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Larry Gude
Strung Out
There are ALWAYS solid market indicators. After the fact, we always look back and say "shoulda seen that coming!" and, in fact, many people did and acted accordingly.
However, the market is a predominantly optimist club and most of us just don't want to believe bad signs. Politicians also enter the mix, the fed, trying to manage and manipulate away the obvious problems.
In out lifetime, the tech stock bubble was a matter of time and everyone knew PE ratios like that were impossible to maintian, especially on companies that weren't actually making a dime!
Dubbya warned in April '01 about what we are going through right now.
It's an optimists club and it's not a club; it's a herd. If things look totally wrong yet the herd is still making the numbers attractive, it's awful hard to sit it out.
Then, the damn, with all it's leaks, suddenly breaks.
Just look around right now and I bet you can list several major reasons why the market should not be over 10,000, pointing out the bubble.
Pushrod
Patriot
There are ALWAYS solid market indicators. After the fact, we always look back and say "shoulda seen that coming!" and, in fact, many people did and acted accordingly.
However, the market is a predominantly optimist club and most of us just don't want to believe bad signs. Politicians also enter the mix, the fed, trying to manage and manipulate away the obvious problems.
In out lifetime, the tech stock bubble was a matter of time and everyone knew PE ratios like that were impossible to maintian, especially on companies that weren't actually making a dime!
Dubbya warned in April '01 about what we are going through right now.
It's an optimists club and it's not a club; it's a herd. If things look totally wrong yet the herd is still making the numbers attractive, it's awful hard to sit it out.
Then, the damn, with all it's leaks, suddenly breaks.
Just look around right now and I bet you can list several major reasons why the market should not be over 10,000, pointing out the bubble.
I can give probably a hundred reasons, but this past year and a half the market has not acted rationally, by all accounts is should be down in the four to five G range. That is why I have lost faith in these major predictions that come out monthly, the market is just not acting rationally!
Larry Gude
Strung Out
No, the market HAS acted rationally.
I haven't gotten into this much because there is so much other stuff to talk about in regards to Obama and his economic policies; The big thing that TARP, by Bush, and the other stuff Obama did was that it stabilized the stock prices of the banks and stocks associated with them thereby chilling out the over 50 crowd and retirees and their portfolios. Obama HAD to do that to buy time to rape...err...'fix' everything else, as he saw fit. This was why Geithner was indispensable; he could set a blue print of how to stabilize the markets never mind the long term consequences.
So, it has been rational to leave money, to invest based on what the stocks, and the herd, was/are doing rather than the numbers behind them.
Pushrod
Patriot
No, the market HAS acted rationally.
I haven't gotten into this much because there is so much other stuff to talk about in regards to Obama and his economic policies; The big thing that TARP, by Bush, and the other stuff Obama did was that it stabilized the stock prices of the banks and stocks associated with them thereby chilling out the over 50 crowd and retirees and their portfolios. Obama HAD to do that to buy time to rape...err...'fix' everything else, as he saw fit. This was why Geithner was indispensable; he could set a blue print of how to stabilize the markets never mind the long term consequences.
So, it has been rational to leave money, to invest based on what the stocks, and the herd, was/are doing rather than the numbers behind them.
I guess that is one way of looking at it. It is irrationally rational!
Larry Gude
Strung Out
I guess that is one way of looking at it. It is irrationally rational!
You got it! Then, when reality finally hits home, no matter how much delayed, we all look around wondering where that truck came from that just ran us over, refusing to acknowledge than we were, in fact, standing out in traffic the whole time.
One of the many things I will forever dislike Dubbya for is that he was already on the way out the door; DON'T do TARP! Let the nation take the hit that needs to be taken!
Let the balance sheets get corrected by the markets. Sure, he would be blamed for it then but, over time, his wisdom of letting it go would be seen and noted as courageous and proper. As it is, it's just another big thing he put his hands on that was too big for him and he just messed it up instead of doing what had to be done. He'll never been noted as having done the tough, right thing as regards TARP not because of what didn't happen at the time but because what didn't happen at the time needed to happen.
philibusters
Active Member
There are ALWAYS solid market indicators. After the fact, we always look back and say "shoulda seen that coming!" and, in fact, many people did and acted accordingly.
However, the market is a predominantly optimist club and most of us just don't want to believe bad signs. Politicians also enter the mix, the fed, trying to manage and manipulate away the obvious problems.
In out lifetime, the tech stock bubble was a matter of time and everyone knew PE ratios like that were impossible to maintian, especially on companies that weren't actually making a dime!
Dubbya warned in April '01 about what we are going through right now.
It's an optimists club and it's not a club; it's a herd. If things look totally wrong yet the herd is still making the numbers attractive, it's awful hard to sit it out.
Then, the damn, with all it's leaks, suddenly breaks.
Just look around right now and I bet you can list several major reasons why the market should not be over 10,000, pointing out the bubble.
I have read books written by social scientist that tend to agree that stock market investors act as a herd. For example when investors see when their fellow investors take risks and get rewarded, they start copying the behavior almost blindly, rather then relazing that the behavior gives the investor a 75% chance of making a decent profit and a 25% of losing almost the entire investment.
Social scientists will also point out there there a higher volume of buying and selling when the market is inflated and overpriced whereas when the market is undervalued and there are bargains to be found, usually after a recession, buying and selling volume goes down.
Finally there is some evidence that things like how much testertone a man has in his blood on a given day affects his penchant for risk on the transactions he enters in that day.
Overall the long haul, I think the market is tied fairly closely to growth and GDP, but short term and by short term that is even including 2, 3 ,4 year periods, the correlation is a lot weaker.
philibusters
Active Member
Why do you think the market should have dipped that low?
Pushrod
Patriot
Not exactly what I think, but what I've read:
News Headlines
I cite: CNBC Stock Market News — Why Dow 5000 Is Still 'Very Likely': Strategist David Hefty - CNBC
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