StageLeft
No Lifer
- Sep 29, 2000
- 70,150
- 5
- 0
That is the question. If it was any other crash, it wouldn't be crashing this hard because people would know it will go up, but if investors worry that the whole damn game is finished now, they don't want to buy only to have these "cheap stocks" crash even further.
IMO, the market didn't have time in the last 30 min to shed what it needed. It will lose more tomorrow, probably a lot more.
7000+-
I said so in a post a few months back - if 10500-10000 was broken, then it could very well go to 7000. There is a head-shoulder formation in the dow chart (if you know anything about technical analysis)
theeedude
Lifer
- Feb 5, 2006
- 35,787
- 6,197
- 126
Doesn't look that bad, though it could change.
http://www.bloomberg.com/markets/stocks/futures.html
As far as how we go forward, is the rest of the world will have to pick up spending where Americans will have to leave it off. They cannot keep relying on US being the spender of first and last resort.
There is absolutely no reason why Americans should enjoy higher standard of living than people who produce the stuff that we buy. People should enjoy rewards proportionate to what they create.
There are much better picks overseas, in creditor nations that don't have anywhere near the deficits or obligations we have. I see quite a few energy companies getting oversold from margin calls, with P/Es of 2 to 3 and extremely high dividends. They're also not dollar denominated, that currency is going to tank in the coming years from all the inflation in the pipeline. Government is going to start flailing like a wild animal trying to maintain the welfare state, and creditors are no longer going to loan us their savings to buy their products. No matter how much they've printed already, their idiotic conclusion continues to be that it wasn't enough, and they want to look like they're doing something. Pelosi is already talking about another stimulus.
"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained"
-Fed Chairman Ben Bernanke 3-28-2007
"Looking over periods of stress that I've seen, this is the strongest global economy we've had"
-Treasury Secretary Henry Paulsen 8-16-2007
Of course, they just recently came before congress saying that global financial armageddon was near if they didn't get this bailout passed. Huh, I thought our economy was sound? Heed John Loeffler's advice: "If they didn't see it coming, they won't know what to do when it gets here." These guys know nothing. If they understood basic economics, the difference between borrowing to produce and borrowing to consume, they may have gotten it right like the Austrians. Put half your investments into gold while it's still cheap. None of that fear is unfounded, these people's credibility is shot. Gold can't be manufactured at no labor or material cost. Fiat units can be, and as a result, government will not restrain itself from making them as common as the material with which they're made at the expense of those who expended actual labor to obtain them when they were scarce.
First
Lifer
- Jun 3, 2002
- 10,518
- 271
- 136
The dollar is up solidly since Congress passed the bailout last year (*edit* week), despite the fact that hundreds of billions in cash infusions and takeovers have been announced. More importantly, the dollar is up on the year and rebounding. Inflation and money supply increases are only loosely correlated, velocity is just as (if not more) important. Those, like yourself, who have claimed dollar devaluation and rampant hyperinflation as inevitable for years, continue to be wrong with the dollar rebounding and inflation under control (for the moment).
Let me know when this happens.
And they were wrong and admitted it. Of course, they're also far more well informed about finance/economics than you, and I think you realize that.
Economics is not an exact science, no one can time or predict the market with any certainty. But Keynesians and their brethren have developed models far more congruent with current business cycles than any Austrian economist, anywhere in the world. That's a fact you'll have to live with I'm afraid. In fact, Austrians haven't come up with any models that have been able to predict anything near our current economic forecasts. It's why Austrian economics is widely considered as sort of a joke among Econ departments; all qualitative analysis with absolutely no balanced work in real world econometric models, nothing quantitative. That's exactly why virtually no one researches Austrian economics, here or elsewhere.
First
Lifer
- Jun 3, 2002
- 10,518
- 271
- 136
Gold is just as manufactured as fiat; we continue to constrain the gold supply with huge gold deposits in Fort Knox. Your investment advice also hasn't stood the test of time. If you had invested in gold since our fiat economy began in the 1970's (and after the OPEC embargos), you'd have gained less than 1% on your principle annually, while equity investments would have earned you over 7% compounded annually during the last 30 years. Recommending someone put half their assets into gold also shows a fundamental lack of understanding (and education, in your case) as to the value of diversification or how systematic and unsystematic risk works. No matter how sure someone believes one single investment to be (gold in your case), diversifying away unsystematic risk is the far superior option to tying half your assets to gold.
EDIT: Corrected gold prices.
One of the few good posts in content without attacking the person. Not many can do that and give sound advice to boot. :thumbsup:
zephyrprime
Diamond Member
- Feb 18, 2001
- 7,512
- 2
- 81
Nothing moves in a straight line. Some people are running to treasuries, some are running to gold. Bonds are mistakenly seen as safety havens right now to the know-nothing average Joe who has yet to feel the coming inflation. Then people who do no research will realize that the CPI is bullshit and the FDIC doesn't insure value. All it insures is a nominal payout, it doesn't insure that the dollars you receive will buy the same amount of goods it did a week or a year before, which is kind of important in a hyperinflationary environment if one is to occur. So you're seeing both bonds and gold going up as stocks hemorrhage. When inflation becomes apparent in people's everyday lives, the low yield on those bonds isn't going to look so hot, while gold's parabolic increases over the last few years will.
No, but some can predict it with a lot more certainty than others, and not confuse problems for strengths. And why is it, exactly, despite all of the Keynesian educated management within these financial firms and banks, so few of them were able to even keep their businesses solvent, were able to spot the inflation that went into tech stocks or housing? I mean, that's a pretty terrible result. They categorize and exclude inflation to suit their statistics, they can't even see the forest for the trees. Most of what they take as evident is ass-backwards. Take the velocity of money as an example. It's a result of people's valuations of goods including money, not a cause. Take inflation, it is a cause of rising prices, not a result. And somehow, consumption drives economies to them. They even think that falling prices (in a normal environment not succeeding inflationary dependencies) are bad and would cause people to indefinitely hoard for a future lower price, despite the perpetual fallacy this creates or the fact that computers continue to be one of the strongest selling sectors despite consistently falling prices. The whole damn "inflation is a necessity" thing is a scam to justify government excess.
Hayek won a nobel prize in economics for doing exactly that. Keynes was a complete crackpot whose ideas were embraced in the middle of a completely misunderstood depression by the politicians and intelligentsia that were to benefit from his theories, which were essentially centered on government spending and direction of an economy. THAT is how it managed to replace classical understandings. He advocated large government deficits and equated savings to hoarding and leakage, even though savings are the only reason loans exist to increase production, and should be what determines the rate of interest since it is this that convinces those with savings to loan it out rather than hoard. Politicians making loans with other people's money to itself or others based on interest rates that its financial arm price fixes, is not a very stable or efficient system at all, it turns out, and is a theory that in practice leads to collapse as certain as any dictatorship despite any amount of time in which it was sustained.
Now that artificially low rates have incentivized an entire sector to become a market of flippers and speculators with no legitimate demand at the prices they bid up between each other, a free market would see those jobs purged and reallocated over a number of years to manufacturing of exports to correct the mistakes brought on by the false signals created by centrally directed interest rates. The Keynesian solution is not to let this happen. It believes that withdrawal symptoms from a drug is not a solution, but a problem to be avoided with more and more of that drug. To have the government print money at no labor or material cost, essentially stealing purchasing power from holders of dollars, domestic and abroad, to create new credit extensions in an attempt to maintain these bubble jobs and home prices. Bubble jobs and home prices that can only exist from this money being loaned at fantasy interest rates that the government is dictating through a central bank. It simply won't work, and you're free to invest in government bonds and companies run by Keynesians, but I'm looking at all the numbers and fundamentals and I severely doubt their ability to continually drain the savings of the world towards these ends.
I would also point out that Peter Schiff has refuted the idea that homes are currently illiquid assets. They are, in fact, perfectly liquid assets with plenty of buyers, just not at the prices that the sellers are demanding. While sales at those prices would be a detriment to the speculators and lenders, they would be to the benefit of many responsible savers and home buyers who never strayed from their principles. The bailout is rewarding the former at the expense of the latter. And you can see the moral hazard this creates, as well as they way in which it might incentivize the wrong kind of future behavior. Just as the FDIC removes the fear of losing one's deposit to a highly leveraged bank that otherwise might have prevented that business model from becoming the norm. Just as the entire idea of having a lender of last resort to prevent bankruptcy removes the fear that otherwise might have deterred banks from following imprudent policies and lending standards. Thus socialism ultimately perverts the very risk/reward system that makes self-regulation occur by trying to backstop something as fundamentally desirable as due consequence and fundamentally undesirable as fraudulent lending.
What kinds of models? I've seen thorough explanations destroying basically every one of Keynes' mistakes, including his disregard of Say's Law on which his subsequent arguments depend. Academia is always looking for sexy objective equations to explain subjective human behavior. Therein lies your problem. Economics is more complicated than a collection of mathematical formulas that spit out correct answers for you every time.
http://www.mises.org/story/1803
Just got home and ate after a 14hr day. Been going gangbusters all week, I'll break 100hrs this week.
Crazy stuff.
I don't want to give explicit advice on forums for something as risky as bottom-calling stocks, I was just saying that I've seen better than anything domestic. I'm too freaked out by gobal central banks being conned into these coordinated rate cuts to advise anyone to buy anything but gold right now. They're either completely incompetent, or a hell of a lot more collusive than I thought. I'm going with the former because I'm not into the whole superbank conspiracy.
Jesus Christ, whatever it is that's going on, it's like the Energizer Bunny ! it keeps going
& going ! Australia opens up October 10 down 7 %, Japan down 4%.
from CNN world markets.
http://money.cnn.com/data/world_markets/
& going ! Australia opens up October 10 down 7 %, Japan down 4%.
from CNN world markets.
http://money.cnn.com/data/world_markets/
Pliablemoose
Lifer
- Oct 11, 1999
- 25,195
- 0
- 56
Jaskalas
Lifer
- Jun 23, 2004
- 35,773
- 10,077
- 136
Yet if large numbers of companies are on the verge of sinking, especially after this failed holiday season, maybe you?re not factoring in if Main Street collapses. That 7,000 level sounds nice, if this crisis is somehow contained.
I?m worried that this shows no sign of containment and is instead hitting critical mass. Wall Street collapsing alone might stop at 7,000, but we?re on the verge of losing so much more than finances.
My Buddy has been investing in Wii s for the Last 6 months.
He has accumulated about 45 so far at a rough cost of about 267 each.
They are going at about 425 to 475 right now and there are predicted shortages again
He jokes that he is going to get better returns than 95% of the people invested in the markets
He has accumulated about 45 so far at a rough cost of about 267 each.
They are going at about 425 to 475 right now and there are predicted shortages again
He jokes that he is going to get better returns than 95% of the people invested in the markets
- Aug 23, 2003
- 25,375
- 142
- 116
The last few days of completed listings on eBay show Wii consoles hovering around $325. Craigslist is usually minus 5-10% of eBay.
They might hit $400+, but that doesn't happen until the week after Black Friday. This is going by experience from the last few years of Wii resales.
Although I don't see how today's economy will breed stronger holiday demand than in previous years. We'll probably see depressed consumer spending.
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