We are in a stock market correction.
Stocks are being re-priced closer in general to their true value.
Stocks are supposed to be merely a means of buying future income. Stocks are not race horses, sports teams or beautiful paintings. In valuing stocks, unemotional reasoning should be applied.
Oil is in a temporary decline due to Saudi population pressures and the desire of US producers to meet agreed upon debt repayments.
Oil can not be produced in the US in the long term at the prices now being obtained , so it won’t be. Government need o nothing. However, it could buy domestic oil wells cheaply.
As for deflation, doctors and dentists aren’t lowering their prices and they won’t be. Plumbers and other repairmen won’t be charging less in my town.
Do you think health insurance will be getting cheaper? Only if your name is Barack.
If house prices fall by twenty percent in my town, houses will still be overpriced.
And if the $20,000 that I have in bank CDs buys more when the CDs mature, I won’t complain if I should be so lucky.
The way my professor explained it to my the true value of a stock is a moving target but it can be roughly calculated as the total assets of a corporation minus it's liabilities divided by the total number of outstanding shares. If you pay more than that price you speculating on future earnings which isn't bad , just realize what you are doing.
....As for deflation, doctors and dentists aren’t lowering their prices ....
Deflation is just a surplus of any commodity vs demand. Doctors and dentists may not lower their prices, but if people just don’t go to a doctor or a dentist, there will be an economic impact on those practices. I may just decide to have a tooth pulled, at a cost of $200, vs the alternative of a dental implant $2-3000. Big difference. Deflation can cut a deep groove everywhere.
In a deflationary environment, what you will see is doctors and dentists closing their practices as fewer people use their services as the unchanged prices. Same goes for plumbers and repairmen. Some work will get done because it MUST get done, but in other cases the customers will simply defer repairs indefinitely.
“And if the $20,000 that I have in bank CDs buys more when the CDs mature, I won’t complain if I should be so lucky”
Indeed, we savers of cash would be king.
Stocks are supposed to be merely a means of buying future incomeExactly, a stake and share in the fruits of a producer. Not a "war chest" to hype up in value in order to facilitate borrowing egregious sums to conquer and cannibalize.