Dow Near Record High - Again

Discussion in 'Economy' started by red states rule, Apr 18, 2007.

  1. red states rule
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    red states rule Senior Member

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    Last month the libs were giddy over the 546 point loss of the Dow on 2/27/2007. The liberal media was gloating it was the worst one day loss since 9-11

    The Dow closed just under 12,100

    Wel, since then the Dow has not only made up the lost ground but is near a record high

    Why? Because of good economic news

    Stocks Boosted By Economic Data

    NEW YORK — The Dow industrials ended just short of a new record high Tuesday, helped by better-than-expected profits at companies such as Johnson & Johnson (JNJ) and data showing tamer inflation.

    The Dow Jones industrial average rose 52.58 points, or 0.41 percent, to end at 12,773.04. The Standard & Poor's 500 Index advanced 3.01 points, or 0.20 percent, to finish at 1,471.48. The Nasdaq Composite Index, however, slipped 1.38 points, or 0.05 percent, to 2,516.95.

    The Labor Department said the core Consumer Price Index, excluding food and energy, rose at a muted pace last month.

    "The core CPI number was a big sigh of relief," said Mark Bronzo, managing director at Nationwide Separate Accounts LLC in Irvington, New York. "For people arguing we're in a stagflation environment of slower growth and higher inflation, that number sort of eases those concerns. On top of that, we got some good earnings from blue-chip names."

    http://www.foxnews.com/story/0,2933,266563,00.html
     
  2. Delbert
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    Delbert Rookie

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    yes, vs the dollar, the dow is breaking records,....but
    vs anything else, its not doing so well.

    i would post a link to various charts of the dow vs gold, euros, oil, food,
    commodities, etc, but for some reason this board wont let
    me post links until i have 15 posts. crazy rule.

    The dollar is in free fall, it is losing its value at an astounding rate.
    You have to make 12% on the dow each year just to break even
    do to inflation.:eusa_wall:
     
  3. red states rule
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    red states rule Senior Member

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    I know good news for America is bad news to the doom and gloomers
     
  4. Delbert
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    Delbert Rookie

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  5. maineman
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    maineman BANNED

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    so the Dow is almost back to where it was when Clinton turned over the keys to Bush over six years ago?

    wow.

    I am underwhelmed.

     
  6. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Wow. A bit of Economic Literacy would be nice.

    Comparing the Dow today to the Dotcom/Pre 9/11 Bubble is specious. We don't see businesses today being bid up into insane multiples based upon Eyeballs. Cash flow is a healthier metric - and we have gotten back to fundamental basics. This is a good thing.
     
  7. maineman
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    maineman BANNED

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    man...you conservatives sure have spun that dot-com bubble bullshit into a fucking economic monster. How much of the economy was dependent on dotcoms?

    It cracks me up.... when the economy does well under a democrat, it is all because of the great economic policies put in place by the previous republican and presidents have no control over it... and when it turns to shit under a republican, it is all because of the market cycle or the previous democrat's fuck ups....and when it does well under a republican, it is their stellar economic stewardship that we should thank. blah fucking blah
     
  8. BaronVonBigmeat
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    BaronVonBigmeat Senior Member

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    The Dow Is Crashing

    On October 4th 2006, the Dow broke its old high of 11,750 set back on January 14th 2000, and from then on all you heard from the financial press was "Dow sets a new, all time, record high"… at least that's all you heard until the correction on February 27th, 2007.

    I just don't get it. How can anyone at this point in time (including the financial press) believe they are actually making gains being invested in general equities? On February 20th, the Dow hit its "brand new, all time, record high" of 12,795, and at the writing of this article hovers at 12,560, 6.9% above its 2000 high.

    A 6.9% gain over the entire 7-year period… hasn't anyone heard of inflation? Don't investors know that if their portfolio doesn't outpace inflation they are actually losing ground?

    The Dow is actually crashing, but if you have not yet educated yourself on the insidious ravages that inflation can have on your portfolio, you can't see it. This is a blind spot investors must be mindful of, and guard against, if they are to prosper.

    Anytime that it looks like everything is going up, stocks, bonds, real estate, commodities, and virtually every kind of investment there is, you have to stop and ask yourself, "why?" The only reason the Dow looks like it is going up is because the Fed has pumped so many more dollars into the currency supply, that all asset classes are rising.

    ...

    So to get a picture of what's going on with stocks, I took the Dow as a proxy for stocks and measured it against everything else I could possibly think of. To do this I took the Dow and divided it into the price of the other asset I am measuring it against. If the Dow is rising faster than the investment I am measuring it with, the chart will be rising. If the investment that I am measuring the Dow with is rising faster than the Dow, then the chart will be falling.

    Here's the Dow Jones Industrial Average the way you're used to seeing it. It appears to have gone up because it is measured in dollars. However, it's up in price only… not value! And now I'll prove it with the following charts.

    [​IMG]

    Since January 2002 the dollar has plummeted 31.25%, verses other currencies.

    [​IMG]

    This has caused money (gold) to rise measured in currency (dollars) as more and more investors move out of their currency and into real money.

    [​IMG]

    In this chart I measure the Dow with money, not currency. It took almost 45 ounces of gold to buy 1 share of the Dow in 1999. Today it takes less than 19. Another way of saying it, if you sold 1 share of the Dow in 1999 you would have been able to buy 45 ounces of gold. Today if you sold 1 share of the Dow, the proceeds would only buy you 19 ounces of real money. So measured in real money, the Dow has crashed 58%.

    [​IMG]

    My favorite… the other real money. Measured in silver, the Dow has crashed 65%.

    [​IMG]

    Measured in another currency (fake money) the Dow has crashed 27% against the Euro.

    [​IMG]

    It's crashed 31% if you paid for it with Aussie dollars.

    [​IMG]

    It's down 22.5%, measured by the pound.

    [​IMG]

    Dow down up in Canada! Measured against the Loonie, or Toonie, it's lost 18%.

    [​IMG]

    I like this chart, because it shows you just how much real stuff (on the average) the Dow will buy you. It's the Dow divided by the Commodities Index. Commodities are the stuff you buy, or the stuff that goes into the stuff you buy. What this chart is saying is that you could buy twice as much stuff if you cashed out of the Dow in 1999 as the same number of shares will buy you today. This chart is also saying; "you can take your Dow and stuff it!"

    [​IMG]
     
  9. BaronVonBigmeat
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    BaronVonBigmeat Senior Member

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    Many analysts refer to copper as Dr. Copper, because it diagnoses the health of the global economy. If the economy is booming a lot of copper gets used in plumbing, wiring, circuit boards and such, causing its price to rise. Measured against copper the Dow has plunged 76.5%.

    [​IMG]

    Here is probably the most important chart in the article. How much oil (our proxy for energy) can you buy with your proceeds from the Dow. If you sold 1 share of the Dow in early 1999 you could buy 800 barrels of oil… today it'll only buy you 200.

    [​IMG]

    Speaking of cars… along with plastics, cars are made of metals like steel, zinc, copper, and lead. Measured against the Dow Jones Industrial Metals Spot Price Index, the Dow has crashed by 73%. And believe it or not, this is one of the reasons the companies that make cars have crashed. (There's a joke in there somewhere but I just can't seem to fish it out). Just take a look at the stocks of GM and Ford over the same time frame. They've crashed by about the same percentage, because the automakers costs are up, and profits are gone.

    [​IMG]

    Boy this next chart really puts the Dow in a pickle, because even the lowly pickle has literally out performed the Dow. This is the Dow divided by the Agricultural Spot Price Index (grains, cotton, timber, vegetables and such), so it's showing how much food, clothing, and lumber you will get with your proceeds from the Dow.

    Speaking of lumber, if you sold enough shares of the Dow to buy 2 houses in 1999, today the same number of shares would only buy you 1… at least in my neighborhood.

    [​IMG]

    Now here's a chart that is almost unfathomable, it's the Dow divided by, what is in my opinion, the worst investment you could possibly have in an environment of ever increasing inflation… It's the Dow divided by, what most investors believe to be, the safest (read stodgiest, slowest moving) investment one could possibly buy… the 30-year U.S. Treasury Bill.

    Measured against the other investment class that is crashing, the Dow has crashed 13%.

    [​IMG]

    But all of this has been an unfair way to measure stocks vs. everything else… because, by using the Dow I have overstated the value of stocks.

    The Dow is currently the best performing major stock index. The situation only gets worse if you use the S&P 500, because it's still down 7% from its 2000 high. By the way, the S&P is a much better proxy for the general economy than the Dow, because it is a measure of 500 of the countries largest companies instead of just 30.

    [​IMG]

    And if we used the Nasdaq to the other items, the charts would literally look twice as bad, because the Nasdaq is more than 50% below its previous high.

    [​IMG]
     
  10. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    This just shows how little you understand the stock market. Equities across many industries were affected by the "new economy" metrics applied to valuing dotcoms, most notably telecom. The huge Global Crossing debacle of measuring capacity instead of actual subscribership hyperinflated telecom valuations, and had a ripple effect across the old economy. The latter 90s were also inflated by temporary tech spending to resolve Y2K issues.

    There was some decent underlying core economic strength due to the Reagan tax cuts and welfare reform, but the Dems don't deserve credit for either of these.
     
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