Those who think the economy is booming due to stocks need to read.

Discussion in 'Too Hot for Swamp Gas' started by gatordowneast, Aug 13, 2013.

  1. gatordowneast
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    gatordowneast Well-Known Member

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    Those of you who worship Big O and make the argument that the stock market reflects the economy, should take off your knee pads, put away your foot washers and prayer rugs and read. You may learn something. Economy is barely inching along...just enough to avoid a stall. And yet our economy typically leads the world out of recessions. I guess next summer will be our 6th summer of recovery?

    http://wallstcheatsheet.com/stocks/...ering-qe-doesnt-help-much-anyway.html/?ref=YF
  2. RealGatorFan
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    Keep in mind, this tepid "recovery" has already cost us nearly $6 Trillion with $85 Billion added every month with no end in sight. The only reason things haven't blown up in our faces is the Euro tanking worse. But, there are signs the Eurozone is starting to recover. If it does, then all eyes are back on us and you will see the dollar plunge along with the markets when the Fed gets not a bite on new bonds and bills. We have been on borrowed time for almost 5 years and instead of positioning ourselves for the better, we are setting up for an implosion. The question is when?
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  3. mdgator05
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    Okay so the Fed policies are only having a relatively small effect on economic growth and inflation? That seems to match what we have seen. But it does certainly make those that have been saying that massive inflation was just around the corner (and have been saying so for years now) or that the stock market growth is fueled by QE look pretty foolish.

    It looks like what I have been saying for a little while now. There isn't a reason to worry much about QE, as deflationary pressure from increased efficiency is balancing out the inflationary pressures of this monetary policy. In addition, the stock market is booming because corporate profits are booming, driven by these increases in productivity and efficiency, and not by QE, as often claimed by many on the right.
  4. Emmitto
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    Emmitto VIP Member

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    Great, another OWS thread.
  5. gatordowneast
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    gatordowneast Well-Known Member

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    Re read the article. It makes no such claim. And anyone who claims the fed infusing $85 B monthly for the past 60 months hasn't made the stock market go up, is not an economist. Or if they are, they are into Obamanomics.

    Corporate profits are not booming. They have been high due to cost cutting, less employees, lower borrowing costs, more productivity per employee.

    Look at top line revenue growth for the F 500 and get back to us. Look at sales in 2007 and sales today. At some point, if a company is not increasing revenue, the proverbial cost curve catches up to them.

    I believe there is some very "creative" accounting going on in corporate America....again.
  6. mdgator05
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    mdgator05 Premium Member

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    Did you not read the whole article?

    So again, limited effect on either the GDP growth rate or inflation (with a much smaller effect on inflation).

    As to stock price growth, markets are ambivalent to the source of additional profits, as a firm's stock price is the market estimated discounted present value of all future firm profits. By booming, I am discussing the fact that they have been not just high but growing rapidly since the end of the recession.

    As to how long efficiency gains can continue, that will be an interesting question for the long-term. However, nothing presented thus far has any definitive answer to how long it will last.
  7. oldgator
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    oldgator Premium Member

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    economy is booming for my family and folks like myself who work and invest wisely.
  8. gatordowneast
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    gatordowneast Well-Known Member

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    We had our best year ever in 2012. That said, I talk, deal and read about people daily who have lost jobs, been out of work, spent life savings, lost homes, losing homes. So to use myself as an example would be disingenuous. It ain't reality.

    Look at the # of bull gators we've lost. Hundreds. Look at the # of season tickets we are down. Thousands. You will see the same thing around all of college athletics. Same in the pros. It ain't big screens. It is the economy. No worries though... Captain Titanic Obama is going to get on it...he really is.
  9. oldgator
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    well then, there could be some benefit to folks facing some financial hardship----focus on essentials of living during rough times and tighten spending til things turn around.

    thing is, there were people losing jobs during periods of economic growth in American. and there are people who lose jobs when economy is low or rotten.

    By working hard and investing wisely there is no reason for people to go without food, shelter, etc.

    Sad part is, in America, what triggered major economic downturns wasn't govt. It was people and/or corporations who invested stupidly on a large scale. People taking stupid risks out of greed. Corporations taking risks on investments and other policies in their lust for short term profit. And then the balloon bursts and they start blaming govt and others and don't bother looking in the mirror
  10. RealGatorFan
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    Ok...let me swing the hammer.

    You can say goodbye to SS and medicare for those 50 and under. The reason? The younger generation isn't anywhere near picking up the baton. The 50 and under group must have the current crop of 20-somethings to put into the system NOW. Savers are dead in this market. Want to retire on a fixed income? Seriously? .01% rates? Maybe 1.7% if you have over a million to invest. Sure, you could have put everything into the market on March 9, 2009 and rode that wave, but few know how big and how long that wave is.

    You can stay in the market and ride it for as long as you want but God help you trying to time when to get out. I have a quarter of my portfolio in stocks and it's too late to up it so I'll wait. As for inflation, keep printing. Like I said earlier, we are on borrowed time considering everybody else couldn't take our slack in this recession. But the Eurozone is starting to wake up and once they do the US is in trouble. Inflation will go up...always has in the history of mankind when governments inflate their currency supply. There are no exceptions.

    Got this from an expatriate:

  11. gtr2x
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    gtr2x Well-Known Member

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    Don't recall anyone seriously saying the economy is booming or even close to it. As for the MKT its just slightly above where it was before the crash. However, its still far better than the financial mess of 5-6 years ago. Glad I stayed invested and didnt listen to the astute analysts in this forum predicting a Dow of 5000 once Obama took over. Pretty funny.
  12. oldgator
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    oldgator Premium Member

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    Hard to pick up the baton with the following
    ---minimum wage not keeping up with the cost of living
    ---the U.S. population boom continuing
    ---busting of unions that help workers have better pay(and be able to contribute to SS, etc)
    ---corporation execs bilking corporations and the govt. and then sending the money into off shore accounts
    ---govt policies
    ---corporate policies
    ---education

    there are a ton of factors and to try to pin all the blame on one factor is stupid and likely nothing more than political spin
  13. gatordowneast
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    gatordowneast Well-Known Member

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    Old, do you think that back in the 90s when the US government began forcing banks to lend to the "underserved" that was helpful or no? And specifically B of A was chastised for not building brick and mortar in "lower income" areas, good or bad. And then down payments became "optional" and documentation of earnings and assets became "optional" to help qualify those who probably shouldn't be borrowers...helpful or no? Did any of these imposed/coerced guvmint policies have anything to do with the housing crash in 06-07?

    Banks and Financial firms had some responsibility also but they did what any of us would have done, bundled that crap, made the origination fees and sold the bundle.
  14. RealGatorFan
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    Those are the things that drag the economy down, not up. For one, minimum wage only drives up prices faster. It doesn't make you wealthier and it doesn't keep up with inflation. If anything, it drives inflation up at a faster clip. With 63% of all businesses in this country being small businesses of fewer than 50 people, if they had to pay their people more money, they will increase their prices. That's 63% of every business in the US. They increase their prices and everyone else follows. Increasing minimum wage isn't only going to effect your lowest-paid employees. You also have to raise everyone else too.

    Unions. Biggest waste of excrement the human race ever created. A completely overblown issue these days propped up by the unions themselves. The only thing remaining in our recession are the union benefits. Why should I have to pay some union member who does a tenth of what I do? I work anywhere from 5 to 40 hours of over time every week without additional pay. Yet, union workers get paid for taking a 60 minute dump.

    My wife went to a conference in New Orleans a week ago and got a great look at what unions really are - dead, useless weight. The conference required everyone to pay $150 per table to rent a table. My wife wanted to buy the same table from Walmart for $50 and set it up herself. Nope, you have to rent it for 3 times the price of buying that same table. Additionally, she unloaded her van by herself because the union guys sitting around wouldn't help because they require $175 - union rules. She embarrassed all of them.

    Why is it that it takes 16 new firefighters to pay for the pension of just 1 firefighter? It's a Ponzi scheme even Madoff would praise. Detroit went bankrupt because they couldn't fund their public pensions anymore. The unions wanted to sue but they just don't get it. Where do you get the money? Steal it? Print more? Hey, the government does it, so why not print more money for our pensions?

    If anything Old, you are the one that brought politics into this. I just brought up why inflation hasn't set in yet.
  15. fubar1
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    A massive debt overhang is what's holding back much faster economic growth.

    And there's no easy answer at the state and local level. The Feds...well, they can just keep printing for a while.

    The states and counties? Gonna be a rough 5-10 years, especially for those who depend on them. Taxpayers in those states will start leaving in droves if bankruptcy doesn't solve the problem or isn't allowed, further contributing to the crisis.

    IL will be the first state to consider bankruptcy...just a matter of time. And the Southern states, including Texas, will continue to see a population influx.

    If GA, FL, TN, etc were smart, they'd institute a $5,000 household tax for anyone moving into their state.
  16. gatordowneast
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    gatordowneast Well-Known Member

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    A toll...I like it. If you are from a liberal state, your toll is $10 K. If you are from a red state, we will wave the toll. We need more people from the south and midwest to balance the obnoxious newww yorkers on the gold coast.
  17. 99gator
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    for those who have expertise....

    how do you protect your money from the market when the bubble bursts (which it will when the fed stops pumping)?

    if you pull it out of the market, where can you put it?
  18. gatordowneast
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    gatordowneast Well-Known Member

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    Move to cash and dollar cost average back in. Wait until market drops 20%, move some money back in. Watch. If market drops again. Buy more. Keep the strategy going until you are fully invested. Remember, on the drops, you are buying stocks/mutual funds "on sale".
  19. Nicho
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    Nicho Well-Known Member

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    I've got news for you. The economy we are dealing with has much more to do with the rise of the internet and disruptive technology in general than the actions of any president. Many traditional jobs are going away and not coming back as a result of greater efficiency brought on by information technology. And most of the folks who lost these traditional jobs do not have the skills to land an IT gig. It's a structural problem. Companies are not thrilled about the prospects of Obamacare, but you can rest assured that it isn't stopping them from hiring skilled tech workers. And even before the internet age, America had long been losing its manufacturing base to other shores. Again, not exactly the fault of BO.

    It's usually nonsensical to attribute a current economic predicament to a current president, no matter that president or his party affiliation. This is one such example. If you want to talk about the future consequences of Obama's legacy, that would be a much more plausible topic.
  20. 99gator
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    thanks.

    i'm a young guy and much of the advice is condescending. i'm young so i have time to deal with the natural rise and fall of the market.

    well, i don't want to hear that. i'd like to avoid the fall (like we saw a few years ago) so that when it rises, i'm in a better position of not having to make back what i lost.

    being young, i don't know if the market has ever been like this. but, have there ever been other periods where the fall of the market was so predictable by so many.

    damn near everyone who isn't a partisan political hack is saying it's a matter of when, not if.

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