(Vanity) Why Is The Stock Market Doing So Good, When The Should Be Tanking

FreeRepublic | OneVike

[OneVike]

For the life of me, I cannot explain to my wife why the stock market keeps doing so well. I keep telling her it should be tanking, but it keeps going strong. From everything I have ever understood, and firmly believe about economics, the stock market should be down to about 5000 or below, yet it isn't. I have heard many experts say that they are themselves baffled?

I could give all kinds of economic numbers from various key industries, along with numerous statistics pointing to the way Obama has indebted our grandchildren's grandchildren. I could also give economic information that shows almost every country in the world is an economic basket case from China to the European Union, yet the stock market keeps defying reality.

I keep wondering if Bernanke is pumping the stimulus money into the market to fool the masses that still think a great stock market equals a great economy. If that is the case, does anyone besides me expect the market to crash next year after Romney is sworn in?

Anyway, back to my vanity question.

WHY? WHY? WHY, is the stock market soaring when in reality is should be fighting to survive?

[OneVike]

I was thinking the same thing.

When I felt Obama was going to beat McCain in early October “08”, took 1/3 of my investments and put it in gold which eventually doubled. Maybe it’s time to reinvest that back into my old stocks, or at least something less shaky then gold will be come next year.

Anyway, I will take that into consideration in the next few Months.

[Armaggedon]

Interest rates are low and people can borrow money to invest in stocks. The price of gambling has come way down. In Obamaworld people are trained to get something for nothing. The flashmobs are looting the markets.

[OneVike]

I have $1000.00 dollars that says Romney wins going away.

Would you really like to put your hatred for Romney where your pocket book is?

[anoldafvet]

As part of QE, the Fed has been buying stocks with the money it is printing.

[Obama_Is_Sabotaging_America]

Anyone outside the United States can invest in the stock market. To some overseas, our market is the safest thing out there. It’s all relative.

[bigbob]

The market reflects opinion, confidence, and human aspirations more than financial metrics. Right now there is no other place to make money, so despite all you cite, people believe in the market and thus, the market responds.

[OneVike]

Forget what I said. I just reread your comment. You have no hatred for Romney, just frustration with those of us who will not vote for him. Like I said in my original comment after the thread i posted,

I do believe Romney will win in a huge landslide.

Look back at 1980 when Reagan defeated Carter. Even with Anderson on a third party ticket taking 7% of the vote, Ronaldo Maximus still won in a landslide.
br /> Now I do not expect anything close to 7% of the electorate not voting for either Romney or Obama. Besides, Obama makes the peanut farmer look like a friggen genius.

Romney will win in a huge landslide. There are not enough of us, who dislike baby killing Rhinos, to throw the election to a man who lost his re-election bid the day he was sworn in office.

[Attention Surplus Disorder]

It is, very slightly. Of course, that implies (unless otherwise specified) that BOTH selling volume and buying volume have declined.

Probably the best snapshot proxy for overall NYSE volume is SPYders. Here's a 5 year chart showing volume. Volume down? Yeah, a little, not gargantuan.

I think you have to consider the investing alternatives, and you also have to consider various market dynamics. For example, IMO there are very few forces in the market stronger than "performance envy" among hedge funds (and, conventional mutual funds) seeking to attract and keep capital. Bonds, paying poor coupon, are very unattractive, it would be easy to call them bubble-like. Who wants to earn 1.4% on a ten year bond? Yet the bond market is said to be 3x the size of the stock market, so it doesn't take much of an exit from bonds to pump the stock market pretty well. And there is the perception that Bernanke simply HAS to keep a floor under the market lest a widespread perception set in that his policies have failed.

The investor's task is not so much to assess where things are and how much those things reflect a current perception of reality; but to assess where things will be next, next, and next-next. I agree with what I *think* you are saying, which is that looking forward, the market appears quite fully valued and thus is less than attractive as far as putting in new money for returns down the road. That's of course a very general statement, but we are making general statements. I find the market not that attractive for new investment on a value basis, but the market has absorbed and begun to run its game on new elements. The market eagerly awaits the next infusion of Fed easing---as if it's an entitlement. Europe looks like crap, so lots of Euro money is flowing over here. I've said before in several posts here and there that there are a baffling array of moving parts going on in the world economy and politico scene, completely forgetting the screaming frauds perpetrated by MFGlobal and PFGBest that have scared people (justifiably) out of the market...as well as the flash crash and let's not forget that little episode circa 2008-2009 when the market dropped to HALF its current value. The markets are skittish now, that much can be said. We just got what, the TWENTIETH Euro rescue?

[what's up]

If you see Romney maintain a solid lead, my advice would be to put a little in now and not wait until the next few months when you won't get as good a deal.

Sure, long term investing will be a good thing to do as the economy turns around, but I think many stocks are a good deal now and worth at least a little investment (as long as Romney keeps his lead).

[peeps36]

I read somewhere that the FED was propping up the markets with printed money it gave to the banks.

[GeronL]

I think Romney will win. Doesn’t mean I’d vote for him.

[OneVike]

I guess that is why I ultimately posted this thread. I need to get as much information as I can before I make the jump.

I don’t have much. I am talking a bout under $80,000.00 total investments. I am in my mid 50’s and thus I have less then 20 years worth of time to actually make money. Much, much less if my spinal troubles get worse.

So while I was able to take $55,000.00 in 2008, and turn it into what I have now thanks to my gold investments the last few years, I need to be real sure about my next big financial move.

If, I find that Obama and Bernanke have been investing stimulus to prop up the market, then I will keep my money where it is. If not, then I will take a different approach.

I am not into this for an overnight enrichment, I am into this for my retirement. My home is paid for, and my expenses are very minimal. As long as I can keep making the money I am I will be fine for the foreseeable future. After retirement I could sell my home for well over $400,000.00 because I am in a very desirable area that has lost less then $20,000 in the market from “08”. So the sale will afford my wife and I to move to another part of the country and live in relative financial ease.

However, I need to be sure of my next move, and I will not make it until I am assured I know what is causing the market to move right now.

All that being said, one bad mover at my level, and I am looking at much less room to maneuver than I would like.

[skr]

For one thing, the market bets on not only the ups but also the downs, i.e., participants can win when a company loses.

[mamelukesabre]

You will find that expert market advice is a lot like listening to the experts talk about future elections. None of them really know what they are talking about.

[ExxonPatrolUs]

http://en.wiktionary.org/wiki/karma
3. The idea that one reaps what one sows

The market is driven mostly by consumer sentiment. It matters not what other indicators suggest. As long as the largest possible portion of the society is purchasing and consuming as much as possible the market will rise. Obama feels he needs to stuff cash in the hands of those who are not spending enough so that the furnace of the economy keeps roaring. To keep this up, we can only borrow – and he and the democrats have borrowed about $1.5 trillion each year of his presidency. In March 2012 national debt on the books of the Fed had passed 100% of what the nation can produce in a year – about $16 Trillion (Including government spending). The 4 million jobs Obama keeps bragging he has created are really just public sector jobs he has saved – which just add to the debt. Municipalities and States are on the verge of bankruptcy. Public pension funds are being propped up with hocus-pocus. Public pensions, Social Security, Medicare, Medicaid, and the new Obamacare entitlements have unfunded liabilities in the 10s of trillions of dollars. Governments, businesses and individuals are still buying US government debt because (relatively speaking) it is safer than any other investment in a global economy that depends on the United States consuming most of the worlds resources. When we can no longer sell this debt, government spending will have to cut drastically or money will have to be printed now, instead of being borrowed from the future. Inflation will dramatically rise and interest on the debt will rise along with it. And then before you know it the so-called middle class will reap what it sows. So, in answer to your question: “Why Is The Stock Market Doing So Good, When It Should Be Tanking?” … My response is: “Wait for it … The new green economy is right around the corner.”

[Paladin2]

It’s not your father’s stock market.

[sourcery]

Financial markets generally must move in the opposite direction to that which most people think they should. Many professional traders make their living by trading in accordance with that well established fact.

Who will buy when everyone who can or is willing to buy has already done so? Who will sell when everyone who can or is willing to sell has already done so? Trapped, wrong-way traders, that's who:

Traders who are trapped by the market moving against them are far more likely to be willing to sell at the lows or buy at the highs than those who have either big profits or no position will be.

The belief that the market simply must crash creates a great supply of shorts versus longs. So the laws of probability mean that, in such situations, it is far more likely that shorts can and will be trapped—"squeezed." With few longs, there's not enough of them to "squeeze" into panic selling. And a big supply of shorts mean there's an oversupply of traders who will nervously take profits by buying, and a big supply of traders who wish they were short...at a higher price, and so will stubbornly wait for a higher price before selling.

The belief that the market simply must rise creates a great imbalance of longs versus shorts. So the laws of probability mean that, in such situations, it is far more likely that longs can and will be trapped and so induced to sell in a panic. And a big supply of longs mean there's an oversupply of traders who will nervously take profits by selling, and a big supply of traders who wish they were long...at a lower price, and so will stubbornly wait for a lower price before buying.

[SaxxonWoods]

I don’t see the problem here. At any given time, some people think the market is overpriced, and some people thing it is underpriced. That’s why trades happen.

You think the market should be at 5,000. You just pulled that number out of your rear end. Why 5,000 and not 4,000 or 6,000? If you can’t answer, you don’t know how to analyze market value anyway.

If you think the market is overpriced, don’t buy it. Very simple, and a tactic used by millions of investors. You can buy when it gets to your magic number of 5,000. Then you’ll be happy and optimistic, right?

[Dan Zachary]

Bonds are extremely low, some are at .125%. Gold has gone up to historic highs and are now dropping. CD’s are at 1%. As some have pointed out, there is hope that Romney will win and do something good for the country and business. What else are investors going to put their money in?

[Dan Zachary]

Bonds are extremely low, some are at .125%. Gold has gone up to historic highs and are now dropping. CD’s are at 1%. As some have pointed out, there is hope that Romney will win and do something good for the country and business. What else are investors going to put their money in?