Peter Boockvar of Miller Tabak & Co Says Dow May Drop to 5,000

I'm not familiar with Peter Boockvar or his investing record but I thought it was interesting that analysts are not starting to talk about more drops in the markets. Before the talk was about whether we had hit a floor at 8,000.

I'm not familiar with Peter Boockvar or his investing record but I thought it was interesting that analysts are now starting to talk about more drops in the markets. Before the talk was about whether we had hit a floor at 8,000.  I personally believe we have a few more drops to go and then probably a lot of sideways growth for the next decade.  It will be a long time before we see the Dow back to its all-time high of 14,164.53 set in October 2007.  In a Bloomberg article, he says:

"Earnings estimates are too high and when investors realize that, they will drive the stock market lower, added Boockvar, Miller Tabak's New York-based equity strategist. Companies in the Standard & Poor's 500 Index will earn a total of $60 a share in 2009, not more than $90 as some analysts estimate, he said."

Of course what we seen is that anlaysts are constantly chasing each other up or down.  When oil was shooting up last summer, analysts were tripping over each other to predict the next peak price.  So it's important to take what these Street guys say with a massive grain of sale and to even be a bit contrarian.  Still, in this case, I think the general thrust of his argument is correct.  The credit markets remain clogged, the economy is in or will enter a recession, and sentiment appears to be getting worse not better.

I've said it before, but we're seeing a once-in-a-generation unwinding of the largest credit bubble in the history of the world.  It aint going to look pretty and it aint going to be over quickly.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • Nope

    October 25, 2008

    Nope, the market is already pricing in terrible earnings in 09 and a real slowdown. This will be bad, but it will also normalize in 2010. The stock market should stabilize around here, maybe a little lower, but we aren't going to 5000 on the Dow w/o a major terrorist attack.

  • Sam Cass

    October 26, 2008

    "Nope, the market is already pricing in terrible earnings in 09 and a real slowdown."

    I hope the bad news is already factored in but the market has shown an inability to price in the credit problems. Everyone knew that Lehman would fail and yet the market didn't react right away. I think recent events have shown that markets aren't as efficient as people once thought.

    Bank failures are far from over and I don't think anyone really knows how the financial crisis is going to impact Main Street.

    I think Dow 5,000 might be extreme but I don't think we've seen a bottom yet.

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