Dow Faces Bouncy Ride to 5,000

[JohnSmith2007 353]

Dow Faces Bouncy Ride to 5,000: Strategist

The Dow Jones Industrial Average will lose about half of its value over the next couple of years as it follows a Nikkei-like pattern of several sharp rallies in an overall decline, according to Charles Nenner, founder and president of Charles Nenner research.

Stocks are currently in a bear-market rally, and looking at charts and past trends, unemployment and leading indicators suggest the Dow will drop to 5,000 in the next two to two-and-a-half years, Nenner told CNBC in an e-mail.

Deflation will arrive, along with a sharp double-dip recession, pushing the Dow lower, although, like the Japanese market, stocks will see several jumps of 30 percent to 40 percent, he said.

"Things look really bad for the next 10 years," Nenner said.

While most stocks will get caught in the downturn, the exception will be those with exposure to soft commodities like wheat, corn and soybeans, he added.

Last week, JPMorgan strategist David Kelly said there is still a lot of opportunity in stocks and that a double-dip scenario is "very unlikely."

Nenner is also bullish on gold and silver over the longer term and expects the precious metals to start a new leg higher by the end of the year.

Bond yields should go lower for the next three or four years and the Japanese yen should gain against the dollar, he said, adding that his target was 80 yen per dollar.

Nenner also said that there is a strong case to suggest that the Federal Reserve will ease monetary policy further.

http://www.cnbc.com/id/38826988

[^_^ 5,021]

Mr. Smith - If you don't mind me asking, how are you incorporating this knowledge into how you handle your portfolio?

[JohnSmith2007 353]

Mr. Smith - If you don't mind me asking, how are you incorporating this knowledge into how you handle your portfolio?

I am out of the stock market in my savings and my 401K. I have most of my assests in money funds and gold right now. I will wait at least until they decide one way or another on the Bush tax cuts. If they let them expire I expect the bottom to fall out of the market in Dec '10 to Feb '11.

[^_^ 5,021]

I am out of the stock market in my savings and my 401K. I have most of my assests in money funds and gold right now. I will wait at least until they decide one way or another on the Bush tax cuts. If they let them expire I expect the bottom to fall out of the market in Dec '10 to Feb '11.

Thank you for sharing.

[mawilson 2,133]

If they let them expire I expect the bottom to fall out of the market in Dec '10 to Feb '11.

I expect just the opposite. Letting them expire (for *everyone*, mind, not just the top 5%)

will reduce the deficit and increase confidence in the economy.

[Obama 2012 1,714]

I expect just the opposite. Letting them expire (for *everyone*, mind, not just the top 5%)

will reduce the deficit and increase confidence in the economy.

Not with the same spending levels we are at now.

Not with unemployment what it is now.

Not with Obamacare going into effect.

A lot has to change...

Of course, the dirty little secret is, that the government has made more money than it ever has since the "Bush tax cuts" went into effect. It has been and always will be "the spending stupid."

[Dan J 277]

I expect just the opposite. Letting them expire (for *everyone*, mind, not just the top 5%)

will reduce the deficit and increase confidence in the economy.

I agree.

[JohnSmith2007 353]

I expect just the opposite. Letting them expire (for *everyone*, mind, not just the top 5%)

will reduce the deficit and increase confidence in the economy.

The rich folks will see the experation as a tax hike, right or wrong. For at least the short term it will supress job growth and effect companies bottom line. After the shock wears off things will get better but the first quarter of '11 will be a rough one. As far as the reduction in the deficit goes?..... Remember who we are dealing with here. In order for the deficit to go down takes two things, increased revinue AND a reduction in spending. The tax hikes may cause more money to go to the fed but we all know that no party will decrease spending enough to make any difference. I am very pessimistic for this countries chances of avoiding a real and hard crash. I have no faith in the government regardless of who is running it.

[Dan J 277]

Not with the same spending levels we are at now.

Not with unemployment what it is now.

Not with Obamacare going into effect.

A lot has to change...

Of course, the dirty little secret is, that the government has made more money than it ever has since the "Bush tax cuts" went into effect. It has been and always will be "the spending stupid."

There is a massive amount of private capital thats sitting on the sidelines that could create jobs. But the excuse has been thus far an issue of "confidence" in the economy. Which really means is that the investors in control of that capital don't have much for balls in investing that money to push a recovery forward. Everyone is waiting for everyone else to make the first move it seems.

Healthcare will be a drag on the economy without or without healthcare reform. Prices have been increasing much faster than inflation, and the uninsured have been causing prices to increase or been a drag on local governments. It wont go as far as it could have, but it would be worse without it.

[Obama 2012 1,714]

There is a massive amount of private capital thats sitting on the sidelines that could create jobs. But the excuse has been thus far an issue of "confidence" in the economy. Which really means is that the investors in control of that capital don't have much for balls in investing that money to push a recovery forward. Everyone is waiting for everyone else to make the first move it seems.

Healthcare will be a drag on the economy without or without healthcare reform. Prices have been increasing much faster than inflation, and the uninsured have been causing prices to increase or been a drag on local governments. It wont go as far as it could have, but it would be worse without it.

The problem with healthcare isn't really the uninsured as much as it is the quality of equipment/technology we use. Don't get me wrong... The uninsured play a role, but it wouldn't be what it is if we didn't have to upgrade equipment to the 'latest and greatest' every couple of years... We're all about new technology, but when it's implemented right away without costs going down, those costs get pushed to the consumer. Much of our cost comes from technology more so than the uninsured individual. That and a lacking of doctors in many areas as well.

The biggest mistake health care reform did was not address this problem, and it's why costs will continue to skyrocket. That and they forgot to do away with malpractice.....

[웃 910]

I'm not sure about the areas you guys live in, but over here in certain Detroit suburbs you can get beautiful houses for under $20,000 (including repairs).

Well, beautiful might be a slight exaggeration. But there is no better/safer/wiser investment then buying a house for $18,000-$25,000 including the repairs (new paint/carpet/doors throughout). Just those three elements and the house looks 1000X better.

I just picked another one up a couple weeks back for $19,500. Has 3 bedrooms, 1.5 baths, 2-car garage, large living room, nice yard with deck, around 1200 square feet. This house that I paid under $20,000 for (about $23,000 with repairs) will fetch $1,000-$1,200 per month. Taxes are $2,500 per year. Make your money back in less than 2 years and continue to put $1,000 cash-in-hand each month. This house sold for just over $100,000 at the peak of the housing bubble.

When I get tired of collecting on it (at least a decade from now) I'll sell it through a realtor for $75,000 to $120,000 and get a nice lump sum payout.

There is no better time to buy bank-owned, foreclosure, or HUD (government-owned) houses. These types of homes are at rock bottom prices. If you don't buy at least 2 of them in the next couple years you are really missing out on a once in a lifetime opportunity.

Don't add anything to your stock portfolio; build up your rental home portfolio.

[JohnSmith2007 353]

The problem with healthcare isn't really the uninsured as much as it is the quality of equipment/technology we use. Don't get me wrong... The uninsured play a role, but it wouldn't be what it is if we didn't have to upgrade equipment to the 'latest and greatest' every couple of years... We're all about new technology, but when it's implemented right away without costs going down, those costs get pushed to the consumer. Much of our cost comes from technology more so than the uninsured individual. That and a lacking of doctors in many areas as well.

The biggest mistake health care reform did was not address this problem, and it's why costs will continue to skyrocket. That and they forgot to do away with malpractice.....

Sorry, the biggest problem with the health care reform is it didn't reform a thing. It will only make things worse. The dems will be forever tainted and hated by me for not giving us single payer when they had the chance. I voted for Obama and the dem congress for that very reason. Curses upon them for blowing their one chance. It will not come again for a very long time.

[mawilson 2,133]

The rich folks will see the experation as a tax hike, right or wrong. For at least the short term it will supress job growth and effect companies bottom line. After the shock wears off things will get better but the first quarter of '11 will be a rough one. As far as the reduction in the deficit goes?..... Remember who we are dealing with here. In order for the deficit to go down takes two things, increased revinue AND a reduction in spending. The tax hikes may cause more money to go to the fed but we all know that no party will decrease spending enough to make any difference. I am very pessimistic for this countries chances of avoiding a real and hard crash. I have no faith in the government regardless of who is running it.

I agree with you, which is why I think we have to let the Bush tax cuts expire for everyone.

People will never support cutting entitlement programs if they don't have to pay for them. Who would say no to a free dinner?

When the tax hike hits their pocket, they will start taking notice.