10/22/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/102218.mp3
JUST LETTING YOU KNOW
We’ve see a little bit of deterioration in the market. The earnings have not been so good. But let me say there are many earnings reports coming out the rest of this week, including the Almighty Apple.
So Friday was terrible, and today was looking really iffy also. And then at the end of the day, the market came back very nicely to be up on the day in the Dow. I call it a defense day in the market where basically the market says, okay, you’ve take us down enough, we’re defending it right here.
I don’t think we’re out of the woods. There’s been some damage done in the marketplace here.
But again, all this talk of bear markets and end of the world – I think we can have some more trouble. I think we can pull back some more. And for sure, let me be clear on growth stock land. One by one they’ve been taking them out and ripping them apart. And that has to be watched.
In recent weeks, all the dollar stores – toast.
Amazon breaks badly.
Some of the biotech goes bye bye.
Apple breaks the 50-day.
It’s been rough. Want me to continue?
On the other end other spectrum, Housing is still in shape. Industrial types are still in shape. And, keep this in mind – Foreign markets are outperforming our markets for the first time in months and months. So we’ll be harping on those areas if leadership shows up in those areas.
If you want to know what I mean by outperform, just go look at EEM and ETA.
These are emerging market types, and you can see they’ve hardly pulled back while ours have a little more than that.
Most importantly, I am watching reactions to earnings.
The Grand Super Cycle
In Cincinnati, OH this Saturday, IBD and William O’Neil will be giving a 2-hour workshop on the Grand Super Cycle. Click here, if you’re interested.
I want talk about this Grand Super Cycle. Listen carefully, from 1966 to 1982, the Dow did nothing. It topped out in 1966 at 1000 and finally broke out from 1000 in 1982. So, 16 years of nothing.
In the last year or two, until the market turned, nobody wanted to be in stocks. Everybody wanted out. Front cover articles, death of equities. You name it.
That leads to the year 2000. Bubble. Valuations off the charts, especially in the Nasdaq tech types. Even the Walmart’s and GE’s of the world were at 50x-60x earnings. That led us into another 1966 to 1982 period.
In 2001, on my radio show, I posed that to you. Bulls and bears, and no progress at all in the major indices. Fast forward. We’re now 13 years since January 1, of 2000. In 2013 will start year 14.
Now, Bill O’Neil thinks that we will be lifting off again within the next year.
I do not know. I try not to argue with him and, guess what? We don’t have to worry about it until the market shows itself anyhow.
My biggest issue is that 1982, the P/E multiple on the market was at 8. Dividend yield was 5-ish. We’re not even close to 8 here and certainly not close to 5-ish on the dividend yield.
And we’ve got $16 trillion in debt that we didn’t have back then. But we’ll see.
So I’m just letting you know, I’m on notice and you should be on notice.
If you live near Cincinnati, I’d go to this.
Certainly, the last secular bear was 16 years. The one before it was 15. We’re possibly in the 8th or 9th inning of secular bear. My guess was always about 2015-2016 before we lift out of this. Bill O’Neil thinks it’s going to be earlier than that. I won’t argue.
I will certainly let the market decide.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.