Yep, reckon you're right that it is an inflationary prop that is holding up the stock market. Least that's been my belief, and it appears this chart supports the theory.
Posted on 03/09/2013 7:44:56 AM PST by blam
The Stock Market Is Looking Like 2000 And 2007 All Over Again
Comstock Partners
March 9, 2013, 7:11 AM
"I have to get into this market; otherwise it's just dragging on me" (A portfolio manager quoted in the Wall Street Journal just prior to the March 2000 peak in the S&P 500.)
"..as long as the music is playing, you've got to get up and dance. We're still dancing." (Citigroup CEO Chuck Prince in July 2007) You know how that turned out.
It's that time again. The Dow surpassed its all-time high and the S&P 500 is not that far from the tops of 1553 on March 24, 2000 and 1576 on October 9, 2007. Just as in 2000 and 2007, the economic, valuation and political background does not support the budding euphoria.
The economy has been limping along at about a 2% growth rate despite the near-zero percent Fed Funds yield and huge amounts of Fed bond purchases. At the same time fiscal policy has become a significant headwind. The agreement to avert the fiscal cliff could slice about 1% off GDP with the sequester reducing it by another 0.5%. A 1.5% hit to a GDP that was only growing at about 2% leaves the economy on awfully thin ice, and very close to recession. Consumers are still in the process of deleveraging their debt, and with wages climbing so slowly, are in no position to go on a spending spree anytime soon. Businesses, sensing a lack of consumer demand, and worried about the dysfunction in Washington, are not likely to step up capital expenditures to any great degree. Unlike the stock market, they are building up their cash in anticipation of the next crisis.
The market has climbed on the basis of an almost childlike faith
(snip)
(Excerpt) Read more at businessinsider.com ...
This bubble blow-out is probably going to be even more spectacular than anything in recent history. Great way to make the illusionary “electronic dollars” created by the Fed disappear.
A lesson that should have been well and fully learned - there is nobody, NOBODY, “too big to fail”.
Once the leakage from the Hindenberg was ignited, there was no stopping the aftermath.
It’s going to blow. That’s inevitable. A recovery running on ghost fumes. There’s nothing there. I just hope it’s a little closer to the 2014 midterms, so we can net maximum gains. If the economy crashes again, all we have to do is tie red state Dems to Hussein and the senate is all wrapped up. We can seat very conservative candidates too, like Steve King.
Notice that bonds took a pretty good lick both Thursday and Friday. Which means interest rates are ticking up.
Just like all of the other apocalyptic stock market prognosticators on this site that have called for a crash ever since Dow 6500. Just like the proverbial broken clock. One day there will be another crash, maybe from Dow 22,000 to Dow 16,000. Meanwhile they missed the last 15,000 points.
keep guessing, one day you will be able to crow. By then I'll be happily retired.
I believe that the market is at this all-time high because our currency has been so devalued.
If you don’t sell, you don’t actually lose.
Shares held do not suffer capital loss
If you don’t sell, you don’t actually lose.
Shares held do not suffer capital loss
If you graph the DJIA against the price of gold, which is real money, the Dow peaked in 2000 with the Tech Bubble, then crashed, and has never recovered. It has simply treaded water for 13 years.
Yep, reckon you're right that it is an inflationary prop that is holding up the stock market. Least that's been my belief, and it appears this chart supports the theory.
That plus that with the Fed keeping interest rates artificially low, what would regularly be money in bonds has been stashed into equities.
These days I'm just amazed that all the talking heads spend all their time discussing values expressed in dollars. I guess it's because it's all their audience understands.
Another dimemma. If Bonds are dying and stocks will crash then there are few options on where to put your money
You sound like the broken clock.
Can't you think of anything new to say?
"keep guessing, one day you will be able to crow. By then I'll be happily retired. "
HA!
I retired 20 years ago at age 50.
Good luck with yours.
I guess if you are in full panic mode, you could just decide to dump everything. If you are slightly less panicky, you could realise that even losing 10%, IF you’ve been in for a couple of years you still come out ahead, so you could simply decide to dump everything if the market drops 1000 points.
Problem is most people hate to sell out after that first 1000 point drop.
And nobody can really figure out where the peak is. If they could, there would be no peak.
Remember, if everybody knew where the market would end up tomorrow, it would already be there today.
You’d hate to look at that chart between 1979 and 2000.
You should see the Apple-to-DOW ratio. It would make you sorry you didn’t invest in Apple.
I yanked everything out of the market this week. Better to be a week,month or year early than a day late.
Tomorrow is just your future yesterday.
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