just a fatty, it's become a unimaginable fat Jabba the Hut, unable to even walk or crawl. To change that, a hole lot has to change in America and possible the world, since the rest liked to feed you tonnes of frogs.

So that’s what I am thinking as well. Thanks.