Is Kodak at risk?

climbing_vine said:
There is still, minimum, $600 billion in basically worthless derivative trash to be unwound. That's only what people are admitting to, and those watchdogs with something of a clue (the folks who called this whole mess four years ago) are targeting the reality to be more than twice that.

GE is a huge player in this market--between that and the impact of the downturn on their other holdings it's not unlikely that their losses will be more than their current market cap. They may not be actually insolvent as Citibank, AIG and others clearly are, but they're not in good shape either.

The sell-off isn't overdone; it has a long way to go. Stocks still haven't fallen to 1993 levels, which is about what they need to hit to undo all the growth that was strictly due to funny money "created" by nominal investment holdings fueled by the various bubbles of the last 15 years.
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I'm interested in where the 1993 date comes from, and why you seem to thinks that ALL the growth during the last 15 years is bubble related.

For all we know, the selloff is done and the rally will commence. Or, we may lose another 50% from here.

Isn't there ONE company who grew by selling innovative products and keeping expenses under control?
 
dfoo said:
1993. How ridiculous.
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1996 would be more like it just to get in line with historical norms (where, in the long run, the DJIA and S&P tend to run about 1-2% over inflation, for the past century). But the backside of a crash always goes a little lower than equilibrium (in any market, including stock).

Stocks had a large run-up in the twenty years after WW2, largely because American businesses filled vacuums created by the destruction of the industrial capacity of essentially the entirety of Europe and Asia. Other than that, stock markets throughout history have tended to remain quite close to inflation. The largest increase in history of a stock market has happened in the US in the past fifteen years, and last time I checked there wasn't a WWIII to explain it. This is credit bubble wealth which is going to vanish, as tends to happen about once every 80 years.

If you think it's ridiculous, you have no idea of the history of markets. It's not ridiculous, it's entirely banal, ordinary, and inevitable.

But, this is a rangefinder forum and the topic was Kodak so I'll get back on topic and say: Kodak is dead unless they focus their digital efforts--and my own hunch is they'll pull it off, but it's only a hunch.
 
Al Patterson said:
I'm interested in where the 1993 date comes from, and why you seem to thinks that ALL the growth during the last 15 years is bubble related.

For all we know, the selloff is done and the rally will commence. Or, we may lose another 50% from here.

Isn't there ONE company who grew by selling innovative products and keeping expenses under control?
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Oh, sure. It's not ALL bubble-related. Just the large majority. Stock markets in the long haul tend to be relatively stable vis-a-vis inflation.
Quasi-exponential increases only happen for two reasons: world circumstances that lead to massive exporting, and bubbles which are going to pop.

When the bubbles pop (and anyone who doesn't think we've been in one is a darn fool), things sink further than they "should" before finally getting back to "normal". 1993 is cherry-picked based on the fact that 1996 is about where things went off the rails. That'll be the nadir, then it'll come back a little. Probably take a few years to finish unwinding, because nobody is going to force all these losses to be catalogued and announced tomorrow.
 
I don't think it ridiculous to point out that markets expand and contract; that is eminently sensible and true. However, the source of my comment was that I believe it is impossible to accurately predict a level of contraction and how much money needs to be unwound.
 
dfoo said:
I don't think it ridiculous to point out that markets expand and contract; that is eminently sensible and true. However, the source of my comment was that I believe it is impossible to accurately predict a level of contraction and how much money needs to be unwound.
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Well, I can get with you on that. I threw out the 1993 because barring something totally bizarre it's close enough to illustrate the point. With a brief break for 9/11, we've been in bubble-ville since 1996. First the 'net bubble, then the various credit bubbles (including mortgages). So... eh. Everyone will draw their own conclusion, but the most sensible one is that it falls back into historical norm now that the easy credit is all gone, and the corollary is that it falls a little further than that before rebounding because that's just how people are.
 
dfoo said:
Aren't you failing to correct for inflation?
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Nope. Here's an inflation-adjusted chart, using the CPI.
http://www.dogsofthedow.com/dow1925cpilog.htm

Note the change in slope from the 82-95 trend to 95-2000. If the Dow doesn't drop at least another 30% or so, it will be the smallest bear drop vs inflation since the WWII downtick, which we pulled out of strongly thanks to nobody else in the world having a manufacturing base left at the end of the war. Overall conditions in terms of production vs debt are worse than any time since (or maybe including) the Great Depression, and we have no relief in sight from international competition.
 
Interesting discussion. I've read several articles over the last several weeks that argued that the stock market was, contrary to popular belief, not a good long term investment and used similar reasoning, along with the suggestion that it is impossible to time markets.
 
Pickett Wilson said:
Interesting discussion. I've read several articles over the last several weeks that argued that the stock market was, contrary to popular belief, not a good long term investment and used similar reasoning, along with the suggestion that it is impossible to time markets.
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So what was the conclusion of the article? ie: what _is_ a good investment?
 
The lottery? 😉

Really wasn't the point of the stuff I've read. They were just pointing out the fallacy of the stock market as a long term investment. Looking at the results of whole financial mess, I have no idea what might work. I moved my investments out into bonds and money markets back when the stock market was headed down toward 12,000. Still trying to figure out what to do when this mess stabilizes.
 
climbing_vine said:
Nope. Here's an inflation-adjusted chart, using the CPI.
http://www.dogsofthedow.com/dow1925cpilog.htm

Note the change in slope from the 82-95 trend to 95-2000. If the Dow doesn't drop at least another 30% or so, it will be the smallest bear drop vs inflation since the WWII downtick, which we pulled out of strongly thanks to nobody else in the world having a manufacturing base left at the end of the war. Overall conditions in terms of production vs debt are worse than any time since (or maybe including) the Great Depression, and we have no relief in sight from international competition.
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Using the 1900 to present line, look at the period from 1965 to 1982, where the Dow moved sideways for almost 20 years. If you use that type of trend, the Dow could stay at roughly the current levels for a similar period to return to the trend line, or could drop to 4,000. Either scenario is possible.
 
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I think about what might happen when it really sinks into the American people that things are likely to never be like they were. Their modest brick homes aren't going to be worth $400,000 again, they will not have unlimited access to easy credit, etc. I know a lot of people who believe everything will return to the way it was before the crash in a couple of years.
 
dfoo said:
Looking at that chart if you follow the slope from 1980 to 1995 and then extend that line the chart has already dropped way below...
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Sure, but I'm not sure what significance it has. You could say the same thing but even more so if you look at 1950 to 1965 instead. There's some level of natural up and down, so you can't take just an up-cycle as establishing a norm...
 
Al Patterson said:
Using the 1900 to present line, look at the period from 1965 to 1982, where the Dow moved sideways for almost 20 years. If you use that type of trend, the Dow could stay at roughly the current levels for a similar period to return to the trend line, or could drop to 4,000. Either scenario is possible.
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Very true. Either way you're losing in the real, the only question is does it happen slowly enough that the nominal value "hides" it. But it's a good point that it's difficult-to-impossible to predict how it'll go (though that doesn't mean some things aren't more likely than others).
 
climbing_vine said:
Sure, but I'm not sure what significance it has. You could say the same thing but even more so if you look at 1950 to 1965 instead. There's some level of natural up and down, so you can't take just an up-cycle as establishing a norm...
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I don't think it was an unnatural up cycle. If you put a line roughly on that chart then we're right around where we should be be right now (as opposed to a year ago when it was obviously way too high).
 
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