The Economy and Stock Market

[dmarc117]

Exactly. Violent revolution would sweep half the world and the other half would regress fifty years at least. There is no way that will be allowed to happen as absolutely no-one has a vested interest in it.

 

 

yep....the sec would say you couldnt sell anything for 2y. pols could not let it happen, ever.

 

edit: which is why i think that terrorists would be crazy not to look at financial terrorism. they could reek havoc on the world.

Edited May 20, 2010 by dmarc117

[SEC=UGA]

Exactly. Violent revolution would sweep half the world and the other half would regress fifty years at least. There is no way that will be allowed to happen as absolutely no-one has a vested interest in it.

 

Quiet!!! It is all part of my master plan... I and some dudes I know from harvard have been working on this for the better part of a decade. We decided once either a black or female president was in office that we would pop the plan as the US would be relatively helpless with such a person at the helm.

[wiegie]

Try to find the fund that has the highest allocation of cash, t-bills and t-bonds. Anything that has holdings in stocks or equities, bank or corporate bonds is not a good option. Most 401ks don't have solid cash options (or cash equivalents) so it might be tough. I've bolded the BAD ones above.

Now this is why I am always calling you out on your nonsense. It's one thing to screw up your own finances, but I feel absolutely compelled to point out the idiocy of your hypotheses so that other people don't actually take you seriously.

[Brentastic]

If you guys think we can never hit 3k in the dow - you are sadly mistaken. We were just at 6500 little more than a year ago. The market is bigger than the government and it will have it's way ultimately no matter what the government tries to do to stop it.

 

Trust me, I don't want it to get there either, but saying it's impossible is being naive.

[Brentastic]

Now this is why I am always calling you out on your nonsense. It's one thing to screw up your own finances, but I feel absolutely compelled to point out the idiocy of your hypotheses so that other people don't actually take you seriously.

What's so idiotic about it? Dude, we are in a deflationary depression - realize it. If you think stocks are a better option than cash, you are the idiot.

 

You said you were going to point out my idiocy, so try. Being cash-heavy is the safest option right now and I'm talking about actual cash. For those with 401ks who aren't willing to take out there money, the next best option is cash-equivalent funds, starting with short term t-bills. Tell me how that hypothesis is wrong. Just because you don't agree with it or understand it, doesn't make it wrong - it only means that our opinions differ. Teachers are not do-ers, remember that.

[Avernus]

guessing where the bottom is right now is very unpredictable....it could be 5,000....it could be 10,000...

 

if we ever hit 3,000...it's because the people in charge are okay with it and which would allow us to start an entirely new global system....

[cre8tiff]

guessing where the bottom is right now is very unpredictable....it could be 5,000....it could be 10,000...

 

So if the bottom is 10K, then the top is what, 10,001 - 100,000?

[dmarc117]

guessing where the bottom is right now is very unpredictable....it could be 5,000....it could be 10,000...

 

if we ever hit 3,000...it's because the people in charge are okay with it and which would allow us to start an entirely new global system....

 

 

im not saying it should or shouldnt trade 3000 or be worth 3000. like u said, im saying it wont happen cause the exchanges and pols will prevent it.

Edited May 20, 2010 by dmarc117

[rhippens]

I've not been active in this discussion, but have been reading intently because I'm a newbie when it comes to financials. I can't tell you how many times I've had the discussion with my wife that we soon need to diversify and try to get some financial help from a professional to line out our goals. I just turned 30 and have a good chunk of money in 401k and a TSP account from working over the last decade. But you can pretty much consider us "cash-heavy" meaning outside of employer retirement accounts and a few ESOP stock, everything we have is in our bank account. If I asked most people how smart that is to date, they would say we are way behind the curve on planning, but we are conservative and have always wanted "reserve" money. Now that this reserve money that is not going out has reached the equivalent of a year's worth of salary we are at the crossroads of paying off the house, playing with diversification, or just holding tight. So, this discussion is very interesting to me.

 

The point of this post is to say a few things. If I poll 10 financial managers, I'll probably get 10 answers, but my guess would be a majority would be near the same direction. As someone who is ignorant to the game of stocks, I would have to go with the majority right? I mean, if you polled 10 guys about whether or not they would rather have Andre Johnson or Larry Fitzgerald and a majority said AJ, that would be a strong indication that enough people are leaning that way for a reason. Of course, this would require that my 10 advisees are people I trust, and in this case, good solid money managers which I realize is hard to find. All that said, throwing around the term "sheep" is probably more offensive to someone like me than it is someone educated on the subject. So, I see that term and find it to be abrasive for the sake of being abrasive. Let's say I don't want to be a "sheep" and I go against the grain. What defense do I have when things go south? Can I go back to the folks in the minority and ask them for my money back? No, and the majority is going to tell me I was an idiot for bucking the system. Granted, it could work out the other way, but for someone who doesn't know the difference, what reason do I have to not trust the majority?

 

Overall, I have a general distrust of what the government is doing and general distrust in people making more money than I can conceive by managing the money of millions of people. They absolutely do not have my best interest in mind, they only have their own bank account in mind, I'm just secondary to it. But at the same time, the system can't be completely so broken that people would still lean strongly one way. It's broken for sure, but how badly seems to be the question. Clearly not badly enough to completely change the mindset of the majority.

 

The point is that I would advise not using the words "sheep" or "diot". There are some of us out here that are trying to learn what's going on. Frankly, if those terms weren't being used, my guess would be that the backlash would be less severe. I hate it when people at work tell me my professional OPINION is wrong. That's not the way it works. Opinions are opinions and everyone's opinion in here is based on their own experiences and conclusions. It may play out that one side is right or wrong, but that doesn't actually mean their OPINION was wrong. Their THEORY may have been wrong, but their OPINION wasn't as long as it was well-founded. Without proof to the contrary, it's a pretty hard sell to flat out tell someone they are wrong in a derogatory manner when frankly it seems to me nobody knows how the picture will be painted in a year or five or fifty.

 

I'm railing on nobody here, I really have enjoyed the discussion as a whole, but I thought it was prudent to point out how this discussion is perceived by someone that really doesn't fully understand either side. If I were to choose right now, I'd be back to leaning on the majority right? But calling someone a sheep or an idiot based on their opinion certainly to me doesn't seem like a way to find the right answer. I know I certainly don't feel comfortable about doing anything outside of what I'm doing now based on this discussion.

 

You folks have scared the crap out of me. Then again, most Huddlers do.......

[CaP'N GRuNGe]

Wow, oil is down 7.5%...

[dmarc117]

Wow, oil is down 7.5%...

 

 

ya, looks like people are selling anything they can.

[Brentastic]

I've not been active in this discussion, but have been reading intently because I'm a newbie when it comes to financials. I can't tell you how many times I've had the discussion with my wife that we soon need to diversify and try to get some financial help from a professional to line out our goals. I just turned 30 and have a good chunk of money in 401k and a TSP account from working over the last decade. But you can pretty much consider us "cash-heavy" meaning outside of employer retirement accounts and a few ESOP stock, everything we have is in our bank account. If I asked most people how smart that is to date, they would say we are way behind the curve on planning, but we are conservative and have always wanted "reserve" money. Now that this reserve money that is not going out has reached the equivalent of a year's worth of salary we are at the crossroads of paying off the house, playing with diversification, or just holding tight. So, this discussion is very interesting to me.

 

The point of this post is to say a few things. If I poll 10 financial managers, I'll probably get 10 answers, but my guess would be a majority would be near the same direction. As someone who is ignorant to the game of stocks, I would have to go with the majority right? I mean, if you polled 10 guys about whether or not they would rather have Andre Johnson or Larry Fitzgerald and a majority said AJ, that would be a strong indication that enough people are leaning that way for a reason. Of course, this would require that my 10 advisees are people I trust, and in this case, good solid money managers which I realize is hard to find. All that said, throwing around the term "sheep" is probably more offensive to someone like me than it is someone educated on the subject. So, I see that term and find it to be abrasive for the sake of being abrasive. Let's say I don't want to be a "sheep" and I go against the grain. What defense do I have when things go south? Can I go back to the folks in the minority and ask them for my money back? No, and the majority is going to tell me I was an idiot for bucking the system. Granted, it could work out the other way, but for someone who doesn't know the difference, what reason do I have to not trust the majority?

 

Overall, I have a general distrust of what the government is doing and general distrust in people making more money than I can conceive by managing the money of millions of people. They absolutely do not have my best interest in mind, they only have their own bank account in mind, I'm just secondary to it. But at the same time, the system can't be completely so broken that people would still lean strongly one way. It's broken for sure, but how badly seems to be the question. Clearly not badly enough to completely change the mindset of the majority.

 

The point is that I would advise not using the words "sheep" or "diot". There are some of us out here that are trying to learn what's going on. Frankly, if those terms weren't being used, my guess would be that the backlash would be less severe. I hate it when people at work tell me my professional OPINION is wrong. That's not the way it works. Opinions are opinions and everyone's opinion in here is based on their own experiences and conclusions. It may play out that one side is right or wrong, but that doesn't actually mean their OPINION was wrong. Their THEORY may have been wrong, but their OPINION wasn't as long as it was well-founded. Without proof to the contrary, it's a pretty hard sell to flat out tell someone they are wrong in a derogatory manner when frankly it seems to me nobody knows how the picture will be painted in a year or five or fifty.

 

I'm railing on nobody here, I really have enjoyed the discussion as a whole, but I thought it was prudent to point out how this discussion is perceived by someone that really doesn't fully understand either side. If I were to choose right now, I'd be back to leaning on the majority right? But calling someone a sheep or an idiot based on their opinion certainly to me doesn't seem like a way to find the right answer. I know I certainly don't feel comfortable about doing anything outside of what I'm doing now based on this discussion.

 

You folks have scared the crap out of me. Then again, most Huddlers do.......

Good post and hopefully an eye opener to everyone, including myself. I am certainly guilty of using the terms you mention, however, only after being lambasted by others first. It doesn't make it right, I know, but I only lash out at after being attacked first. I have certainly been the recipient of name-calling more than I have been the deliverer.

 

Anyways, if you think about this in terms of fantasy football, how often is the majority really correct? The majority might accurately predict the best single player in a position etc… but to win, to beat the majority, you must separate yourself from the majority overall and have a full team of correct picks. Picking one player that is a consensus will never win you a championship – you need to be correct on several players, not just one or two.

 

If you’re following the majority, you can never be exceptional and by it’s very nature (of following the majority), you will only be average at best. Putting this into the context of investing, it’s always the little guys (all of us, day traders etc…) that are last. Whether it’s getting long or getting short you can be sure that real market movers are already positioned with the trend and by the time the majority are on board, it’s almost always too late. That’s not to say there aren’t profits for the late comers, but because the majority is always behind the curve, the profits that are available will be lost when the market reverses. It’s also important to recognize the market in a time frame that you can understand as there are different degrees of trend to be watched.

 

If you can comprehend that investing/trading is a zero sum game, you can then begin to see the flaw in the thinking of most laymen investors. What that means (zero sum game) is that for every dollar gained a dollar was lost by someone. Depending on what degree of time you are watching the market, we have been in a bull market since the 40s (the longest time frame) or more recently the 80s. During this time the 401ks and mutual funds (which invest in stocks) were created. For at least the last 30 or so years, investing in these type of funds have produced great returns and therefore have skewed the perceptions of most investors because we have been in the greatest bull market in history (especially the 90s thru 2007). Most investors falsely believe that this exceptional bull market will go on forever but common sense should allow you to realize it is not possible. Not many people are able to study the market with an un-biased eye because most believe that any downward momentum will be a small correction sure to take off to new highs sooner than later. Whoever is caught holding this paper profit last, will be the losers and I can guarantee it won’t be the big banks and the big hedge funds – it will be the common investor. Which is why it’s no surprise that ‘buy, buy, buy’ has been pounded into our heads over the years – hell, it’s probably safe to assume that many experts also believe in this flawed approach.

 

Finally, keep in mind that money in your bank account is not truly cash – banks can fail and if too many fail at one time, the FDIC will not be able to reimburse your losses. In other words, the only true safe investment right now is holding actual cash in your home or somewhere safe where only you can access it. If you continue to use a bank, I suggest doing research on which banks are the strongest. I’m personally a fan of Northern Trust but there are others.

[Avernus]

im not saying it should or shouldnt trade 3000 or be worth 3000. like u said, im saying it wont happen cause the exchanges and pols will prevent it.

 

 

I agree....my whole point was that if it somehow did manage to hit that low, then this is what was "allowed" to happen.....either that or the people in the right places want it so we can implement a new monetary system due to the trickle-down effect that something like this would involve..

[Avernus]

So if the bottom is 10K, then the top is what, 10,001 - 100,000?

 

 

it was an example.....

[Brentastic]

I agree....my whole point was that if it somehow did manage to hit that low, then this is what was "allowed" to happen.....either that or the people in the right places want it so we can implement a new monetary system due to the trickle-down effect that something like this would involve..

The government cannot control the stock market in the long run.

[bushwacked]

Good post and hopefully an eye opener to everyone, including myself. I am certainly guilty of using the terms you mention, however, only after being lambasted by others first. It doesn't make it right, I know, but I only lash out at after being attacked first. I have certainly been the recipient of name-calling more than I have been the deliverer.

 

You're clearly the victim here.

[Avernus]

The government cannot control the stock market in the long run.

 

 

exactly my point....and my point is that they won't allow it to hit that low unless there is no more manipulation to be done and they just give way to a new system....

 

the manipulation is only good for them in the short term (10 years if things should go real bad and they are preventing it)...but right now I think we're watching the wheels come off at a considerable rate....

[Brentastic]

You're clearly the victim here.

I can take all you have to dish because I know what I stand for and what I believe. No matter how many of you try to make me look bad, it won't affect my approach, my understanding or my confidence in market study.

 

What are you adding by posting this? I know change is hard to accept by the majority but I'd think at some point you'd realize that you are doing nothing productive by repeatedly trying to call me out. Grow up, add to the discussion or just ignore it. Your meaningless posts are counter-productive.

 

BTW, I'm still waiting on weigie to prove I'm an idiot.

[wiegie]

What's so idiotic about it? Dude, we are in a deflationary depression - realize it. If you think stocks are a better option than cash, you are the idiot.

 

You said you were going to point out my idiocy, so try. Being cash-heavy is the safest option right now and I'm talking about actual cash. For those with 401ks who aren't willing to take out there money, the next best option is cash-equivalent funds, starting with short term t-bills. Tell me how that hypothesis is wrong. Just because you don't agree with it or understand it, doesn't make it wrong - it only means that our opinions differ. Teachers are not do-ers, remember that.

I feel compelled to point out that, even with today's losses, the DOW is still 23.4% higher than when Brent wrote this last summer:

Fixed.

 

It's funny how all the experts refuse to learn from the past. Our economy is sooo over-valued right now. Unfortunately, the worse is yet to come. The Fed's constant manipulation of the money supply is an overlooked cause of our current economic situation and the governments current interventions will prolong and hinder the recovery.

 

Our economy is a very complex organism that cannot be out-smarted or tricked into sustained growth by any man or groups of men. The only important result manipulation can achieve when applied to such a massive organism such as the free market economy - is a total collapse of everything that was fabricated. In other words, the longer and more severe the manipulation, the more severe the crash.

 

Make no mistake about our current economy - this is a depression and deflation is all but certain.

I will also mention that Brent refused to put his money where his mouth is when I offered him a chance to do so a few months ago.

[wiegie]

BTW, I'm still waiting on weigie to prove I'm an idiot.

please see my above post

 

(You're welcome in advance.)

[Ursa Majoris]

In other words, the only true safe investment right now is holding actual cash in your home or somewhere safe where only you can access it. If you continue to use a bank, I suggest doing research on which banks are the strongest. I’m personally a fan of Northern Trust but there are others.

If everyone followed this, it would become a self-fulfilling prophecy. And it is delusional to think that cash is a safe resource, particularly in your scenario of a total collapse. People in the Weimar Republic and in other countries more recently have carted their cash down the road in a wheelbarrow to buy food.

[Atlanta Cracker]

If you can comprehend that investing/trading is a zero sum game, you can then begin to see the flaw in the thinking of most laymen investors. What that means (zero sum game) is that for every dollar gained a dollar was lost by someone.

 

I paid $10 a share for 1000 shares of a stock a year ago that was sold today for $20 a share. My investment was $10,000 and I received $20,000 when I sold the stock today for a profit of $10,000. Who lost $10,000 to make this a zero sum?

[cre8tiff]

I paid $10 a share for 1000 shares of a stock a year ago that was sold today for $20 a share. My investment was $10,000 and I received $20,000 when I sold the stock today for a profit of $10,000. Who lost $10,000 to make this a zero sum?

 

Brentastic. Do I win?

[Ursa Majoris]

I paid $10 a share for 1000 shares of a stock a year ago that was sold today for $20 a share. My investment was $10,000 and I received $20,000 when I sold the stock today for a profit of $10,000. Who lost $10,000 to make this a zero sum?

Exactly what I was going to ask. Well put.

[Brentastic]

I feel compelled to point out that, even with today's losses, the DOW is still 23.4% higher than when Brent wrote this last summer:

 

I will also mention that Brent refused to put his money where his mouth is when I offered him a chance to do so a few months ago.

Your quote only proves that I was a year ahead of the curve. The quote you produced shows that at that time (last July) I was anticipating a major crash and I even stated that the more the government intervened, it would only prolong the disaster. So even though I saw it coming, it's took about a 10 months to finally start showing it's ugly head.

 

And you're right, I did refuse a bet with you because my bet is with the market. As an investor, it's prudent to eliminate risk and I'm already short the market - doubling up on this bet against you is foolish because I have to consider that my forecast could be wrong. As an investor, you should never put all your eggs in one basket.