Tuesday, October 27, 2009

BAGAKOAA Oct 27 A Flash Back to January 2009

BAGAKOAA;

October 27, 2009

A Flash Back to January 2009

A Little trip down memory lane is helpful in a market like this. Here is a note I sent to one of our readers back in January 2009. The exact date was January 28, 2009. The market opened at 8,149 the next morning to give you some perspective.


From: brian.cronin@XXXXXXX
To: XXXXXXXXXXXXXXXXXX
Date: Wed, 28 Jan 2009 10:45:39 -0800
Subject: Might be a good day in the market

Guys;

As I mentioned a week ago, as details of the stimulus package are released, we might see a 600-700 bump in the market. Over the last two days we have seen it headed that way and today looks impressive. There are some balanced earning reports coming out of Wall Street and this is promising as well. The housing start numbers on Monday were promising but I think a one off. I’d like to see 3 in a row.

As I mentioned, aligning your funds with where the money is going is important for the next 2-5 years. It might not be as entertaining as Cramer, but here is a link to a WSJ article that does a great job of outlining where the 900 Billion is expected to go. The President’s visit to the House yesterday was historic and I must say there was a great deal of give and take. His movement on the AMT (Alternative Minimum Tax) levels was really important. It does not impact people at our income but it is huge to a family making an AGI of 220,000 plus. It will save them about 22,000 in taxes. That is money they can spend in the economy.

So right now we are deep in the honeymoon period and the euphoria is helping the market. By the end of March, when first quarter earnings wash through and all the announced layoffs make their way to the official numbers, the honeymoon will be over and we could see 6500 or below on the Dow. After that it is anybody’s guess, but here is mine. (The Dow bottomed on March 9 at 6,547)

By July, mid year real estate and bank balance sheets will stabilize, earning reports will be based on real numbers in a somewhat stable economy. People and business will be able to borrow money again. The estimated 2.6 trillion sitting on the sidelines will slowly enter the market again. People will become more employed and finding their 401K programs. Our biggest economic concern will be inflation. The value of the dollar will adjust down to some degree. The Dow will end the year at. . . . drum role . . . . . . 9257.

Anyway here is the link. The map is interactive so you can see where and how the money might be spent.

http://online.wsj.com/article/SB123315486943524321.html

Salve Lucrum

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