Dare I make another post on the economy?

Cosmo

Riddle's unwrapped enigma
Jul 30, 2003
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Once again... if you don't care, don't click on the post (I mean... come on... I gave you fair warning).

Last fall I said that we had experienced a severe economic earthquake and the full ramifications were not yet known.

The picture becomes a little clearer... but still much is in doubt.

Yesterday the DOW closed at a six year low of 7,465.95. In 2002, the lowest level that the Dow hit was 7,286.27.

If the DOW slides below that 2002 level, it will have fallen back to 1997 levels, making it a lost decade for DOW investors (not counting dividends).

It brings to mind former US Federal Reserve Board Chairman Alan Greenspan's speech of December 5, 1996. Speaking to the American Enterprise Institute during the stock market boom of the 1990s, Greenspan made his infamous 'irrational exuberance' comment.

“Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”

The phrase was interpreted by financial pundits as a typically cryptic warning that the market might be overvalued.

And where was the DOW on December 5, 1996? It closed that day at 6,437.

Twelve years later the market may well be on it's way to finally wiping out those years of 'irrational exuberance' Greenspan referred to and, in the process, taking out all the years that have come afterwards.

Is a DOW of 5,000 out of the question?

As for real estate, earlier this week we had the chief economist of the BC real estate association (Cameron Muir) calling this a great time to buy.

Uh-huh.

I wonder if he caught the front page of the Washington Post newspaper?

"Markets around the world plunged Tuesday as evidence mounted that the global economic crisis is worsening. Japan is suffering it's worse downturn in 35 years. The British economy is facing it's sharpest decline in 30 years. Germany is slumping at it's worse pace in 20 years. Meanwhile the job market in the United States, at the epic-centre of the world downturn, is at it's worse in decades. And emerging economies are contracting at a pace few had predicted just months ago. Even China, whose economy is still growing at 6.8% annual pace is grappling and grasping with vast numbers of the unemployed, raising fears of unrest. The sharpness of the global showdown has alarmed economists who see no obvious engine for recovery. Most Western developed economies are going to see the deepest downturn they have seen in a number of decades, in some cases, possibly, since the Second World War."

Last night Charlie Rose called it 'scary stuff'.

Yet Cameron Muir calls it a great time to buy.

Uh-huh.
 
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FunSugarDaddy

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Aug 15, 2008
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To put some of these losses into perspective, the US stock market has lost about 10 Trillion in value and the US real estate market about 6 Trillion. Total about 16 Trillion. The GDP of the US is about 14.5 Trillion. So it's definately not good news.

Having said that I do think Obama is moving in the right direction and over time it will have a positive influence of the markets. But it could take a year or so before this becomes apparent.

As far as this warning you gave, everyone knew what was going to happen after the unpresidented events in September, the warning was needed prior to that.

If you posted warning then, you'd be one of the very few who did.

The Economist did make some reference to it prior to that, but it was vague. Essentially they had on one of their covers the US housing bubble, will it pop, or will there be a gentle fissle. Turned out there was neither. There was a damn explossion!!!!
 
Jan 7, 2008
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Cosmo, you should short the market if you think we are headed much lower:

http://cxa.marketwatch.com/tsx/en/market/quote.aspx?symbol=HXD&x=7&y=9

you can leverage yourself as well and make a killing...you got the balls?:confused:
The financial markets are a barametor of the economy usually signalling 6 months ahead of time.

From now until the fall of this year, you can basically right it off!!! Dow mid 6000 range and TSX index in the low 7000's is inevitable!!

Things are not looking good at all as of now. I've been in safe haven choices for quite some time now and will be for the forseeable future.

Until the financial markets become stable and start to move higher and the banks ( a main part of the economy ) start to lend again, Real estate will continue it's decline, unemployement will increase, commodities will decline etc etc.

This year is a right off!!! Put your $$$ in safe haven funds!! The best you can do right now.
 

FunSugarDaddy

New member
Aug 15, 2008
1,113
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The financial markets are a barametor of the economy usually signalling 6 months ahead of time.

From now until the fall of this year, you can basically right it off!!! Dow mid 6000 range and TSX index in the low 7000's is inevitable!!

Things are not looking good at all as of now. I've been in safe haven choices for quite some time now and will be for the forseeable future.

Until the financial markets become stable and start to move higher and the banks ( a main part of the economy ) start to lend again, Real estate will continue it's decline, unemployement will increase, commodities will decline etc etc.

This year is a right off!!! Put your $$$ in safe haven funds!! The best you can do right now.

The other option of course is just to leave things the way they are. The markets have dropped so much I personally don't see the point of locking in the losses and guessing when the market is going to recover. Historically this has proven to be very bad advice.

If anything putting money in the market would be the wiser option. This is especially true if you're under 30. Over 50 and wanting to retire in the next 5-10 years, tougher call.

There's a saying. "Buy when everyone is selling and sell when everyone is buying." There's more truth to this than most realize because it goes against the psychology of the markets, which of course are bearish at the momement.
 
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Jan 7, 2008
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The other option of course is just to leave things the way they are. The markets have dropped so much I personally don't see the point of locking in the losses and guessing when the market is going to recover. Historically this has proven to be very bad advice.

If anything putting money in the market would be the wiser option. This is especially true if you're under 30. Over 50 and wanting to retire in the next 5-10 years, tougher call.

There a saying. "Buy when everyone is selling and sell when everyone is buying." There's more truth to this than most realize because it goes against the psychology of the markets, which of course are bearish at the momement.
I agree, always buy low which I believe personally we haven't seen the lows yet. Where the lows are is anyone's guess. But I think The predicted index # I've stated might be a great time to start dipping your toes in again.

Be diversified to your risk level and with a dollar cost average in top notch quality funds or stocks and looking out 10 - 15 yrs.
Returns should be stellar IMHO.
 

Cosmo

Riddle's unwrapped enigma
Jul 30, 2003
506
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18
114
Yesterday the DOW closed at a six year low of 7,465.95. In 2002, the lowest level that the Dow hit was 7,286.27.

If the DOW slides below that 2002 level, it will have fallen back to 1997 levels, making it a lost decade for DOW investors (not counting dividends).
DOW February 23rd, 2009: 7,114.78

DOW May 8th, 1997: 7,136.62

Over a decade of financial gains just went POOF!

==================

Paul Volcker, chairman of Obama's Economic Recovery Advisory Board:

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world."
 

wess

New member
Jan 5, 2009
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The other option of course is just to leave things the way they are. The markets have dropped so much I personally don't see the point of locking in the losses and guessing when the market is going to recover. Historically this has proven to be very bad advice.

If anything putting money in the market would be the wiser option. This is especially true if you're under 30. Over 50 and wanting to retire in the next 5-10 years, tougher call.

There's a saying. "Buy when everyone is selling and sell when everyone is buying." There's more truth to this than most realize because it goes against the psychology of the markets, which of course are bearish at the momement.
Im not locking in any losses. I dont have a huge amount of money in so i am just writing that money off, its staying in untill i die. Its sure a bitch to watch the business networks while trying to avoid seeing the ticker prices.
 

FunSugarDaddy

New member
Aug 15, 2008
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DOW February 23rd, 2009: 7,114.78

DOW May 8th, 1997: 7,136.62

Over a decade of financial gains just went POOF!

==================

Paul Volcker, chairman of Obama's Economic Recovery Advisory Board:

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world."
Yes indeed. Thankfully those who have diversified portfolio's with a fair amount of bonds in them aren't doing nearly as bad. If nothing else it illustrates the wisdom of having fixed income products in your portfolio.
 

87112

Well-known member
Dec 13, 2004
3,622
610
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*&^%
DOW February 23rd, 2009: 7,114.78

DOW May 8th, 1997: 7,136.62

Over a decade of financial gains just went POOF!

==================

Paul Volcker, chairman of Obama's Economic Recovery Advisory Board:

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world."

All these investing pros who taught us ( those not near retirement) to buy and hold hold hold are eating shit right now.
 

FunSugarDaddy

New member
Aug 15, 2008
1,113
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All these investing pros who taught us ( those not near retirement) to buy and hold hold hold are eating shit right now.
As opposed to what else? Where they suppose to tell you to hide it under your pillow?

A smart advisor would have told you to have at least 50% of your investments, perhaps more, in fixed income. If he/she did you should be doing relatively okay. ( down ~ 15-18% ) range compared to the market drop of about 33%.
 
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