***Official*** 2011 Stock Market Thread

[the DRIZZLE]

Drizzle, U3.

Reality is that somewhere between the U3 and U6 is probably reality. What has hte historical spread between U3 and U6 been?

UPDATE:
Took some time to track this one down. U6 seems to be about 80% higher than U3 historically. Not much deviation in this correlation. Looks like a rising tide/lowering tide correlation. Not sure how to think about this data. Right now I see it as knowable but not that important. if the tide lowers, one or the other will not all of a sudden drop without the other dropping. Maybe if one is way out of whack against historical norms, that one would correct first? Anyway, I stand by my U3 number. Sure the news can sensationalize this data. get people to be emotional about it. Yadda, yadda, yadda I just see it as data that so far has behaved exactly as it has historically.

Either way, an hour well spent looking into something I have not looked into before. BLS.GOV sucks for finding anything.

ASIDE:
Drove around alot this summer. It's amazing how much infrastructure work is being done in this country. Bridges in need of repair or replacement finally being replaced or fixed. Stimulus at work I guess. Gotta love socialistic safety nets. I can't imagine where we would be without those people working, but i can only imagine rationally that unemployment could be much worse.

MEDIA:
Why I ignore the media.... headlines like this:
Stocks: 'It's a war zone out there' - really?
Stocks get demolished
Sensationalized much?

Why not:
Stocks go on sale - Not once have I read that headline.

The answer of course is that if the media gets you emotional about something, you are more likely to read it.

IMO it's not the percent spread between U6 and U3 that matters, but the absolute spread. If hiring hypothetically picks up a lot more people will start looking for jobs and will start to be counted in the U3. The point is that you will have to add a lot more jobs than is indicated by the U3 number.

For example look at the math I did above that indicated we need about 5.5 million jobs to get to a 7.5% U3. If we assume that U6 would have to fall to 13% for U3 to fall to 7.5% we actually need 10 million jobs to get there. To do that we would need 416k jobs per month, not 232k. Do you think we will average 416k new jobs per month over the next two years?

edit: Before you answer, I should tell you that the most jobs the US has added in any single year since they started tracking in 1939 is 4.3 million. So all we need to do is have the best two years ever consecutively to get to a 7.5% U3.

 

[IHateMyJob2004]

1982-1983 is the 4.3 million?

We were in just as bad of shape then. In one year we went from 10.8% U3 to 8.3% U3.

Finding raw data on all this is a pain. The BLS.GOV site is horribly laid out.

What year are you referring to though with the 4.3 million?

 

[the DRIZZLE]

1982-1983 is the 4.3 million?

We were in just as bad of shape then. In one year we went from 10.8% U3 to 8.3% U3.

Finding raw data on all this is a pain. The BLS.GOV site is horribly laid out.

What year are you referring to though with the 4.3 million?

4.3 million was for 1978. During 83 and 84 we added 3.5 and 3.9 million jobs respectively. The BLS site does suck. The monthly change in employment is series id: CES0000000001. I exported it to an excel file. If you PM me your email address I'll send it to you.

The U-6 data only goes back to 1994, so I can't get it for the 82-83 recession. But if you look at the monthly change in employment data the 82-83 recession looks completely different than this one. The increase in unemployment wasn't as drastic and by 2 years after the recession we had already added those 7.5 million jobs. I just don't see any sign that we are going to see a V type pattern in unemployment.

 

[IHateMyJob2004]

Thanks for confirming the U6 data. Read from a few unreliable sources that the data started in 1994.

Is this it:
http://data.bls.gov/timeseries/CES0000000001

The BLS web site loves to title things incorrectly.

I think we are about to come full circle on this. I see a V shaped recovery due to the need for new housing. That time is nearing. the government thinks we are going to have a nice linear ramp up from 400,000 new homes to 1.5 million over a 5 year time span. I don't see it that way. I see the need for housing hitting us fairly quickly. And that is going to start employing people everywhere. residential Construction will pick up but with it so will manufacturing (drywall, lumber, etc). All of those industries are going to need more people. And those newly employed people will start buying more clothes, going out to dinner, etc. So it will trickle through the economy. The question is how many people would become employed if we went from 400,000 new homes a year to 1 million?

BLS.GOV is not easy to navigate and I can not find the number of people in residential construction that are out of work. The percentage is easy to find but the number is not so easy to find. Construction numbers can be found but i want more detail. Also, not sure if they have a U6 breakdown of this. U3, maybe.

EDIT 1:
While there are no actual U6 numbers for 1982-83, one could assume that U6 was probably at or around 19.5%. And in a year that U3/U6 of 10.8%/19.5% dropped to 8.3%/15%.

In 82/83 we had about 230 million people. So giving the guesstimate of U6, that was 10 million jobs recovered or 862,000 a month. U3 implies that 5.75 million jobs were created or about 480,000 per month.

EDIT 2: Crap, I see the flaw in the numbers above in the EDIT 1. the percentages are probably approximately right. The U3/U6 numbers are off a bit ... quite a bit. Still though, we have recovered from similar hardships in the past. Have to run.

 

[the DRIZZLE]

I am looking at the actual change in employment numbers here. http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth

The way that you're doing the math is incorrect. Just use the direct change in employment numbers above. The size of the US work force in 1982 was only 90 million since not everyone works.

If you want to think of it in the simplest possible terms, the US has lost 7 million jobs since the employment peak in 2007. We have also added 6 million people to the labor force since then. We need 13 million jobs to get back to where we were.


Regarding housing, BLS says 832k people are directly employed in residential construction.
http://www.bls.gov/oco/cg/cgs003.htm

I just don't see that adding 13 million or even 5 million jobs even with some kind of multiplier effect.

 

[IHateMyJob2004]

Drizzle,

Very well argued. I am starting to be swayed. I'll have to look at things more. Still see 8%- as possible though within two years.

There are alot of things that need to be looked at.

Thanks for providign those links. I wish BLS had historical data for those 2008 numbers soemhere. They probably do. Probably just need to spend a bunch of time on the site to learn the logic behind its layout.

 

[the DRIZZLE]

Honestly, I hope that I turn out to be wrong. At this point I'm just hoping that we can add the 125k a month we need to stay even.

 

[IHateMyJob2004]

Honestly, I hope that I turn out to be wrong. At this point I'm just hoping that we can add the 125k a month we need to stay even.

Thanks for explaining your position. I understand your rational. Time to come to grips with non-confirming data and what it actually means. I'm goign to be busy with alot of other things but I'll see what I can do. If you find any interesting historical per sector data at BLS, please post a link.

I'm having trouble finding historical per sector numbers for the number of actual people employed per industry. I found current unemplyment levels(&#37 per sector but I want the numbers. Of course, knwoing the percentages of peole employed per sector historically would work if you have the total number of people included in each particular timeslice.

I'd liek to get data going back 20 years.

It's getting to the point that I might do an article soon for a value ivnesting web site that I do some side work for. Articles are great as they bascially force you to organize your thoughts. I also want ot get rail data to see if varius types of rail have corrected. I suspect that lumber shipments are flat since 2007/2008.

 

[darkewaffle]

God, get a room you two!

 

[Mermaidman]

Is HPQ a good buy or value trap? It's down to <24!!

 

[Imp]

Is HPQ a good buy or value trap? It's down to <24!!

If you want to buy HP, you should look into RIM too.

Come on slow day, no crashy crashy!

 

[IHateMyJob2004]

Is HPQ a good buy or value trap? It's down to <24!!

Definitely looks undervalued. Good FCF. Share reducers. Growing Revs. Looks wonderful.

It could bbe a trap but that is becasue I am biased against most tech. And I'd rather buy Dell. But I would never buy eitehr so my point is moot.

Consider using deep in the moeny calls. If HPQ goes under, you loose your investment either way. But if it doubles in price, calls would allow you to get more than doublethe return.

 

[SP33Demon]

That's ironic. I expect gold, which is trading at or near an all time high after adjusting for inflation, to tank within 2 years as the housing recovery begins and unemplyment levels drop below 7.5&#37; and maybe even get under 7%.

Quoted for posterity, especially for unemployment below 7.5%. Were you the one who is just re-quoting warren buffet? We need to get some "Warren Buffet Saves!" tshirts made just for kicks because he's going to be in for a rude awakening.

My prediction of gold hitting 2K is looking even better every day. 1883 now. Where are the naysayers? Who said gold was going to top out at 1700? Yeah right.

 

[KB]

Is HPQ a good buy or value trap? It's down to <24!!

I think HPQ is a trap.

HP is selling/spinning off their PC business. Their tablets weren't selling so they are dropping all WebOS products included their brand new tablet.

I think they are overpaying for Autonomy, but someone who knows Autonomy better may have a different opinion. http://www.bloomberg.com/news/2011-...autonomy-takeover-spinoff-of-pc-business.html


IBM did something similar in the past (moved mostly into software, bought Lotus, and it was good for them). I am not so sure about HP, but I would like to hear from someone who has followed HP for a long time.

 

[Ns1]

My prediction of gold hitting 2K is looking even better every day. 1883 now. Where are the naysayers? Who said gold was going to top out at 1700? Yeah right.

like buying a house at the top of the bubble.



wont' be now, won't be tomorrow, but eventually the bubble will pop. you can QFP that.


ref: historical gold prices adjusted for inflation

 

[SP33Demon]

like buying a house at the top of the bubble.



wont' be now, won't be tomorrow, but eventually the bubble will pop. you can QFP that.


ref: historical gold prices adjusted for inflation

It won't matter because once it hits 2K I've made my money. All automated and should be any day now.

As long as unemployment is above 9% and the economy continues to lose jobs, gold isn't going down anytime soon. Two great quarters in a row and I'd be selling no doubt. It's all emotional.

 

[IHateMyJob2004]

Quoted for posterity, especially for unemployment below 7.5&#37;. Were you the one who is just re-quoting warren buffet? We need to get some "Warren Buffet Saves!" tshirts made just for kicks because he's going to be in for a rude awakening.

My prediction of gold hitting 2K is looking even better every day. 1883 now. Where are the naysayers? Who said gold was going to top out at 1700? Yeah right.

Maybe you could get some of those "F Warren Buffett" t-shirts everyone was wearing on Wall Street as Wall Street was shorting WFC and Buffett was accumulating it in the late 1980s.

Revisit history. In the early 1980s, unemplyment improved by 2.5% in 12 months. I'm looking for 1.6% over 18 months. It has happened before and in much more dramatic fashion.

No one knows where gold will go. I just know that when/if it starts appraoching $2500 I am going to investigate it more deeply and consider shorting it. The smart people during the tech boom are those that made their money and walked away. Greed made most newly branded millionaires during the tech boom to loose their shirt.

$1883. All that is needed is another run up of 6.2% for $2K. I wonder when people will start dumping it. The only thing more impressive is how fast it will fall. They tightened margins on gold buying a few months ago and it dropped sharply. Point being that alot of people are borrowing to buy gold. And when those margin calls come in, look out below! It's a matter of time.

Do me a favor though. Tell us what you bought it at. When you buy more and when you eventually sell.

 

[IHateMyJob2004]

It won't matter because once it hits 2K I've made my money. All automated and should be any day now.

As long as unemployment is above 9% and the economy continues to lose jobs, gold isn't going down anytime soon. Two great quarters in a row and I'd be selling no doubt. It's all emotional.

So, dumping at $2K. Not $1999?

You are picking up pennies in front of a bulldozer at this point. Why not just sell now? Greed?

 

[SP33Demon]

So, dumping at $2K. Not $1999?

You are picking up pennies in front of a bulldozer at this point. Why not just sell now? Greed?

2K is a nice even number. I bought in at 1300... I think a 53&#37; return off emotions is enough, that's why I'm getting out at 2K. I'm not a day trader and just going conservative. I'll probably reinvest 1/4 to 1/3 of the profits back into it depending on consumer confidence levels at the time it hits 2K. If I lose my shirt on house money, I'm ok with that. The rest of the profit (other 2/3) will get rolled back into mutual funds.

 

[sunzt]

Gold is gonna fall pretty soon.... it's parabolic now so just a matter of time... see SLV and 2001. Of course, irrationality can last a long time.

 

[sunzt]

Q: is it time to get back into equities?

 

[darkewaffle]

2K is a nice even number. I bought in at 1300... I think a 53% return off emotions is enough, that's why I'm getting out at 2K. I'm not a day trader and just going conservative. I'll probably reinvest 1/4 to 1/3 of the profits back into it depending on consumer confidence levels at the time it hits 2K. If I lose my shirt on house money, I'm ok with that. The rest of the profit (other 2/3) will get rolled back into mutual funds.

That's the problem with that though, everyone loves numbers that end in 0 or 5 so much that you can bet there's going to be a lot more than just you selling at $2k. The first time it hits 2000, it'll probably dip down a bit before getting back up over it

 

[Scarpozzi]

I want to get into commodities again, but I lost a lot last time... I bought cardboard when it was 27 cents per metric ton, but my broker said that due to a lot of rain we had last year it was pretty much worthless due to the moisture and I lost about half of my investment.

Think this is a good time to jump back in? Or should I wait to see how bad hurricane season is. (I'm in the South if that makes a difference)

 

[IHateMyJob2004]

That's the problem with that though, everyone loves numbers that end in 0 or 5 so much that you can bet there's going to be a lot more than just you selling at $2k. The first time it hits 2000, it'll probably dip down a bit before getting back up over it

I wonder if people are going to start panicking before Gold $2K. People might start saying "It's almost to $2K? I better get out before it tanks" and dump it.

 

[Imp]

So when/if gold takes a dump, is that going to trigger some massive negative financial event?

Lot of people do have their money tied up in it.