I think the labor force participation rate is a much better assessment of what's really going on in the economy.
http://data.bls.gov/timeseries/LNS11300000
The unemployment rate is supposedly 7.6% right now, but from what I can tell, the overall economy is still stagnating and feeling the long term effects of the 2008 financial crisis. Still not good. QE has been utterly useless as a financial tool.
What would 200 point Dow gain mean for investors, especially those who have invested in both stock and commodities?
Chalk it up to game theory - everyone is trying to guess when the FED will exit, and hoping to ride the wave of cheap money as long as they can. It's a bubble of proportion that will make 2008 look like a blip.
Sadly, too many people have forgotten that stocks represent a share of an underlying business. Indexing and ETFs are mostly responsible. For me, the individual stock is everything. If purchased at a reasonable price, and held for many years, a share of a good business that treats its minority shareholders well can be an excellent investment. I am still holding stocks, often purchased years go, that generally "pay" me 10-20 percent on my original cost, in a combination of cash dividends, cash reinvested in the business or cash used to reduce the number of shares outstanding. So daily fluctuations in stock prices are less important to me. Right now, I am not finding many new companies whose stocks are at attractive entry points. I did buy shares of a microcap stock in a stable business whose management has a sound plan for growth. But I would not encourage most people to "do this at home". When you have to go down to the microcap level to find good stocks, it is a signal to keep some cash in reserve for a buying opportunity in the bigger, higher quality stocks.
The stock market today has nothing to do with the economy. Stock price has nothing to do with the value of the company or its price vs earnings. The stock market is being purely driven by QE. Free money buying up bad debt so banks can play roulette in Wall Street casinos. If they win its pure profit. If they lose the People's Bank of Washington DC will bail them out. Good news is bad news, no more free money. Bad news is good news, QE4EVER! This is the new economy. All the new jobs being created are low paying jobs, minimal hours, no benefits. It's an Obama World!
People are so brainwashed into believing "government spending drives the economy", they can't think straight. This includes politicians, voters, and journalists. And there's no breaking through with them. I've tried math, facts, logic, reasoning, all to no avail. I gave up and am enjoying the decline.
Aaron when this things bursts and the markets tank do you have an contingency plan for survival? Or are you expecting to ride out the chaos in your house?
I think the labor force participation rate is a much better assessment of what's really going on in the economy.
ReplyDeletehttp://data.bls.gov/timeseries/LNS11300000
The unemployment rate is supposedly 7.6% right now, but from what I can tell, the overall economy is still stagnating and feeling the long term effects of the 2008 financial crisis. Still not good. QE has been utterly useless as a financial tool.
What would 200 point Dow gain mean for investors, especially those who have invested in both stock and commodities?
Chalk it up to game theory - everyone is trying to guess when the FED will exit, and hoping to ride the wave of cheap money as long as they can. It's a bubble of proportion that will make 2008 look like a blip.
ReplyDeletehttp://i.imgur.com/kSHGom4.gif
"...FEDERAL RESERVE BOND BUYING PROGRAMS that is a sign of economic growth..."
ReplyDeleteIt sounds a lot like "feed them sh*t and tell them it's steak, and see how many are stupid enough believe it".
DAMN ITS FUCKED UP
ReplyDeleteSadly, too many people have forgotten that stocks represent a share of an underlying business. Indexing and ETFs are mostly responsible. For me, the individual stock is everything. If purchased at a reasonable price, and held for many years, a share of a good business that treats its minority shareholders well can be an excellent investment. I am still holding stocks, often purchased years go, that generally "pay" me 10-20 percent on my original cost, in a combination of cash dividends, cash reinvested in the business or cash used to reduce the number of shares outstanding. So daily fluctuations in stock prices are less important to me. Right now, I am not finding many new companies whose stocks are at attractive entry points. I did buy shares of a microcap stock in a stable business whose management has a sound plan for growth. But I would not encourage most people to "do this at home". When you have to go down to the microcap level to find good stocks, it is a signal to keep some cash in reserve for a buying opportunity in the bigger, higher quality stocks.
ReplyDeleteThe stock market today has nothing to do with the economy. Stock price has nothing to do with the value of the company or its price vs earnings. The stock market is being purely driven by QE. Free money buying up bad debt so banks can play roulette in Wall Street casinos. If they win its pure profit. If they lose the People's Bank of Washington DC will bail them out. Good news is bad news, no more free money. Bad news is good news, QE4EVER! This is the new economy. All the new jobs being created are low paying jobs, minimal hours, no benefits. It's an Obama World!
ReplyDeletePeople are so brainwashed into believing "government spending drives the economy", they can't think straight. This includes politicians, voters, and journalists. And there's no breaking through with them. I've tried math, facts, logic, reasoning, all to no avail. I gave up and am enjoying the decline.
ReplyDeleteAaron when this things bursts and the markets tank do you have an contingency plan for survival? Or are you expecting to ride out the chaos in your house?
ReplyDeleteAaron when the bubble bursts are you planning on riding out the economic chaos from your house or do you have a contingency plan?
ReplyDelete