Dow Closes Up 82, Nasdaq Finishes Up 9

AP ^

[reformedliberal]

I am confident that they cannot ignore it. Everyone knows that their own personal economy is doing fine and, besides, the stock market numbers are repeated on TV and radio quite often and are even on the news tickers during prime time.

People perk up when they hear "stock market is up" and "five year high", even if they don't recall the exact numbers or understand what is happening. Almost half of all Americans have some sort of stock investment.

People see they have money left over at the end of a pay period, they go out to dinner and buy something. Supply side
economics in action!

[Dont_Tread_On_Me_888]

There is one overriding point--presidents have very little to do with the economy. The business cycle and the global economy are the two biggest drivers of the US's economy. What litle direct input a president has is usually in concert with Congress.

Presidents should get no credit for the economy, nor should they receive blame. The media makes to big a thing in associating the economy with the president--it is a false association.

[groanup]

If I may, I'll respond to those points in your post that I understand:

You are right. The major move in the Dow in the 90's occurred after the Contract With America got elected. On January 3, 1995 the Dow closed at 3838.48. In January of 2000 I believe it peaked at 11,722. That's over a 250% return. Then all hell broke loose. A lot of the Dow's momentum had to do with the bubble in the tech stocks. The Dow lost over 4000 points. Ouch.

Tuplip money is a kind moniker. The Y2K thing created tens of thousands of fake jobs. There were companies with NO earnings doing IPO's and rasing billions of dollars. I used to converse with a friend who was very good on these things. During the bubble all of the literature that was used to sell mutual funds spoke about "time in" the market not "timing" the market. We knew that when the bubble popped that market timing would come back into favor. It did. Market timing is, after all, only a form of damage control investing.

I think what you say is true, there is REAL growth in the economy with REAL companies who make REAL money and hire REAL people.

But, rest assured, after about 20 years or so the wizzes on Wall Street will have another NEW thing. Last time it was the internet, next time it will be micro-robotics or bio-tech. Whatever it is it will be profound and will be PROOF that things have changed. They won't have changed as far as investment is concerned. There will be another bubble and the aftermath will be a lot of people who lost everything pointing fingers at Wall Street or auditors or the government.

The only finger they won't point is the finger that points at themselves for being so foolish and greedy.

It is a scenario that has played out every couple of decades since the advent of bid/ask markets and capitalism.

The tulip fiasco is just the oldest (1700's) that we have good data on. There were older ones.

Get a book called "A Short History of Financial Euphoria" by John Galbraith.

He's not a conservative economist but his book tells a vivid story.