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Don't be fooled by the stock market advances!

Discussion in 'Political Discussion' started by PatriotsReign, May 26, 2009.

  1. PatriotsReign

    PatriotsReign Rookie

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    The economy is not doing any better than it was in early 2009. All leading indicators point to stagnation and further erosion of the work force. In my opinion, the markets will go into another tail-spin this summer & fall...just my own opinion.
  2. Patriot_in_NY

    Patriot_in_NY Rookie

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    Any links? Not that I don't believe you, just trying to blunt any of the naysayers for you ;)

    I'm not a real economy buff, but my understanding from different reading and such is pretty similar. Most people I've heard with knowledge seem to indicate the same and essentially say the current gains are inflated and unduly influence with the recent massive cash pumped into the system, which of course is not sustainable.
  3. PatriotsReign

    PatriotsReign Rookie

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    I think that's a fair analysis PINY! I didn't post any links because, as I stated, it's just my opinion.

    But if you look at the number of car dealerships closing and the most recent news that home values have declined another 20% all we're left with is the news that consumer confidence is up. That won't be sustainable.

    Time will tell...and we'll just have to wait.
  4. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    I told my kids to move their 401K's into Gold & SIlver. The dorrar is aobut to be devalued as the printing presses at the fed get ramped up.

    As I said BEFORE the election this administration will be the Carter administration on steroids. What a mess.
  5. Holy Diver

    Holy Diver Rookie

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    correct me if I'm wrong here....


    but weren't the gains during the housing bubble and insurers also INFLATED? Without the bubble, we could have no burst.

    Having the ability to read indications on this being slightly inflated is way better than having potential treasury secretaries telling us that we are "a nation of whiners" and almost all finaincial analysts telling me to invest in bear stearns etc?

    Stimulating the economy has the effect of creating a false advance, but thats also th epoint of a stimulous. To inject currency, and free credit up....isn't it?
  6. efin98

    efin98 Rookie

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    Just from the Dow...

    January 2nd(first trading day of year) it was at 9,034.
    February 2nd it was at 7,936.
    March 6th(the lowest) it was at 6,547.
    April 1st it was at 7,761.
    May 1st it was at 8,212.
    Today as of 3:56 PM it is roughly at 8,451.

    It's down for the year so far and really down from a year before(when it was an all time high). It's rising but it's not really gaining much.
    Last edited: May 26, 2009
  7. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Governemnt 'stimilus' spending removes money from the private sector and inhibits growth over the long term. Short term gain long term pain. THe massive increase in spending we have seen (and we aren't even talking about the massive energy tax and the nationalized health care) will be brutal for the economy. Inflation will go way up and capital for job formation will be non existant since the gov will be borrownig everything that is out there....

    Recipie for disaster.
  8. Holy Diver

    Holy Diver Rookie

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    well, thats not at all what I'm asking, but thanks Nostradamus!


    What I'm asking is if its better to be blindsided by the illusion of a strong financial system, or to understand that its inflated because of an injection by the government?

    either way, I understand peeps like PF13 and myself will b!tch....
    Last edited: May 26, 2009
  9. efin98

    efin98 Rookie

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    The illusion is only as good as the confidence of the buyers...if things are looking good things will be fine in the economy.

    Things went downhill fast in 2001 with the fraud based companies going under...the market rebounded and was higher than ever before the housing funded financial companies started to go under. Once bad news turns into consistent good news things will begin to get better.
    Last edited: May 26, 2009
  10. Real World

    Real World Moderator Staff Member

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    I'm with PR. The employment data is extremely scary.
  11. BSR

    BSR Rookie

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    This isn't just about news and consumer confidence. There is a real change that is working its way through the buisness sector and until it all shakes out there will continue to be job loss.
  12. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey

    S+P 500 is up 0.4% this year.

    NASDAQ is up 10.6%

    The DJIA is the Donald Trump of the major indexes - - it is a vastly overrated media darling. The media does a hideous disservice to its audience when it calls the Dow "the market". Note well: The DJIA is only 30 stocks (one of them being GM).

    That being said, historically, markets tend to turn up 6 months ahead of the economy. Extrapolate March 9th as the bottom of the market (if you believe it won't be subsequently failing that market bottom test), then you are looking at another 3-4 months of economic downturn. Analysts pretty much have it baked into the forecasts that unemployment rates will continue to increase towards 10% before beginning to decline (so RW, prepare to be even more scared throughout the summer).

    We're in a churning environment right now - - just as Bernanke said a few weeks back, the difference is that we are no longer seeing a free fall.
    Last edited: May 26, 2009
  13. PatriotsReign

    PatriotsReign Rookie

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    Smessy, how do you define a free-fall?

    Granted, the banking system does not appear on the verge of collapse as it was late 08 and early 09, but I think there is more to come regarding steep declines. The first being credit card debt defaults and the second is commercial property. Both are teetering upon total collapse.

    When you consider increasing unemployment, we know consumer spending will decline as well. Of course that's my personal opinion and everyone has one. In my experience, market trends are the most difficult things to forecast in the business world. Even the experts suck at it.

    So we'll just have to wait and see what happens.
  14. tanked_as_usual

    tanked_as_usual Banned

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    there are still tons of bargains out there......at least fundamentally........take GE for example......at 13 and change per share, it has a price to earnings ration of 8-9 which is roughly half of what historic average PtoE benchmark value.......what's more, with a 1.25 per share dividend, you earn 9.5% return just for holding it....try to get that at any financial institution........

    to say market this or market that is the typical type of lemming thinking that signifies a lack of understanding in finance and investment
  15. PatriotsReign

    PatriotsReign Rookie

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    Some people know what they are talking about here tanked. Shmessy is an investment advisor and I'm an economic forecaster for the company I work for. But of course there are far more qualified people you can believe, but most of them have been wrong so far as well.

    What I can state as a fact is that where ever consumer spending goes, the economy and the markets will follow. Over 70% of our GDP is generated through consumer spending. And due to dramitic declines in consumer spending, the retail industry is shrinking rapidly. There are many large, familiar retailers that we'll see fail in the coming months and we've already seen several examples of this (Circuit City).

    This is probably a relatively permanent trend as spending was over-inflated by the perception of wealth created by over-inflated stock markets, 401K's and home values. This all means that corp. income is rapidly shrinking which in the long run must drive stock values downward.

    The bottom line is, if consumer spending continues to decline, stock values must follow...
  16. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    You just answered your own question.

    It ain't rosey right now, but it isn't on the verge of collapse as it was in Sept-Oct '08.

    I somewhat disagree with your original post: "The economy is not doing any better than it was in early 2009. All leading indicators point to stagnation and further erosion of the work force. In my opinion, the markets will go into another tail-spin this summer & fall...just my own opinion."

    Where I agree: Unemployment figures will continue to creep upward towards 10% through the summer and into the fall.

    Where I disagree: That is a widely held expectation and is already baked into the forecasts of most economists/market watchers. It won't cause a tail spin in the markets.
    Last edited: May 27, 2009
  17. tanked_as_usual

    tanked_as_usual Banned

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    circuit city was heading for the trash bin while the economy was still robust.......they had their lunch eaten by bestbuy.........

    I am an electrical engineer........my financial knowledge is strictly based on personal factors.......that said, the smart person cares about his own money much more than anyone elses and the biggest part of that is paying attention and being as ahead of the curve as possible........right now is not a good time to be 'index invested' since you're at the mercy of morons in government and public lemming perception........in time, I believe when the dust settles, the companies with the best fundamental situation will rise most dependably.......at this point, I am just happy making mone

    also, I haven't really looked at CY2009 as a stock market advance as much as a correction for an oversold condition
  18. godef

    godef Rookie

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    I don't believe it will be getting back to the all-time high anytime soon, because if anything was ever overinflated, that all-time high was it. Consider the Dow Jones hit 1000 for the first time in the early 70s and 2000 in the mid 80s, it seems proposterous that it ever reached such heights (700%) a mere 20 years later. Just check this chart and see how absurd its recent growth was; this was all primarily fueled by speculation and cheap get-rich-quick gimmicks. I would think 10,000 to be a good goal once the economy recovers.
  19. tanked_as_usual

    tanked_as_usual Banned

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    you're confused.........maybe you were thinking of nasdaq

    http://finance.yahoo.com/q/cp?s=^DJI

    there are no get rich quick schemes on this list...........in fact, if you factor out the banks along with GM, the rest is pretty healthy.........

    as for things being overinflated, outside of the period of 1995-2000, the DJI has always been pretty consistent in terms of longer term growth

    http://upload.wikimedia.org/wikipedia/commons/e/eb/DJIA_historical_graph_to_jan09_(log).svg

    the past decade or so has been relatively flat, and major corrections like the one we have had have never been followed up by a 2nd one...major corrections have always been followed by solid growth and the only extended period of stagnation was from 1965 to 1982......but there was no major correction in that time

    I think an investor stands to do very well over the next 20 year period
  20. PatriotsReign

    PatriotsReign Rookie

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    Fair enough...I guess time will tell as always.

    You made me think of something I have often wondered about and that is college graduates. In my op, those who can't find jobs should be counted among the unemployed. Considering that many of these young men & women paid $80 - $160K for a 4-year degree, they were all part of the economy in a sense and should all be employable.

    Just one of my "musings" I guess...

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