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sibyl
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« Reply #15 on: October 16, 2009, 03:14:57 PM » |
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The 10,000 is not a real indicator of the economy as much as it is an indicator of a weak Dollar.
Isn't it an indicator of investor confidence more than of fundamentals? |
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"I do not pretend to set people right, but I do see that they are often wrong." -- Jane Austen, Mansfield Park
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mad_doctor
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« Reply #16 on: October 16, 2009, 03:37:08 PM » |
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BTW, I agree w/ you about consumer credit. We definitely need to change the culture of consumerism to a culture of fiscal responsibility. If you believe this, though, I don't understand why you don't like von Mises? He's really saying just that - a nation shouldn't circulate more money than it's worth as a nation. He's saying the same thing about nations as we're saying about individuals.
Yes, one of the things Mises gets wrong is assuming a nation's finances work just like an individuals. For example, see Alexander Hamilton's argument about why the US should never pay off its national debt, even if it could. In his day, he wanted the bondholders to have an interest in the political stability of the US. In ours, we want the Chinese to feel the same way about our economic stability. Whereas this does not really apply to individuals. OK, so individuals shouldn't have more debt than their long-term ability to pay, and banks shouldn't give them any more credit than that, which is MOL the equivalent of allowing them to circulate only as much money as their productivity will allow. Surely there is a level of debt a nation may maintain between 0 and 20 trillion that would maximize the strength of their economy? |
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mad_doctor
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« Reply #17 on: October 16, 2009, 03:43:58 PM » |
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The 10,000 is not a real indicator of the economy as much as it is an indicator of a weak Dollar.
Isn't it an indicator of investor confidence more than of fundamentals? By "fundamentals" you are referring to earnings reports? Yes, people buy stock when they have confidence. My point is that although the 10,000 mark represents investor confidence on account of positive earnings reports, those earnings reports are positive on account of all the overseas business represented in the Dow. The overseas business appears good because the earnings are in foreign currencies, which exchange at higher rates now that the Dollar continues to weaken. In other words, there's a lot of profits occurring on currency exchange rather than real domestic productivity. |
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madhatter
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Just killing time
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« Reply #18 on: October 16, 2009, 03:59:12 PM » |
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mad_doctor's commentary: We're in deep, deep, trouble with our currency. Our government needs to drop whatever else they're doing and make this a priority asap, especially since everything else they're working on right now will only make it worse. It's more important to pay attention to the real economy. If that is strong and sound, the currency will be too. You mean Dow 10K, unemployment 10%? That real economy? The current economy sucks. I figure the US could sustain a strong currency again without using interest rates to prop it up artificially in say, another couple of generations. One if you're lucky and start now. And Madhatter, thanks for the clarification. ?? I haven't posted on this thread. I've been too busy derailing the venting thread with DMV and diaper stories. Maybe mad_doctor should change his moniker to avoid being confused with me. |
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"I may be an evil scientist, but it doesn't take a degree purchased from the Internet with your ex-wife's money to know how special and important you are to me." -- Dr. Doofenschmirtz
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sibyl
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« Reply #19 on: October 19, 2009, 05:16:05 PM » |
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The 10,000 is not a real indicator of the economy as much as it is an indicator of a weak Dollar.
Isn't it an indicator of investor confidence more than of fundamentals? By "fundamentals" you are referring to earnings reports? Yes, people buy stock when they have confidence. My point is that although the 10,000 mark represents investor confidence on account of positive earnings reports, those earnings reports are positive on account of all the overseas business represented in the Dow. The overseas business appears good because the earnings are in foreign currencies, which exchange at higher rates now that the Dollar continues to weaken. In other words, there's a lot of profits occurring on currency exchange rather than real domestic productivity. Thanks. Earnings reports were one of the things I meant when I said "fundamentals"; I also meant things like production stats, unemployment filings, housing starts, consumer durables, etc. But that doesn't vitiate your larger point. I guess I meant that I see the Dow mostly as an index of investor confidence rather than as an index of any particular underlying strength or group of them, and while the weaker dollar is surely contributing to that confidence I am not sure I see that it is the primary cause; I think I agree with normative_ that a stronger dollar isn't necessarily going to jump-start employment or construction, or for that matter necessarily reduce investor confidence. |
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"I do not pretend to set people right, but I do see that they are often wrong." -- Jane Austen, Mansfield Park
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prytania3
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« Reply #20 on: October 19, 2009, 06:41:25 PM » |
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I see it as a big casino, but I'm thinking it may go to 11K.
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Clowns, I tell you. Clowns.
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parispundit
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« Reply #21 on: October 20, 2009, 01:51:50 AM » |
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I see it as a big casino, but I'm thinking it may go to 11K.
Indeed, it is a big casino if you bet on individual horses, i.e. stock of individual companies. In that case, the house is likely to win. Which is why I bet on the house to win, i.e. index funds of the total stock market, and for the long term (20+ years, only). Once you hit 65, stop investing new money in stocks, period. Until then, use an age-based sliding scale based on your tolerance for risk. So far, despite the crash, the results have been very good for me. |
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prytania3
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« Reply #22 on: October 20, 2009, 05:55:29 AM » |
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I see it as a big casino, but I'm thinking it may go to 11K.
Indeed, it is a big casino if you bet on individual horses, i.e. stock of individual companies. In that case, the house is likely to win. Which is why I bet on the house to win, i.e. index funds of the total stock market, and for the long term (20+ years, only). Once you hit 65, stop investing new money in stocks, period. Until then, use an age-based sliding scale based on your tolerance for risk. So far, despite the crash, the results have been very good for me. Oh, you're one of those geniuses who dossn't know you can lose your ass on bonds, too. |
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Clowns, I tell you. Clowns.
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parispundit
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« Reply #23 on: October 21, 2009, 01:56:27 AM » |
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A genius can manage to lose their ass on anything, from bonds to pork bellies. I try to practice financial humility.
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prytania3
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« Reply #24 on: October 28, 2009, 12:35:55 AM » |
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So I was looking for a big move on November 2. Let's see what happens. I was thinking maybe the DJIA would go to 11K, but that wasn't based on anything--either charts or fundamentals--I just thought maybe they'd continue pumping.
At any rate, I'm still not ready to commit to direction. I'll have to look at a chart, but I'm too tired tonight.
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Clowns, I tell you. Clowns.
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mad_doctor
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« Reply #25 on: October 28, 2009, 08:22:39 AM » |
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The market jumped on earnings reports last week. I'm wondering what will happen when the Christmas sales projections start coming in? I still think it will dip, perhaps another crash, although I'm not as sure of the date as you are. (I suppose that makes us even, since you're not sure of the direction of the move?)
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prytania3
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« Reply #26 on: October 29, 2009, 05:59:01 AM » |
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On the DJIA chart, the trend line is about 9500. I expect it to go there, but I think news will dictate it it breaks out of the channel, up or down from there.
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Clowns, I tell you. Clowns.
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prytania3
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« Reply #27 on: October 30, 2009, 11:44:00 AM » |
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Dow back down 183.
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Clowns, I tell you. Clowns.
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mad_doctor
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« Reply #28 on: October 30, 2009, 11:49:19 AM » |
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Yes, supposedly on the news of abysmal consumer spending reports.
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mad_doctor
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« Reply #29 on: October 30, 2009, 07:44:27 PM » |
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Yes, supposedly on the news of abysmal consumer spending reports.
... and now even more since the market figured out that the job numbers were ginned up not to look as awful as they are. |
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