Stocks hit one year highs

[Paulie]

I often value your opinion and did not want to quarrel with what I think is your mistaken speculation on that subject.

Well that's kind of ridiculous, don't you think? Valuing my opinion shouldn't mean you can't feel free to oppose it when the time comes for you to do so.

I'd really like to see your reasoning for the market's bounce.

 

[JakeStarkey]

Not ridiculous at all. But since we are discussing it now, when oil slumps as it inevitably will (bloated supply, no pent-up demand), the smart money will jump into the dollar. Then we get to see what that pressure does to your concern about inflation.

 

[Paulie]

Not ridiculous at all. But since we are discussing it now, when oil slumps as it inevitably will (bloated supply, no pent-up demand), the smart money will jump into the dollar. Then we get to see what that pressure does to your concern about inflation.

With all due respect my man, that reasoning completely ignores typical market functions. First of all, a flight from oil does not automatically typify a flock to the dollar. There's still the issue of gold shattering its record high and not looking like there's anything to stop the momentum. It took a hit on Friday, but with WHAT to SUSTAIN such?

You simply can NOT just ignore the monetary base. You have to understand that the monetary base is where the economy's money eventually pulls from, and as banks start to lend again, that money will be added to circulation.

This is the reason why many feel that the market has gone so high. The smart money, as you say, is going anywhere BUT the dollar because of the virtually inevitable potential for inflation down the road. Asset inflation almost always precedes price inflation due to money supply expansion. This signals investors getting an early jump on increasing the value of their wealth by getting out of cash.

While you may see oil drop slightly in the near term, you will and ARE still seeing the commodity market ultimately going higher. Silver is almost at $20, and copper is approaching $4.

And look at commodity futures overall. Look at the far month contracts on Wheat, for instance. Or cotton. Or soybeans.

Most took a hit on Friday, but never underestimate the power of Friday profit-taking. It's the far month contracts that are telling a bigger story.

When I see the Fed finally grow a set of balls and extinguish some bank reserves and raise rates, I might start to change my tone. Otherwise, there's every reason in the world right now to be in this market due to the monetary policy moves of the Fed in the last 12 months.

 

[JakeStarkey]

I am not discounting the monetary base (a light pun). But if no significant demand exists, then no inflation can occur. If oil collapses again, the economy contracts, lessening pressure for acquiring existing products. On the other hand, if economic recovery does take off (not counting on it), then the economy will be able to handle the inflationary pressure of so much money.

 

[Paulie]

There will be demand for that money when jobs begin to be added.

People are DYING to feel comfortable spending money again, it's in the American bloodstream and that's not going to ever change without some kind of catastrophic economic collapse.

If the Fed doesn't extinguish a large portion of that base before demand for borrowing increases, it could wind up becoming an uncontrollable situation like it was in the 70's, with the only alternative ONCE AGAIN, being that rates are drastically raised to ridiculous levels. Which means all that cash just gets yanked right out from under us just as we were starting to become accustomed to it. Now you have ultra high prices, scarce money, and most likely jobs lost again.

Agreed though, that with no demand inflation can not occur. All I'm saying is that investors are betting that it WILL occur, and that's why they've poured into the market. Obviously if something significant changes in monetary policy, investors will change their tune, including myself. Right now, there's no sign that anything is changing anytime soon. Just recently the FOMC said it was not going to raise rates for at least another 6 months. That in and of itself is potentially inflationary, and that's why commodities and equities continue to rise.

You still haven't given your reasoning for why the market has risen like it has, if not for inflationary reasons.

 

[JakeStarkey]

Your analysis is not convincing to me. Personally, I think the cost cutting, employee dismissals, etc., have led to stronger companies, a growth on the back of people instead of on the strength of the companies themselves, that has led to an improved stock market. Time will tell.

 

[Toro]

Inflation is partly the reason for the bounce, but not the only reason. Markets have gone up because they went down too hard as investors were pricing in Armageddon, which didn't happen. Also, cost cutting is keeping profits higher than what most investors expected. So it is a combo of all three.

 

[Paulie]

Inflation is partly the reason for the bounce, but not the only reason. Markets have gone up because they went down too hard as investors were pricing in Armageddon, which didn't happen. Also, cost cutting is keeping profits higher than what most investors expected. So it is a combo of all three.

Yeah but if you compare this recession which is the worst in DECADES, with previous and albeit much less extreme recessions...and the market lows that accompanied them...there's certainly no reason to think this particular low wasn't at least justified.

I agree about the profit issue though. I'm not trying to make the point that ONLY inflation is fueling the market, but I think out of the 3 reasons you mentioned, inflation is the biggest.

And just to throw this out there, armageddon didn't happen BECAUSE of the Federal Reserve's policy moves which are nothing short of inflationary.

 

[wimpy77]

hey everyone i know i haven't been around in a while, been busy. over the last couple of weeks there has been talk about the rally running out of steam. bernanke said that he sees headwinds and obama talking about another stimulus (who didn't see that coming). do you guy think the market is just tired or something else is about to happen.

 

[JeremyNight]

hey everyone i know i haven't been around in a while, been busy. over the last couple of weeks there has been talk about the rally running out of steam. bernanke said that he sees headwinds and obama talking about another stimulus (who didn't see that coming). do you guy think the market is just tired or something else is about to happen.

I think this is going nowhere. Borrowing more and more can never be a good economy policy. I started to sell all my stocks and I'm going our of public market. Me and my 2 friends have been doing something else recently focusing on being equity investors because:
a) those are fundamental investments that are much more safe
b) this is something that actually gives real added value to our economy.

 

[uscitizen]

Under Boooooooosh the market fell from 14000 to 8150 when he left office. As Obama struggled to control the economy, the market continued to slide to 6500. This represented a loss of $11.2 trillion in our economy

Since the banks were rescued and the stimulus passed in Feb, the Market has risen to 9900. This represents a gain of $4.6 trillion since March.

Over eight years of Booosh economic policies, the market dropped from 10,750 when Bush took office to 8150 when he finally left.

Where did that 11 trillion go? Who got it?
Or did it never really exist?

 

[Paulie]

hey everyone i know i haven't been around in a while, been busy. over the last couple of weeks there has been talk about the rally running out of steam. bernanke said that he sees headwinds and obama talking about another stimulus (who didn't see that coming). do you guy think the market is just tired or something else is about to happen.

I think this is going nowhere. Borrowing more and more can never be a good economy policy. I started to sell all my stocks and I'm going our of public market. Me and my 2 friends have been doing something else recently focusing on being equity investors because:
a) those are fundamental investments that are much more safe
b) this is something that actually gives real added value to our economy.

There's not really that much difference between investing in public or private companies. Private companies will offer you a certain percentage of equity in the business in return for your investment. This is basically the same thing as with a public company. When you invest in a public company that offers a dividend, you are receiving a percentage of the company's profits and the ability to sell your equity stake at a higher price than what you paid for it, thereby earning you another profit.

Sometimes in private companies you can get percentages of REVENUE for your equity, rather than earnings, but I'm not really sure why you think there's some kind of huge difference between the two types.

A company is still a company, and fundamentals are still the same. I guess it's nice to know your equity won't be depreciated by short sellers on the private side. But just because you're invested in a private company doesn't mean your position isn't still open to depreciation through shady dealings and manipulation.

You're only as strong as you are informed, regardless.

 

[Neubarth]

I will probably short the market again on Monday using DXD. In the months between March and now, I have shorted five times, been right three times and wrong twice. When companies have no appreciable increase in earnings off of the bottom, you know that the market is ripe for a tremendous fall.

 

[Neubarth]

Your analysis is not convincing to me. Personally, I think the cost cutting, employee dismissals, etc., have led to stronger companies, a growth on the back of people instead of on the strength of the companies themselves, that has led to an improved stock market. Time will tell.

Industry and manufacturing makes up less than a third of our economy. Most of the manufacturing companies have seen a collective fall of about twenty percent in sales from 2007. Sales have been jumping all around since the beginning of the year, up a percent and down a percent. We have seen no real pickup overall in sales. Industrial Production has increased about two percent for the year. Basically, that is not a real improvement.

Meanwhile the service sector continues to shed jobs by the millions every month. Taint good.

 

[jillian]

I will probably short the market again on Monday

ahhhhhhhhhhhhh.....explains all your distortions...

you profit if we fail.



i can see where it would upset you that we're in a bull market that's lasted longer (9 months) than 1/3 of our bull markets.

http://www.marketwatch.com/story/happy-9-month-birthday-to-bull-market-2009-12-09

 

[Neubarth]

I will probably short the market again on Monday

ahhhhhhhhhhhhh.....explains all your distortions...

you profit if we fail.
]

Jillian, that is a damned lie! I have never once posted a distortion. Why don't you show the people how honest you are by showing them one distortion that I have posted? I'd love to see this.

 

[jillian]

Truth hurts, eh?

now keep posting garbage that has nothing to do with actual reality

 

[Neubarth]

Truth hurts, eh?

now keep posting garbage that has nothing to do with actual reality

You have now demonstrated for all to see that you are a disgusting pathological liar. Hide behind your alias and lie all you want. Others will know that you have been exposed as a liar.


Prove that you are not a liar by showing where I have distorted anything in my life. As a Christian Minister, I take exception to pathological liars like you. Once you have been caught in lies like that you should be banned from the board.

 

[Toro]

We have to be really watchful on stock market conditions!

This guy is a spammer. He is here to promote his product that is linked in his sig.