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Old November 15th, 2012, 06:22 PM
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Default Stock market tanking - again

I recall before the election I was asked "if the economy is so bad why os the stock market booming?"

My gut feeling was that it was a Romney bounce, but I did not have a source to back it up. The day after the election I read that Wall Street supported Romney by about 4 to 1 (in terms of campaign contributions).

The reason is Romney had specifically addressed Dodd Frank - a bill (written by two democrats) that has created a lot of uncertainly in the banking sector.

According to Romney - there are parts of the law that are good, but there are parts that were creating uncertainty - specifically the parts where banks were told not to make "risky" loans but they were never given any guidelines as to the definition of a "risky" loan.

In any case - since the election the DOW has dropped every single day, reaching a low today of an 800-point haircut since Nov 6th.

I pointed out long ago that the same thing happened in Obama's first term, beginning with the day he won the nomination, dropping further the day he was elected, dropping further the day he was inaugurated and reaching a low (40% from its 2008 peak) in summer 2009.

During the campaign we heard people saying "The stock market has gone up 100% since Obama was elected" - that is not factual at all. At its best in the last four years it has re-touched its 2008 peak. But now it is falling off again....

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Old November 15th, 2012, 06:33 PM
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Let's go out and buy some stock while the prices are low. I am not a rich man like yourself, but I will buy what I can.
Just like real estate you buy when it's low and sell when it's high.

What a country! There are allways opportunities to make money.

Thanks for the info Paul.

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Old November 15th, 2012, 07:01 PM
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I have been buying.

People are anticipating the republicans to run America right over the fiscal cliff.
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Old November 15th, 2012, 07:18 PM
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Expand your graph.
There was a big loss last time Obama was elected. Then greed kicked in again, and the market tripled the loss. The "pundicts" predicted disaster, but the last four years were anything but, market-wise.
I didnt know you looked at the market through the wrong end of the telecope, Mr. Motter.
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Old November 15th, 2012, 07:33 PM
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Such a lack of perspective, Paul, I hardly know where to begin.

Let's start with this: Anybody in this day and age who calls an 800 point Dow drop a "haircut" probably doesn't have the ideal temperament to be an equities investor. Of course Wall Street wanted Romney to win. We knew that before the election. They're all sitting around figuring out how to circumvent regulations so they can continue to line their pockets without contributing to productivity in terms of goods and services. So they surely didn't want Obama back. Giving them Elizabeth Warren as a bonus brought them to the brink of apoplexy.

In fact at our last meeting with our financial adviser Terry and I were kidding with him about all three of us getting ready to vote against our short-term financial self-interest.

Next, anybody who attributes a short-term market move in either direction to a single cause has, by definition, done a poor analysis. The markets are now essentially world markets, and as much as Americans refuse to understand it, what happens in this country isn't the whole story.

Next, your math skills are lacking. Let's take the random number 2,000 as an example. If that number is cut in half to 1,000, that's a 50% drop. But if you're at 1,000 and it increases to 2,000 (where it started), that's a 100% increase. A 50% increase would only take it to 1,500. Didn't we learn this in high school?

So, in round numbers, it isn't wrong to say that before the recent sell-off, the Dow and S&P had made nearly 100% gains since the crash, bringing them almost back to their October 9, 2007 (not 2008) highs of 14,164.53 and 1,565.14 respectively. The percentage issue is essentially irrelevant, mostly because of the mathematical anomaly demonstrated above. The reason the overall economy hasn't done better in the face of this is essentially that large companies continue to hoard cash on their balance sheets.

Next, of course it's true that the market drop continued after Obama's inauguration, but we all know that the landslide started with the bubble burst in late 2007 that continued into 2009. The bust was squarely on Bush, and was reversed during Obama to near status quo ante before the current downturn.

Many people foolishly sold equities into the crash. Most of those who didn't, and who have invested wisely and well since then, are well ahead of the game now, despite the current "haircut."

So if it's OK with you, I'll refrain from claiming that the sky is falling just yet, I'll get my haircuts at the barber shop, and I'll continue to sleep very well at night.
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Old November 15th, 2012, 10:02 PM
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Once again...

...nothing to see here, move along please.
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Old November 16th, 2012, 08:19 AM
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About the only stocks that didn't drop were those corporations that make guns and ammo.....seems like they had real nice gains after the election.
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Old November 16th, 2012, 10:50 AM
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About the only stocks that didn't drop were those corporations that make guns and ammo.....seems like they had real nice gains after the election.
Boy, you sure missed your calling. You should have been a Wall Street analyst.
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Old November 16th, 2012, 11:19 AM
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I see Carnival has declared a special dividend!

Carnival declares a special dividend on top of regular quarterly dividend
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Old November 16th, 2012, 12:05 PM
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Never mind....
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Old November 16th, 2012, 03:06 PM
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Originally Posted by zydecocruiser View Post
Carnival is a great stock to own and Royal Caribbean is also quite good as well.
I have done Ok in the market. RCL, UTX, and ALL have done well for us. I had some Ford stock ( 350 shares ), but I gave it to my son ( with the proper paperwork).

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Old November 19th, 2012, 05:27 PM
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Today Nov. 19th., the billionaires made some money since the stock market reversed course.

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Old April 10th, 2013, 03:23 PM
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I happened to glance at the stock market averages today and couldn't help remembering Paul's Chicken Little screed shortly after the election.

His anger and confusion over the president's re-election led him to attribute an 800 point Dow correction exclusively to the fact that Romney lost, and of course, Wall Street favored Romney.

Of course it did. But despite Paul's na´ve pronouncements and shoddy math, things have gone rather well since then, proving the folly of basing investment decisions on short-term predictions, even by those who have some credentials in the field. For the record, as of 2:00 on April 10, the Dow stands at 14,820 and the S&P 500 shows 1,588. These represent increases of 4.5% and 1.5%, respectively, over the closes on October 9, 2007, when both indexes set record highs before the Bush crash.

Paul called what happened after the election a "haircut." The hair seems to have grown back nicely, at least for investors. The economy is still hurting for the same reasons I mentioned throughout this string. Companies still hoard cash because they don't trust Wall Street, and because they've learned to do more with less. Americans, for their part, are generally not being trained or retrained in the skills that will be necessary to succeed in the new economy. The sequester has made all these problems even worse.

Could the markets tank again tomorrow? Of course they could. Instead of trying to predict things like that, I prefer to stay diversified enough to easily withstand whatever comes along.
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Old April 10th, 2013, 03:47 PM
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AR....

I have to say I really don't respect the way you have to make your "political discussions" personal.

800-points is very serious, and furthermore, while the market is doing very well now, at the time it wasn't, so my comments were fully logical and justified. Not a "Chicken Little Screed."

Furthermore - explain to me WHY the market is doing so well right now? Who is invested in it, because I have asked around (to professional money managers) and they honestly don't know.

It isn't John Q. Public.

The best guess is that it is all the banks who have been pumped up by the Feds QE while simultaneously limiting their ability to lend money through Chris-Dodd.

If everything is rosy - why aren't the banks lending money? Why are businesses still going bankrupt? Why are there no new jobs being created?

In other words - this has all the signs of an artificial bubble created by the government just like the real estate bubble in the last administration. I may be missing this rally, but I feel a lot safer NOT being in this market right now, because if it crashes & burns it will not be a pretty sight.

Many people have come to accept the current status quo of QE as "manageable" but in truth no one really knows - and the arrogant proselytizing of "economists" like Paul Krugman that the market is a sign of a "solid economy" is just plain laughable.

There are still no jobs. Obama has invested billions in "clean energy" startups and not one of them has had a successful lift-off. Most have crashed and burned. One in five people are getting food stamps.

Are those people in the market? Yeah, right.
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Old April 10th, 2013, 05:16 PM
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Quote:
Originally Posted by Paul Motter View Post
AR....

I have to say I really don't respect the way you have to make your "political discussions" personal.

800-points is very serious, and furthermore, while the market is doing very well now, at the time it wasn't, so my comments were fully logical and justified. Not a "Chicken Little Screed."
If you had stopped at saying the Dow had dumped 800 points, nobody could have faulted you. What made it a screed was your simplistic and na´ve reasoning. What made it personal is that you said it.

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Furthermore - explain to me WHY the market is doing so well right now? Who is invested in it, because I have asked around (to professional money managers) and they honestly don't know.
Then you're talking to some pretty poor professional money managers. It's their job to know, and the good ones do.

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It isn't John Q. Public.
Of course it is, mostly through institutional investing.

Quote:
Originally Posted by Paul Motter View Post
The best guess is that it is all the banks who have been pumped up by the Feds QE while simultaneously limiting their ability to lend money through Chris-Dodd. .
Not the best guess at all.

Quote:
Originally Posted by Paul Motter View Post
If everything is rosy - why aren't the banks lending money? Why are businesses still going bankrupt? Why are there no new jobs being created?
Everything isn't rosy. Never said it was. There's a fundamental disconnect between the markets (plural, please) and the recovery. This is unique but certainly explainable.

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In other words - this has all the signs of an artificial bubble created by the government just like the real estate bubble in the last administration. I may be missing this rally, but I feel a lot safer NOT being in this market right now, because if it crashes & burns it will not be a pretty sight.
Thank you for your advice. I'll sell out at once.

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Many people have come to accept the current status quo of QE as "manageable" but in truth no one really knows - and the arrogant proselytizing of "economists" like Paul Krugman that the market is a sign of a "solid economy" is just plain laughable.
Agree. Never read any of 'em. They make my head hurt.

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There are still no jobs. Obama has invested billions in "clean energy" startups and not one of them has had a successful lift-off. Most have crashed and burned. One in five people are getting food stamps.
Yeah, what we need is more dirty energy start-ups. Could it be that the reason so many get food stamps is that the minimum wage is so low? I'm just askin'.

Quote:
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Are those people in the market? Yeah, right.
Well, if you're not in the market, and they're not in the market, I wonder who is. Must be that guy behind the tree.
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Old April 10th, 2013, 05:26 PM
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AR - what you have is a theory, like me and everybody else. I see no reason for you to act as if you know anything that I don't know as if I am not informed just because the (stock) market (singular is perfectly acceptable) is doing well right now.

If you are so well-informed - where is the market going next? Yeah - that's what I thought.

There is nothing easier than personally attacking someone for their prior opinions after events have changed - but its meaningless. It only shows one thing, that you are somehow oddly consumed with a desire to make light of me, personally.

But that isn't in the spirit of how we run these boards my friend.
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Old April 10th, 2013, 08:16 PM
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Quote:
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AR - what you have is a theory, like me and everybody else. I see no reason for you to act as if you know anything that I don't know as if I am not informed just because the (stock) market (singular is perfectly acceptable) is doing well right now.

If you are so well-informed - where is the market going next? Yeah - that's what I thought.

There is nothing easier than personally attacking someone for their prior opinions after events have changed - but its meaningless. It only shows one thing, that you are somehow oddly consumed with a desire to make light of me, personally.

But that isn't in the spirit of how we run these boards my friend.
Ya know Paul, I don't mind a bit that you disagree with me or anybody else about anything. But you're just not reading.

1. I have no bloody idea where the markets (they are plural, sorry) are going next and I have said so repeatedly, including at least twice in this very string. Only a fool would say he knows. The difference between us is that not knowing is keeping you out of the markets and not knowing is keeping me in, but for the long term (like five decades and counting), and widely diversified. I just looked at the pie chart and we are currently in 15 different asset classes, not all of them stock, in different markets around the world. This is why I refer to markets in the plural, and I truly believe that those who insist on the singular generally have a far too narrow view of investing. One of the cornerstones of my "theory" is "no big bets." That goes not only for individual investments but for asset classes as well.

2. I got on you not because your prediction was wrong, but because it was so wildly, erroneously reasoned. Remember, on the very day you wrote the OP, I said your reasoning and your math were. . .what shall we say?. . .suspect. And this would be true no matter what the markets did between then and now.

3. You say I'm working from a theory that's no better than anybody else's. I guess it just depends on how you measure such things. I've plotted my theory (which has never changed) on a graph over those five decades, and I believe the results speak for themselves. But you'll just have to take my word for that. . .or not. I don't really care.
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Last edited by AR; April 10th, 2013 at 08:29 PM.
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