Art Hogan's Bottom Seriously Violated

Sorry! I didn't know how else to word the headline. ;)

November 21, 2008
Art Hogan's Bottom Call

“This market is indiscriminately selling and ignoring good news out of IBM, GE, and ignoring good news on the monetary policy front.. all of that’s being ignored while we’re in liquidation mode.”

“I think if you look at all the carnage we’ve done to the major indices, the bottom gets put in today.“

That was said on October 10, 2008. The S&P closed that day at 899.22. It closed today at 735.09. That's an 18% loss for those keeping track at home.

What's 18% in this environment?

A pessimist would say that at today's 0.25% interest rate on three month treasury bills, it's going to take 66 years to safely make it back. Why not 72 years? Fortunately, the interest will compound and you'll soon be earning interest on that interest.

On the other hand, a pessimist would say that at today's 14.03% interest on a typical credit card, that's just 15 months of interest.

What on earth? How did the pessimist get in there twice? I was planning to have an optimist offer the rebuttal. Sorry!

Let's look at that good news out of GE we've apparently been ignoring. It closed at 21.50 on October 10, 2008. It closed down 6.5% today to 8.51. That's a 60% loss.

GE cuts quarterly dividend to 10 cents a share

In a statement Friday, CEO Jeff Immelt said that GE's board of directors cut the payout to strengthen its balance sheet and provide "additional flexibility." GE is trying to protect its top 'AAA' credit rating despite growing doubts over the stability of its GE Capital lending unit.

Those are growing doubts over stability from an indiscriminate selling, the ignoring of good news, and a liquidation mode mindset though. I want to make that clear.