Dow Will Fall to 6,300 by Year End: Portfolio Manager

[240 is Back]

CNBC ^ | 05 Oct 2009 | JeeYeon Park

With the prospect of higher unemployment hanging over the markets, some experts expect a correction. So are they right? Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds, and John Lekas, CEO and portfolio manager at Leader Capital, shared their insights.

“I think we go below the double dip,” Lekas told CNBC. “By year-end, we drop below 6,300 on the Dow and by 2011, we’re at 4,200.” Lekas said although Monday's ISM services index was “neutral,” the unemployment number was at 785,000 last month and that number is expected to worsen.

http://www.cnbc.com/id/33179408

[nicky.smth]

240,  what stocks do you own...?


You strike me as the conservative type of investor, whose scared of stocks, and invests in 500 dollars Cd's that yield 1.50%


Right now i'm selling naked puts all long. 

[240 is Back]

I avoid stocks. 

[Soul Crusher]

I avoid stocks. 

God Gold & Guns   

[240 is Back]

i sent all my $ to SarahPAC months ago.  I figure she'll know how to spend it best.

[Soul Crusher]

i sent all my $ to SarahPAC months ago.  I figure she'll know how to spend it best.

She has a really good facebook article out today on the need to drill for our own oil.  If only those in the WH and congress had the same sentiments maybe we would not be the laughing stock of the world devaluing our dollar the way we are. 

[The Luke]

Don't any of you guys think this much-worse-than-the-Great-Depression situation might have a something-similar-to-the-Great-Depression effect?

We shoud all expect a 90% second leg down that reduces the Dow Jones to 10% of its peak value.


The Dow peaked in 2006 around 14,000.

If this current "Debt Apocalypse" ends up being something less than the end of the monetary system itself (which is where it is going) and is somehow ameliorated into something as mild as, say, just The Great Depression, then we should expect a best-case-scenario second-drop-off similar to what happened after 1929.

So, expect Dow 1,400 (yes, ONE thosand four hundred) as a best case scenario.


In reality, I don't know where the Dow will NOMINALLY find a bottom as the dollar continues to decline... but in terms of gold: expect the Dow to reach one ounce of gold (currently $1,050).


The Luke

[Skip8282]

God Gold & Guns    

Not to derail this thread, but perhaps some of the more business savvy people here can explain to me why gold goes up when the economy is going down.  Even if there were a crash, I can't imagine a store accepting 3 pinches of gold dust as payment.  And if there is a crash, I wouldn't think many would be buying jewelry.  Perhaps other uses which I'm unfamiliar?

PLEASE keep it SIMPLE.  I don't have an MBA and I'm not an investor.  My investment knowledge is limited to putting my money in my retirement account, where some unamed fund manager with some unknown company, (theoretically) works hard to make my money grow.  

[The Luke]

Not to derail this thread, but perhaps some of the more business savvy people here can explain to me why gold goes up when the economy is going down.  Even if there were a crash, I can't imagine a store accepting 3 pinches of gold dust as payment.  And if there is a crash, I wouldn't think many would be buying jewelry.  Perhaps other uses which I'm unfamiliar?

PLEASE keep it SIMPLE.  I don't have an MBA and I'm not an investor.  My investment knowledge is limited to putting my money in my retirement account, where some unamed fund manager with some unknown company, (theoretically) works hard to make my money grow.  

Gold is and always has been the only real World Reserve Currency.

Gold has only ceased being the official World Reserve Currency since America closed the gold window to foreign dollar holders (ability to convert dollars into gold bullion) in '74 (I think?).

So we've had oil (the petro-dollar) as the official World Reserve Currency for about 35-38 years... now we no it simply isn't stable enough and is continuosly undermined by market manipulation and fractional-reserve counterfeiting.


Gold will reassert itself as it has done whenever fiat currencies fail (they all fail eventually), it always has ever since the beginning of human history.


Gold is always acceptable in extremis. That's how the Nazis funded their war machine.

Just as you wouldn't accept a suitcase full of Zimbabwean dollars as payment for anything (my brother carries a 100 trillion dollar Zimbabwean note in his wallet just for laughs), a collapsed dollar wouldn't be worth shit either. But you'll always find a taker for a suitcase full of gold... anywhere on earth... any time.

Granted, your local supermarket won't accept a sprinkle of gold dust... but when currencies fail, people learn the vale of a Kruggerand real quick (currently worth approx $1,600). Silver dollars too (currently worth approx $50).

Gold is the only investment that has kept pace with inflation since the inception of fiat currencies... and it will continue to do so once this temporary gold-suppression scheme (the petro-dollar) runs out of steam: expect gold $2,000 (at least).

The only investment advice working people will ever need, two words: Buy gold!



The Luke

[SAMSON123]

Not to derail this thread, but perhaps some of the more business savvy people here can explain to me why gold goes up when the economy is going down.  Even if there were a crash, I can't imagine a store accepting 3 pinches of gold dust as payment.  And if there is a crash, I wouldn't think many would be buying jewelry.  Perhaps other uses which I'm unfamiliar?

PLEASE keep it SIMPLE.  I don't have an MBA and I'm not an investor.  My investment knowledge is limited to putting my money in my retirement account, where some unamed fund manager with some unknown company, (theoretically) works hard to make my money grow.  

It is really simple. what you are seeing is NOT the value of GOLD going up, but rather the value of your dollar going down. Right now it takes over 1000 US dollars to buy one ounce of gold. As the dollar continues to falter it will then take 1100 or 1200 or 1500 etc of US dollars to buy an ounce of gold. If the dollar collapses completely like the German Mark did or the Zimbabwe dollar has it could cost you MILLIONS of dollars to buy that same one ounce of gold. So as you said as the economy of america falls and the dollar sinks with it the amount of dollars required to buy the same one ounce of gold will increase.

Hope that makes it easier to undestand

[Soul Crusher]

It is really simple. what you are seeing is NOT the value of GOLD going up, but rather the value of your dollar going down. Right now it takes over 1000 US dollars to buy one ounce of gold. As the dollar continues to falter it will then take 1100 or 1200 or 1500 etc of US dollars to buy an ounce of gold. If the dollar collapses completely like the German Mark did or the Zimbabwe dollar has it could cost you MILLIONS of dollars to buy that same one ounce of gold. So as you said as the economy of america falls and the dollar sinks with it the amount of dollars required to buy the same one ounce of gold will increase.

Hope that makes it easier to undestand

Gold is also universally recognized, rare, long lasting, and measurable. 

[Benny B]

...

[Bindare_Dundat]

...

"Gold is a shit hedge in this enviroment.", says the economic wizard who can't see past his hand.



Gold $1,057.00

[Benny B]

This jackass is a prime example of why 95% of retail investors have no business watching CNBC.

[Benny B]

"Gold is a shit hedge in this enviroment.", says the economic wizard who can't see past his hand.



Gold $1,057.00

LOL
I wonder how often "Ziggy" has stored my investment advice on his hard drive. Everything in it's proper context, dipshit! 

[Bindare_Dundat]

LOL
I wonder how often "Ziggy" has stored my investment advice on his hard drive. Everything in it's proper context, dipshit! 

The only dipshit chasing his tail is you.

[Benny B]

The only dipshit chasing his tail is you.

When did you buy into the gold rush Ziggy? What's your YTD yield?

[Bindare_Dundat]

When did you buy into the gold rush Ziggy? What's your YTD yield?

Do you not remember all the times you would rib me about this? I've been talking about gold for some time.

http://www.getbig.com/boards/index.php?topic=180577.msg3482163#msg3482163

Gold was around $700/oz.

GG and EGO, ABX around the same time.

[SAMSON123]

Gold is also universally recognized, rare, long lasting, and measurable. 

RIGHT ON... THe only way the value of gold or its amount could change is if somewhere someone finds a gigantic gold vein that could increase the worlds supply considerably. So far such vein has not shown itself.

[pedro01]

The value of Gold is sentimental.

Gold will never become the worlds reserve currency because you can't limit the amount of wealth on the planet to the amount of Gold on the planet. No system of currency is perfect, neither fiat currencies or metal based currencies.

Gold value rises as the dollar falls but some of the price increase in Gold has to be attributed to the laws of supply & demand. When buying Gold, always be aware that this is what everybody else is doing and so the chance of a Gold bubble is high. A basket of metals may be more sensible than just Gold.

Also be aware that you should not be worried about inflation AND the  DOW going down to silly levels like 1,000. As prices inflate, earnings inflate but not in real terms. In turn, the prices of stocks will inflate the dollar value of the DOW will increase but that doesn't necessarily mean it is worth more. Now - if someone were to say - the DOW will go down to 4 ounces of Gold, that may make sense.

The DOW is only 30 companies, it's not a broad index like the S&P. Many of them are major exporters. There's also stocks like pharma companies who's earnings aren't really hit too badly by recession. Taking into account the amount exported as well as the fact that inflation is good for the dollar price of the DOW - I don't think it's going down below 2000 as has been stated on this thread. I wouldn't be surprised if we saw 10,500 in the next few weeks.

Long term, perhaps 20,000 by the end of 2011. Trouble is though - 20,000 then will be 10,000 now because of dollar devaluation/inflation.

[pedro01]

Do you not remember all the times you would rib me about this? I've been talking about gold for some time.

http://www.getbig.com/boards/index.php?topic=180577.msg3482163#msg3482163

Gold was around $700/oz.

GG and EGO, ABX around the same time.

How much did you buy ?

[Benny B]

Do you not remember all the times you would rib me about this? I've been talking about gold for some time.

http://www.getbig.com/boards/index.php?topic=180577.msg3482163#msg3482163

Gold was around $700/oz.

GG and EGO, ABX around the same time.

We all TALK about gold all the time Ziggy, and my firm has definitely made significant purchases of gold during the upswing. Gold's prices are primarily due to institutional investors like mine, as the small retail investor has not yet been a major factor.

But that's cool, Ziggy I'm glad you are happy with your little commodities play that doing quite nicely right now. If you put my previous quote in context, gold was indeed a "shit hedge," as a speculative investment was not needed given the market's obvious upswing and inexpensive value opportunities abounded.

So how much did you buy? You bought in at $700? Do you anticipate a further run up to perhaps $1200, or do you have a built-in short sell trigger point? How do you feel about the reasons behind gold's expansive run up, and does the rationale fit into your overall investment philosophy? That is assuming, of course, that you DO have an investment philosophy.

Since you file away my statements on your hard drive with hopes that they might fail so that you can  regurgitate them later, did you take advantage of my BAC recommendation yet? It's the only stock pick I've ever given on this board. It's up...oh, I'd say 60% or so since I threw that one out there. 

I'm also curious, Ziggy, about how back in March you (and 33334567) felt President Obama's policies were directly at fault for the Dow's decline to 6500. Do you still believe this to be the case, and if so, HOW so? If not, are you prepared to acknowledge that you did not know what the hell you were talking about?

[GigantorX]

Question for All:

When you are buying gold, are you  buying the actual physical bullion or some paper that says you own the bullion?

[Soul Crusher]

We all TALK about gold all the time Ziggy, and my firm has definitely made significant purchases of gold during the upswing. Gold's prices are primarily due to institutional investors like mine, as the small retail investor has not yet been a major factor.

But that's cool, Ziggy I'm glad you are happy with your little commodities play that doing quite nicely right now. If you put my previous quote in context, gold was indeed a "shit hedge," as a speculative investment was not needed given the market's obvious upswing and inexpensive value opportunities abounded.

So how much did you buy? You bought in at $700? Do you anticipate a further run up to perhaps $1200, or do you have a built-in short sell trigger point? How do you feel about the reasons behind gold's expansive run up, and does the rationale fit into your overall investment philosophy? That is assuming, of course, that you DO have an investment philosophy.

Since you file away my statements on your hard drive with hopes that they might fail so that you can  regurgitate them later, did you take advantage of my BAC recommendation yet? It's the only stock pick I've ever given on this board. It's up...oh, I'd say 60% or so since I threw that one out there. 

I'm also curious, Ziggy, about how back in March you (and 33334567) felt President Obama's policies were directly at fault for the Dow's decline to 6500. Do you still believe this to be the case, and if so, HOW so? If not, are you prepared to acknowledge that you did not know what the hell you were talking about?

We pumped hundreds of billions if not trillions of dollars into the system since then.  WTF do you think was going to happen?

Oh yeah, we have to pay it back though and now have a diminished dollar.       

[rockyfortune]

Question for All:

When you are buying gold, are you  buying the actual physical bullion or some paper that says you own the bullion?

you can buy both...coins..or gold stock...