It’s an historic event that takes us back to 1997. Below is a chart showing the history of the DJIA from 1929 to present, courtesy of msn money central. the first thing I look at every morning when I wake up.
When I started working in 1972, the Dow was at about 950. When I switched to real estate in 1990, the Dow was just under 3,000. It’s interesting to read some of the rationalizations of the 2002 low point.
Dow Jones Industrial Average History
Dow Jones Industrial Average 10 year
“The ‘game changer’ will be the housing market, and whether (or not) it can stablilize”
I think we’ll continue to see this fall to 5,000 (http://www.vikduggal.com/2008/12/stop-shouting-how-to-communicate-in-2009/)
There has been a profound loss of faith in unregulated free market systems. Even if the housing market starts to show signs of life again I doubt that anyone will be too egar to return to the heady days of “Cowboy Capitalism”. The stock market will generate only slow and measured wealth creation for some time to come.
Even though I do belive that free market capitalism, much like Darwinism is the evolutionary imperative I think that the current downturn opens up some very good opportunities for this country to improve itself. Infrastructure projects that have languished while we sent all of our tax dollars to Iraq should be undertaken. In the past large projects tended to have budget creep, today the contractors and suppliers are so hungry new highway project bids are coming in 10% to 15% under estimates. Since new housing has practically flat lined there is no competition for labor and materials from the private sector. This should keep costs for long term capital projects flat for 3 to 5 years. Also with property prices in decline the cost of acquiring property for new roads and public works projects will be substantially lower. It only makes sense that the advantage shifts to the public sector for awhile and that we as a country invest in our long term survival as a whole. When we have done this we will find ourselves on stronger ground for the next expansion as things shift back to the private sector.
I interpret it as a lack of confidence in the new administration.
The Dow will find a bottom around 4000. The democrats response to the crisis has ensured that there is nowhere to go but down. A lack of transparency, deficit spending, higher taxes, all ensure there is only one direction to go from here. It isn’t the failings of capitalism, but the corruption of government that has led us to this point. Hang on for the ride.
I agree Scotsman (my family came here from Scotland too, good hard working Calvinists) it is all the government and the Demoncrats fault. We have all these lazy yuppies crying about losing their retirement in the stock market. Retirement is nothing but a Socialist pipe dream. Nowhere in human history does the concept of retirement exist except for the very rich. And even for them they still needed to remain vigilant because someone would always be trying to usurp their wealth. Retirement for them was more a matter of falling back to a fortified position and keeping the barbarians at bay. Retirement as we know it has only existed for a brief period in modern history as the product of a perverted socialist agenda of robbing those that work hard for themselves and their families.
In my family the men have always worked until the day they died. My uncle had a stroke when he was 57 and the medical bills nearly bankrupted the family business. After it was over he made my father promise that if he ever suffered another stroke to let him die. He did not want to go to his grave knowing that he was responsible for ruining the family. That is the kind of moral fiber we need in this country. Not more socialist whiners that want to live forever on the public dime.
Our Puritan forefathers left the decadence of Europe to find a land where they could live without the yoke of oppressive taxes and fickle self-serving aristocrats that had degenerated into their own incestuous socialism. We just need to stand up and say no to socialist health care, no to socialist security, food stamps, welfare, and the coddling of the weak and shiftless. We are a nation of rugged individuals. We take total responsibility for our own actions and we look to no man for our daily bread. Only to our own self and God on high.
The only true Americans are those that have to show up every day and earn their living. No paid days off, no sick leave or vacation. Only good hard God fearing work, that is what made our nation great and that is what will save it
I agree Scotsman (my family came here from Scotland too, good hard working Calvinists) it is all the government and the Demoncrats fault. We have all these lazy yuppies crying about losing their retirement in the stock market. Retirement is nothing but a Socialist pipe dream. Nowhere in human history does the concept of retirement exist except for the very rich. And even for them they still needed to remain vigilant because someone would always be trying to usurp their wealth. Retirement for them was more a matter of falling back to a fortified position and keeping the barbarians at bay. Retirement as we know it has only existed for a brief period in modern history as the product of a perverted socialist agenda of robbing those that work hard for themselves and their families.
In my family the men have always worked until the day they died. My uncle had a stroke when he was 57 and the medical bills nearly bankrupted the family business. After it was over he made my father promise that if he ever suffered another stroke to let him die. He did not want to go to his grave knowing that he was responsible for ruining the family. That is the kind of moral fiber we need in this country. Not more socialist whiners that want to live forever on the public dime.
Our Puritan forefathers left the decadence of Europe to find a land where they could live without the yoke of oppressive taxes and fickle self-serving aristocrats that had degenerated into their own incestuous socialism. We just need to stand up and say no to socialist health care, no to socialist security, food stamps, welfare, and the coddling of the weak and shiftless. We are a nation of rugged individuals. We take total responsibility for our own actions and we look to no man for our daily bread. Only to our own self and God on high.
The only true Americans are those that have to show up every day and earn their living. No paid days off, no sick leave or vacation. Only good hard God fearing work, that is what made our nation great and that is what will save it
Scotsman, seems to me “the corruption of” spreads far beyond “government”…no?
Is it too idealistic for me to hope we will move to a time when people do what they love and have a passion for, vs. what will make them the most money? How many people in the last decade went to college to “be” what they thought would have the highest ROI, vs. what they had a passion to do and be?
Trebor,
My Italian Grandmother had a stroke while getting dressed for work (family pasta making business) at age 81. Everytime she sat down past age 70 she would look up to God and say “NO! I’m not ‘ready’; I’m just resting” 🙂
The ability to work your whole life isn’t as realistic though, for those who don’t work in their own business.
Hard work is a great thing, and shouldn’t be stifled. I’d prefer, though, to make sure that 75-year-old grandmothers or single moms with children don’t need to beg on the streets or eat cat food to survive than to have folks buy that second luxury yacht they don’t need. These two ideas aren’t incompatible; “social democracy” is NOT “socialism”.
I’m channeling my father. He came from a long line of hard bitten Scottish Presbyterians. To them the Great Depression was more like an orgy of self indulgence. And don’t get him started on today’s military, why those lazy bastards, back in George Washington’s day a soldier showed up for duty with his own clothing and his own gun. When the fighting was over the soldier returned to his home and looked after himself. No government health care or lifetime pension. Today if you want socialized medicine and a lifetime pension just join the military and stop complaining.
Trebor: your ideas are noble but they don’t work any more. We are a nation in which people don’t practice financial restraint. Our government is the same way. You see the deficit in this country keeps growing and growing. We just keep borrowing and borrowing, and some days, our kids or our kids’ kids will have to pay back what we spent. But our sense of entitlement is what leads this country to this great recession. We are not entitled to live better than the others, yet, we are consuming 25% of the world resources with a population that’s 4.6% of the world population. We borrowed from other countries, we overspent with our credit cards, we bought houses that are too big that we couldn’t afford, then we use the appreciation in our home equity to borrow more… No, this is not the greatest country on earth because the people in this country have not been financially responsible. This is a country that relies on credit cards, not hard earned cash. When I go to the grocery store around the corner of my apartment, I see people use credit card to buy a .75 coke. Is it too much to carry a $1 bill, a $5 bill or a $10 bill? Why are the people in this country hate to use the cold hard cash so much? Why are the people in this country insist on using credit card every where? Guess what, you can’t just borrow with your credit card, with your home equity, the banks can’t just write toxic loans, sell complex financial instruments without understanding the risks involved, and the fat cats in WS can not just hand out exorborent bonuses to the people who lead us to this trouble. Americans need to start learning how to live within our means, the fall from the top ain’t pretty.
Trebor: Sarcasm can be hard to read on the internet, but I’m assuming your above posts are full of it?
The corruption in government starts at the root. You need look no farther than the military to find where the creeping socialism starts. Our founding father’s were at first uncomfortable with the idea of a standing army but felt that the threat from the British was too great and Washington and Jefferson caved in and let the idea of the citizen soldier fall by the wayside. The problem with a standing army is that while it might be convenient for defense it also gives the government a means to extort taxes from the populace. Only a couple of short years after the Revolutionary War the government was using US troops to quell a tax rebellion. Those of you who know your history will know what I am talking about. A standing army becomes a force unto itself constantly looking to perpetuate itself. Eventually it creeps to all level of government. Bureaucracies seeking to accumulate wealth and power to themselves irregardless of the people.
Wow- down 300 points for the day, a pretty decisive drop through any floor that may have existed in the 7000-7100 range. 4000 here we come.
I’ve always told my friends and associates that this fifty year trend in government and personal spending would only come to an end when the government’s checks bounced. Oblivious to reality, they do indeed continue down the same road, and will do so until their checks are no good
In the words of Robert Louis Stevenson, “everyone, sooner or later, sits down to a banquet of consequences”. Dinner is served!
Update Closed at:
6,763.29 -299.64 -4.24%
Ardell:
Is the stimulus package going to help those people who have good credits to refinance their existing mortgage to a much lower rate, like 4%? I thought that’s what the government said. But I have not seen the rate go any where near 4% at this point.
Ardell:
Is the stimulus package going to help those people who have good credits to refinance their existing mortgage to a much lower rate, like 4%? I thought that’s what the government said. But I have not seen the rate go any where near 4% at this point.
This is all quite agonizing, but has anyone ever really planned to spend the money they’ve saved in their portfolios on anything but retirement? If it’s a 401k and you’re under 50, like I am, it’s going to be years before we can even withdraw it (without penalty). Seems to me it’s not the drop stocks in and of itself, but it’s the negative feedback cycle that it’s feeding that is causing all of the damage. Also not talked about much is the imminent inflation…and what that does the rents/real estate prices. That will be 2011’s story.
Prices will retreat to levels of the early 1990s. Spending our way out of this will no longer be an option. Even those that saved will not have enough buying power to stop the slide and God knows they are not going to want to go out and spend anymore anyway.
All of you who so saliently predicted this I salute you. Now be prepared to fight to hold on to what you have. The old folks who thought they had a retirement are going to be looking to saddle today’s youth with the bill.
It doen’t look like we will see anything less than 5% at par unless and until the government nationalizes the banks. And then we are just talking about printing money.
Look the government is the only entity in a position to do much of anything. We could make it get out of the way and declare bankruptcy. That would be the total free market solution. Admit that there is nothing there backing up those T-bills and just sit back and take our lumps as a nation. The rest of the world would quickly follow suit. Suddenly it would be a level playing field all around, except for the Canadians who are still solvent, have strong banks and national health care. They would end up owning us. Maybe that would be a good solution.
brian_sun on Wednesday, March 4, there is suppose to be more information available regarding the mortgage plans President Obama discussed. At this time, there is still little information available. Rates have been trending higher.
We’ll see what Wednesday brings!
brian_sun on Wednesday, March 4, there is suppose to be more information available regarding the mortgage plans President Obama discussed. At this time, there is still little information available. Rates have been trending higher.
We’ll see what Wednesday brings!
This is the Obama Bear Market. In a couple of years, Obama will be more unpopular than Bush ever was.
While we’re Obama-bashing, why is it that the same Democrats who want to raise taxes by a trillion dollars are such tax cheats themselves?
And, since I’m not shy about saying I told you so, I predicted Dow 6,000 on this blog back in December (http://www.raincityguide.com/2008/12/20/christmas-gift-idea/).
Quote from my comment in December: “I’ll do my bit for the country by finally shifting my retirement account from T-bills to stocks when the Dow hits 6,000 next year.”
Dow 5,000! Yes, we can!
Bush and the Republicans were smart to bail when they did. Hoover hung around too long so he got tagged with the Depression. Whoever is in office while the nation is feeling pain will get blamed for it even if they had nothing to do with it. Those stupid Democrats fell into the Republican trap!
Why do people complain that the Dow is heading towards 4000 ? Isn’t that supposed to be an opportunity ?
If you know it is heading south, then short it. 🙂
At Dow 5000 all MY money comes outta the mattress and I’m all in! I continue to sit in cash and watch the ramifications of greed and deceipt. I tried to warn many fellow investors to steer clear of GE at 10-11.00. They thought it was a buying opportunity of a lifetime. I tried to warn them. I fear they will lose 1/2 of their investment in the coming 60 days. Sure they can hold….but will they?
I tell everyone to listen to the Ceo’s of AXP, MBIA, ABK, HD, WMT, TGT, …I can go on and on…Ths picture is truly frightening.
trebor, did someone run over your dog today and leave it in the street?
6000 … 5000 … 4000 … ??
Predicting the bottom is a futile exercise.
Case in point – Nikkei 225, which made an all-time high of 38,957.44 on Dec 29, 1989. Today, nearly 19 1/2 years later, Nikkei is at 7,229.79 – a drop of nearly 81.5%.
Along the way, a whole generation of investors were pulling cash out of their mattresses to avail of “once-in-a-lifetime” buying opportunity – Nikkei at 30,000 … then 25,000 … then 20,000 … 15,000 etc.
Poor souls !! The cash is gone … all they have is a mattress.
The Dow equivalent of the Nikkei could be around 2,620.
🙂
6000 … 5000 … 4000 … ??
Predicting the bottom is a futile exercise.
Case in point – Nikkei 225, which made an all-time high of 38,957.44 on Dec 29, 1989. Today, nearly 19 1/2 years later, Nikkei is at 7,229.79 – a drop of nearly 81.5%.
Along the way, a whole generation of investors were pulling cash out of their mattresses to avail of “once-in-a-lifetime” buying opportunity – Nikkei at 30,000 … then 25,000 … then 20,000 … 15,000 etc.
Poor souls !! The cash is gone … all they have is a mattress.
The Dow equivalent of the Nikkei could be around 2,620.
🙂
Trebor wrote: “I doubt that anyone will be too egar to return to the heady days of “Cowboy Capitalism”
I only WISH we had had an era of unregulated “cowbow capitalism”. Unfortunately, the government has been meddling in the economy at a furious pace for the last 40 years. The central banks kept interest rates ridiculously low, governments subsidized real-estate investment both by backing the GSEs and mortgage interest tax deductions.
All the bail-outs the government has engineered over the years (e.g. S&L bail-out, LTCM, etc) engendered an attitude of recklessness on the part of people buying bonds and depositing their money.
Perhaps the GREATEST evil the government has perpetrated on the economy is deposit insurance. This has only served to create irresponsible savers who don’t care one jot whether the institutions they put their money in are soundly managed. Hey, if the government has your back, why not just pick the bankt that has the best interest rates or service? Who cares if their interest rates are so good PRECISELY because they engage in risky investments.
In short, the mess we are in was CAUSED by government meddling in the economy.
I’m predicting a Dow 2000 (and possibly down to the 1000 range) before this downturn is over, sometime in the next 6 years. I believe we are heading into a period of long-term deflation, similar to what Japan has been experiencing since 1989.
The Nikkei has fallen more than 80% from it’s 1989 peak and I don’t see why such a thing can’t happen in the US. Heck, many of the world’s stock indexes have already fallen 70% in just the last year alone.
Of course, I don’t think we’ll head to Dow 2000 all at once. Bear markets are notorious for volatility, and always experience the most dramatic rallies (i.e. bull markets never have super swift rallies that rise by 500 or 1000 points in a week). In fact, I think we are getting close to a major rally that could last for several months and see the Dow regain 30% or so of it’s losses- only to fall to even lower lows in the fall.
sampai / Scotsman, or anyone who feels like commenting
I’ve seen (at least Scotsman’s) comments for some time on the crisis, and I’m kind of curious. From what I remember reading from you over the years, government spending has been out of whack for a _long_ time, since at least 1997 if not before (though both Dem & Rep control).. I seem to remember you predicting the DOW down to 4,000 or 5,000 long before the election happened. ( I may be mixing you with Sniglet & Eula as well.. my apologies if I’ve bumbled that)
I see a lot of blame for democrats, but isn’t that opportunism on your part? government (both parties) have been pretty irresponsible for some time, from what I’ve seen the only difference appears to where the excess spending goes.
At this point (i.e. the 2001 election), is there really anything either one of them could have done with wouldn’t have resulted in a continued plummet of the stock market? Hasn’t your argument been that this is the results of years, and years of mismanagement?
I mean, if you could have had anyone elected to handle this, who would it have been, and why them?
sampai / Scotsman, or anyone who feels like commenting
I’ve seen (at least Scotsman’s) comments for some time on the crisis, and I’m kind of curious. From what I remember reading from you over the years, government spending has been out of whack for a _long_ time, since at least 1997 if not before (though both Dem & Rep control).. I seem to remember you predicting the DOW down to 4,000 or 5,000 long before the election happened. ( I may be mixing you with Sniglet & Eula as well.. my apologies if I’ve bumbled that)
I see a lot of blame for democrats, but isn’t that opportunism on your part? government (both parties) have been pretty irresponsible for some time, from what I’ve seen the only difference appears to where the excess spending goes.
At this point (i.e. the 2001 election), is there really anything either one of them could have done with wouldn’t have resulted in a continued plummet of the stock market? Hasn’t your argument been that this is the results of years, and years of mismanagement?
I mean, if you could have had anyone elected to handle this, who would it have been, and why them?
Everett_Tom wrote: “if you could have had anyone elected to handle this, who would it have been, and why them?”
I don’t think there is much any President could have done over the last 4 years to prevent the depression from occuring. Neither is there anything policy makers can do today to prevent things from getting even worse. About the best thing we could hope for is to have policy makers who didn’t fritter away resources in silly attempts to stop gravity (i.e. the re-adjustment of the economy and purging of debt). Alas, such leaders have been scarce indeed. Republican and Democrat alike have been fallen over themselves to bail-out every firm running into trouble, and pump trillions into “stimulus”.
Maybe something could have been done if policy makers had opted to stop mortgage tax deductions and deposit insurance a decade ago, as well as keeping interest rates high through the 2001/2002 recession. But all that is water under the bridge, and there is nothing that can be done to prevent the consequences of all the mal-investments that have been made.
“I see a lot of blame for democrats, but isn’t that opportunism on your part? government (both parties) have been pretty irresponsible for some time, from what I’ve seen the only difference appears to where the excess spending goes.”
I do know this: Raising taxes by over a trillion dollars on the most productive members of our society is bad. Doing that so you can put down a $700 billion “down payment” on socialized healthcare is even worse. And doing so in the midst of the worst economy since The Great Depression is sheer lunacy.
Obama is waging an undeclared war on capitalists. Unfortunately for him (and for us), we need capitalists to do their bit so that we can all enjoy the fruits of a capitalist society.
In two years, Obama’s name will be mud.
He’ll pay a political price for his undeclared war, with approval ratings that will be far worse than Bush’s ever were. But we’ll pay too, as our economy crumbles due to an undeclared capitalists’ strike.
Thanks Sniglet, maybe it’s just that I’d gotten your position and other confused.
sampai, I’m not going to argue that what Obama / the dems is doing is the best option, or even a good option. While taxing the rich in a recession certainly doesn’t seem like such a smart thing, giving away income (i.e. tax breaks) during a time where income dries up doesn’t seem very compelling to me either..
I’d be much more interested in who you think could have done better, or really just what could be done right now that wouldn’t have resulted in the market falling.
Thanks Sniglet, maybe it’s just that I’d gotten your position and other confused.
sampai, I’m not going to argue that what Obama / the dems is doing is the best option, or even a good option. While taxing the rich in a recession certainly doesn’t seem like such a smart thing, giving away income (i.e. tax breaks) during a time where income dries up doesn’t seem very compelling to me either..
I’d be much more interested in who you think could have done better, or really just what could be done right now that wouldn’t have resulted in the market falling.
#31: I don’t think there is much any President could have done over the last 4 years to prevent the depression from occuring.
1) Better funding and oversight at SEC.
2) Continuing with Paul O’Neil as Treasury Secretary – instead of firing him and replacing him with the idiot John Snow.
3) Reducing spending over the last 4 years, instead of increasing spending.
The President had direct executive powers to direct and control the outcome of all the above points. I can add another dozen things that were under the direct purview of the POTUS.
Sampai wrote: “In two years, Obama’s name will be mud.”
I’ll agree with that, but not because the President’s policies are “bad”, per-se. Rather, people will become disenchanted when they see that the economy continues to get worse and that NOTHING the policy makers do seems to help. But this would have been the case even if the Republicans had won the presidency. Like I said earlier, there is NOTHING that will really kick-start the economy and prevent us from experiencing a major economic contraction (far greater than anything we’ve seen yet).
Sure, taxing the rich will only result in slowing the economy down more, but even cutting taxes would fail to deliver any significant economic gains at this point in the cycle. The only thing the various economic (and tax) policies enacted today will do is impact how well the economy does when it does start recovering in a decade or so, it has very little relevance in the hear and now.
Bombay Trader wrote: “The President had direct executive powers to direct and control the outcome of all the above points.”
Sorry, but I don’t think that any of the items in your list would have had a significant impact on preventing this economic crisis. No government regulator would have gone after the ratings agencies or exotic derivative instruments, seeing as how it was universally agreed by both Republicans and Democrats that these things were inviolate, and out of the realm of regulation.
Neither Republicans or Democrats would have reigned in Fannie/Freddie, or stepped into the securitized mortgage market regulatory vacuum. Until these exotic markets blew up, everyone was convinced they were immune to problems. Even leading Democrats are on record for saying that the government should keep it’s hands off of derivatives.
#4 : The Dow will find a bottom around 4000.
Those who pick bottoms end up with brown fingers. 😀
I had this thought this morning. Is it a fair assumption that Republicans do more to move the stock market, generally speaking, than Democrats? Could some small part of this decline be a result of Republican disappointment over the change of Adminsitration?
I’ve always read this the other way.. the decline paused for a bit while investors hoped that Obama would have some magic trick which would make everything better. Once it was determined that no suck trick exist, the decline continued.
I find it hard to believe that a market can be dramatically influenced by enough people thinking that a trick is going to produce an overnight result.
If that is the case, then “Spring Bounce” everywhere will produce some false hope results, temporarily, over the next 5-6 months starting maybe in April. But really, are poeple that short sighted? The kind of people that influence markets? That’s just sad.
I almost wrote a new post today called “We’re in it for the long haul” but found one written by Katy Delay.
http://seekingalpha.com/article/121982-we-re-in-for-the-long-haul-in-spite-of-stimulus
What people fail to understand about the markets, whether it be housing or stock or any market, is that stabilizing is not about getting it back to where it once was…and in short order, if ever.
My favorite line from Katy’s article: “And frankly, I think it would be criminal to deprive us of the benefits of lower prices, whether it be for food, gas, or housing. Lower prices enrich us all.”
Those who are looking for “a trick” that will bounce things up to where they once were, and who are disappointed when that doesn’t happen, are just waiting for the wrong consequence. Until they learn that, the markets will bounce around like they are. Seems the more people’s expectations run far afield from a realistic expectation, the more they keep getting the “wrong” answer.
Expect less and get what you expect will stabilize the market more than expecting a turn around within 6 weeks in office, or ever even. If someone is expecting the Dow to get back to 14,000, someone needs to sell them the Brooklyn Bridge.
Update Closed at
6,726.02 -37.27 -0.55%
Though some, possibly more people are more interested in what Jason from Kirkland did last night on The Bachelor 🙂
If you bought stocks in 1997 with the idea to “buy and hold” as a long term strategy, you’ve now officially lost money. And that doesn’t include the adjustments for inflation. Another investing truism bites the dust.
For those of you waiting to buy stocks when the DOW hits 5,000 what then? The market goes up a few points then dives again and flops around. There is no engine to drive stocks up again in the short term. The long term is open to speculation.
The perfect hand of the Free Market will redistribute the wealth of nations in perfect accord with the laws of economics. The nations that will come out the best are the ones that had the least to lose in the first place. Like water wealth will flow from the US to the poorer nations like India and China. Their people have lived in privation for generations. They can adapt to the changing economic situation better than we can. In the end our standard of living will drop down closer to theirs and their standard of living will come up closer to ours.
I do not say this to be sarcastic. I don’t always like what the Free Market does but it is the evolutionary imperative.
Update Closed at:
6,875.84 +149.82 +2.23%
Pretty sure we hit 7,000 or very close to as an intraday number between 3:00 and 3:30 EST before the end of day dip.
I’m hoping we’ll be back above 7,000 by Friday. Hoping we’re “peeking into” the sixes vs. heading toward the mid point, but admit that “peeking in” often “opens the door” as a precurser as to what’s to come. Hope not. Hope we’re back to 7,500 soon instead.
#44:
Very true.
But before that, I think there will be a war or some kind of a showdown between the US and China – either of Taiwan(unlikely) or over resource competition in Africa (likely).
In the history of human civilization, it is but natural for the superior power to protect its hegemony militarily against an upcoming power.
#44:
Very true.
But before that, I think there will be a war or some kind of a showdown between the US and China – either of Taiwan(unlikely) or over resource competition in Africa (likely).
In the history of human civilization, it is but natural for the superior power to protect its hegemony militarily against an upcoming power.
#46 :
Why would you pay 10% more for the Dow next week ?
Has anything changed in a positive way that commands a 10% premium than today ?
The chart of Dow will resemble the chart of Nasdaque eventually.
#46 :
Why would you pay 10% more for the Dow next week ?
Has anything changed in a positive way that commands a 10% premium than today ?
The chart of Dow will resemble the chart of Nasdaque eventually.
It’s a very bad day…so far. Pretty freakin’ scary, really.
Chairman Maoxian says another 4% and we will be done with this round of hammering.
Then a nice bounce-back, and then some correction.
Rinse … repeat … rinse.
http://www.maoxian.com/images/2009/20090218spx.png
Chairman Maoxian says another 4% and we will be done with this round of hammering.
Then a nice bounce-back, and then some correction.
Rinse … repeat … rinse.
http://www.maoxian.com/images/2009/20090218spx.png
Bombay Trader,
Can’t say I agree with the double peaks up past 14,000 in that graph, unless there is a 10-15 year timeframe between the two. I do believe in the old addage “where it once was, it will be again”, but 14,000 again? Maybe…but not likely in my lifetime.
I think it will be good for Obama generally, if the lowest point hits within the first 6 months of his Administration. Then he’ll have a “good track record”, with no place to go but up, by year 3 and re-election campaigning.
Update Closed at:
6,594.44 -281.40 -4.09%
Can you say ZOMG and FCK in the same breath?
Thank you. I never followed anything but the Dow and blue chips generally, as I was a Trust Investment Officer. Except for a brief disaster with REITs in the 60s, bank trust funds generally had nothing to do with the S&P or NASDAQ, I have no opinion or tracking method for either of those. But we can talk bingo halls 🙂
Ardell,
Anything is possible, including Dow 14,000 in the next couple of years.
If the US gets into a situation of hyper-inflation like Zimbabwe, then even 70,000 Dow is possible. Zimbabwe Industrial Index (ZII) was the best performing stock market in the world, with an annual gain of 12,000% (yes, 12,000% – gaining on average 48% every day – on a simple percentage basis).
So, be careful what you ask for !! 😀 There are unintended consequences.
Humor aside, I do not see too much upside for the Dow or the US markets for the next couple of years.
But it is hard to predict, as new policies are made (some good, others bad), and they take time to work out.
Ardell,
Anything is possible, including Dow 14,000 in the next couple of years.
If the US gets into a situation of hyper-inflation like Zimbabwe, then even 70,000 Dow is possible. Zimbabwe Industrial Index (ZII) was the best performing stock market in the world, with an annual gain of 12,000% (yes, 12,000% – gaining on average 48% every day – on a simple percentage basis).
So, be careful what you ask for !! 😀 There are unintended consequences.
Humor aside, I do not see too much upside for the Dow or the US markets for the next couple of years.
But it is hard to predict, as new policies are made (some good, others bad), and they take time to work out.
Bombay Trader.
I think the market should be at 8,500 give or take. I think many companies are trimming and slimming and having more accountability now, whether they are currently in trouble or not. I think that will pay off. The current slide is freaking me out, but when it went from 14,000 to 8.500 I was not surprised or scared at all.
I’ll feel better if and when I see an 8 on the front again. More than that should scare people as much as where it is now.
Dow 5,000! Yes, We Can!
I always thought the US economy was fair and free, that its citizens were financially knowledgeable relative to the rest of the world.
Apparently not, day by day it resembles like a banana republic that was driven by debt, voodoo economics, corruption and greed.
Dow 5,000 !! Indeed.
“its citizens were financially knowledgeable relative to the rest of the world.”
How much do “its citizens” influence the market? Used to be not so much. don’t the bigger funds and investment houses and buyers and sellers in other countries impact the market than “U.S. Citizens”?
On a side note, I have to be at a Home Inspection when the market closes today. Can someone post a comment similar to my #52, with your own commentary of course :). I’d appreciate it.
I’m posting the close of each day at the end of each day for my own tracking purposes. RCG is “my notebook”.
Update DOW: Closed @ 6,626.94 , +32.50 , (+0.49%)
Note: you might check out Google Finance, as you can probably get this data from it without too much hassle.
Thanks for posting the close of day for me, Tom.
I want to record “end of day” here until we get back up over 7,000. Could be awhile 🙂
#52:
How much do “its citizens
#52:
How much do “its citizens
“I want to record ‘end of day’ here until we get back up over 7,000. Could be awhile.”
Bear markets have some of the most notorious suckers’ rallies. It wouldn’t surprise me at all to see the market soar above 7,000 one more time this year, and empty the pockets of any sucker who’s sitting on the sidelines.
Iceland bankruptcy :
http://www.vanityfair.com/politics/features/2009/04/iceland200904
Funny, scary and educative.
…..
Nor were the Icelanders particularly choosy about what they bought. I spoke with a hedge fund in New York that, in late 2006, spotted what it took to be an easy mark: a weak Scandinavian bank getting weaker. It established a short position, and then, out of nowhere, came Kaupthing to take a 10 percent stake in this soon-to-be defunct enterprise—driving up the share price to absurd levels. I spoke to another hedge fund in London so perplexed by the many bad LBOs Icelandic banks were financing that it hired private investigators to figure out what was going on in the Icelandic financial system. The investigators produced a chart detailing a byzantine web of interlinked entities that boiled down to this: A handful of guys in Iceland, who had no experience of finance, were taking out tens of billions of dollars in short-term loans from abroad. They were then re-lending this money to themselves and their friends to buy assets—the banks, soccer teams, etc. Since the entire world’s assets were rising—thanks in part to people like these Icelandic lunatics paying crazy prices for them—they appeared to be making money. Yet another hedge-fund manager explained Icelandic banking to me this way: You have a dog, and I have a cat. We agree that they are each worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners, but Icelandic banks, with a billion dollars in new assets. “They created fake capital by trading assets amongst themselves at inflated values,
Update Closed at:
6,547.05 -79.89 -1.21%
I was optimistic early in the day, but the last hour was not pretty 🙁
The dows bottom i predict to be 5400…but it will be later in the year
Update Closed at:
6,926.49 +379.44 +5.80%
It was a good day. I a good day indeed.
Update Closed at:
6,930.40 +3.91 +0.06%
We had a peek over 7,000 today with an intraday 7,015. Kind of like the sunrise in Seattle on a Cloudy Day…you can almost see the sun.
Update Closed at:
Drumroll please…..
7,170.06 +239.66 +3.46%
YES!!!! We…Can!
Update Closed at:
Drumroll please…..
7,170.06 +239.66 +3.46%
YES!!!! We…Can!
UPDATE Closed at:
7,223.98 +53.92 +0.75%
“The Dow hasn’t put up four straight gains (like this) since late November.”
A pretty good day until the last hour.
Closed At 7,216.97 -7.01 -0.10%
Update Closed at:
7,395.70 +178.73 +2.48%
A darned good day. Still pulling for it to get to 8,500 and hold in the 8s again.
The weak shorts have been blown out by now.
(9034+6547)/2 = 7790 is the level to watch.
This is where the next battle of bulls v/s bears will be fought – the next round of hammering from the strong shorts will most likely come in at this level.
Friday is the Quad-OpEx day – so it will all be smoke and mirrors. The “maximum pain” for the Dow futures is around 7700 at option expiry.
Update Closed at
7,486.58 +90.88 +1.23%
Thanks Bombay Trader. What do you think will happen on Friday? Which direction will the “smoke and mirrors” play out?
It would be hard to predict what happens on Friday – perhaps 7500~7600 is where the market might close tomorrow. These “triple-witching” days tend to be high volatile – fun to watch, painful to trade.
If I could predict, I would be first on the Forbes billionaire list 🙂
However, next week onwards, good shorting opportunities will be available.
The 7790 level is simple the 50% retracement from the recent highs(9000) to lows (6547). Statistically, that is where most of the short-squeeze rallies in bear markets tend to lose steam – after recouping half the correction.
I still think the correction should land us steadily bank in the 8s eventually. Is there hope for my thnking? 10,000 or over would scare me as much as being in the 6s did.
Don’t worry about 6’s, we are going to 4’s soon. Goodbye dollar, its been fun.
b,
If you want to thumb your nose at the United States, I’d prefer you did it elsewhere. Being flippant about the state of this Country does not add to the conversation and is offensive. Your avatar even suggests you are gleeful in people’s misery.
I will never understand people who want to fly in on a broom and say “I’ll get you yet, my pretty. like the Wicked Witch of the West.
It does not speak well of you.
Update for yesterday;
Closed at:
7,278.38 -122.42 -1.65%
In post #74, I mentioned the level 7790 as the level to watch.
Yesterday, the Dow made an intra-day high of 7796.57 and failed to hold that level.
The charts lead me to believe that the markets will start sliding.
The battle has begun.
In post #74, I mentioned the level 7790 as the level to watch.
Yesterday, the Dow made an intra-day high of 7796.57 and failed to hold that level.
The charts lead me to believe that the markets will start sliding.
The battle has begun.
I’m watching…and I did remember what you said. I’m still betting it will get to the 8s before it sees 6s again, and hoping to see it “hanging in the 8s” again before long.
I have initiated short positions today in Dow(7805) and S&P futures(817) level .
I do not however see a huge corrections – perhaps a 10% modest correction.
Tick .. tock ..
Good luck to you, Bombay Trader. I’m hoping to see a full break into the 8s and past the 7790 back and forthing within the next 10 – 20 days.
It’s a whole lot more fun than “whale watching” 🙂
Bombay Trader reminds me of the guy playing the “don’t pass” line at the craps table while the rest of us hope against hope that a 4-5-6-8-9-10 gets rolled before that damn seven.
Update Closed at:
7,924.56 +174.75 +2.25
“Today’s rally was a continuation of a rebound that began on March 10 and has pushed the Dow up 21%”
Hey Ardell …. you got you 8000 Dow 🙂
I am adding to my short position in Dow (at 8020) and S&P500 (at 837).
Yes! I love YAY-days! I’m writing another post to celebrate 🙂
I so appreciate your perspective, though mine is slightly different. I still see bounce points at benchmarks of 7,500 ad 8,000, but it’s fun testing each other’s benchmarks 🙂 The difference between 8,000 and 8,020 is not enough for us to quibble over.
I see the mid points as magnets and 7,500 can still be the magnet of today. Often when the market peeks over to the other side of the first number being different, whether that be 6,999 or 8,001, it springs back to the magnet point of 7,500…so we’re still “hanging in the 7s” until we get sufficiently past 8,500. That’s just how I choose to view it, and it seems to work for me.
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Bombay Trader,
Can you elaborate on what you mean by “I am adding to my short position in Dow (8020).
In my previous field of Trust Investments, we didn’t “short” positions. I simply had to time dollar averaging in and out of the market when large sums were involved. Usually that was only when an account first opened, or when I had by circumstance a huge cash position to invest.
Much appreciated!
Bombay Trader,
Can you elaborate on what you mean by “I am adding to my short position in Dow (8020).
In my previous field of Trust Investments, we didn’t “short” positions. I simply had to time dollar averaging in and out of the market when large sums were involved. Usually that was only when an account first opened, or when I had by circumstance a huge cash position to invest.
Much appreciated!
By building up short positions, I am selling short the Dow futures and the S&P 500 futures.
Futures offer very high leverage, so unless the risk is managed diligently there is a very high probability of losing capital. Unlike stocks, futures are derivative contracts and thus a zero-sum game. For someone to make money in futures, someone with an opposite position must lose that money.
For example, the mini-Dow future is valued at $5/point. So, if you are short and the Dow goes up by 100 pts, you lose $500. Similarly, if the Dow falls by 100pts, you make $500.
If a trader (or an investor) feels the markets are overvalued and due for a correction, there are many strategies he/she can employ :
a) Exit all long positions and stay in cash, and wait for a better lower entry price, and/or
b) Short the underlying futures. If the market goes up, you lose money and when the market comes down you make profits.
c) Purchase inverse ETFs. Inverse ETFs work exactly opposite of ETFs – so when the index goes up the price of the inverse ETF falls and vice versa.
E.g. DOG is the inverse ETF that tracks the Dow inversely, and SRS is the inverse ETF that tracks the S&P inverse. These two are popular with conservative investors as well (even traded in IRA accounts) – especially to hedge the risk of falling markets.
c) Buy PUT options. If the markets go up your risk is limited, but when the markets fall the profits can be very significant (high reward/risk ratio). PUT options can be purchased for futures, inverse ETFs or individual stocks.
d) Additionally, manage your short-side risk through hedging. One may purchase CALL options, so if the market goes up when you are short, you may lose only a little amount of money.
As you said, Dollar Cost Averaging is also an excellent way of managing investments. The basic premise is that the underlying instrument is robust and will not become bankrupt in the future. Likewise, movements in price should provide opportunity for meaningful profit.
Of course, as with any strategy is, the key is to know when to enter and when to exit.
By building up short positions, I am selling short the Dow futures and the S&P 500 futures.
Futures offer very high leverage, so unless the risk is managed diligently there is a very high probability of losing capital. Unlike stocks, futures are derivative contracts and thus a zero-sum game. For someone to make money in futures, someone with an opposite position must lose that money.
For example, the mini-Dow future is valued at $5/point. So, if you are short and the Dow goes up by 100 pts, you lose $500. Similarly, if the Dow falls by 100pts, you make $500.
If a trader (or an investor) feels the markets are overvalued and due for a correction, there are many strategies he/she can employ :
a) Exit all long positions and stay in cash, and wait for a better lower entry price, and/or
b) Short the underlying futures. If the market goes up, you lose money and when the market comes down you make profits.
c) Purchase inverse ETFs. Inverse ETFs work exactly opposite of ETFs – so when the index goes up the price of the inverse ETF falls and vice versa.
E.g. DOG is the inverse ETF that tracks the Dow inversely, and SRS is the inverse ETF that tracks the S&P inverse. These two are popular with conservative investors as well (even traded in IRA accounts) – especially to hedge the risk of falling markets.
c) Buy PUT options. If the markets go up your risk is limited, but when the markets fall the profits can be very significant (high reward/risk ratio). PUT options can be purchased for futures, inverse ETFs or individual stocks.
d) Additionally, manage your short-side risk through hedging. One may purchase CALL options, so if the market goes up when you are short, you may lose only a little amount of money.
As you said, Dollar Cost Averaging is also an excellent way of managing investments. The basic premise is that the underlying instrument is robust and will not become bankrupt in the future. Likewise, movements in price should provide opportunity for meaningful profit.
Of course, as with any strategy is, the key is to know when to enter and when to exit.