Dow

[oakranger]

Here we go again, in the red -268.14   -2.61% 

This economy will never recover!   

[skernsk]

See Rule #14

[Saurdaukar]

Here we go again, in the red -268.14   -2.61% 

This economy will never recover!   

We are a long, long, long way off from "recovery." 

At present course, the next 36 months (politics ignored) will be rough sailing and I expect it will get worse before it gets better.  We're only delaying the inevitable.  Losses need to be taken - only then can a real recovery begin. 

Currently, the only thing we are doing is masking the problem; giving more drugs to a drug addict to combat the symptoms of withdraw.

[oakranger]

We are a long, long, long way off from "recovery." 

At present course, the next 36 months (politics ignored) will be rough sailing and I expect it will get worse before it gets better.  We're only delaying the inevitable.  Losses need to be taken - only then can a real recovery begin. 

Currently, the only thing we are doing is masking the problem; giving more drugs to a drug addict to combat the symptoms of withdraw.

Yep, it will create more job looses.  I guess we still have not learn from the 1930s and the past two years.

[eagl]

You are confusing the market with the economy.

[cattb]

I havn't looked at the charts for awhile but look at the DOW going into the great depression and look at the charts now. I hope we don't go for the second fall

[Jayhawk]

You are confusing the market with the economy.

Shortest post I have ever seen from you.   

[Saurdaukar]

I havn't looked at the charts for awhile but look at the DOW going into the great depression and look at the charts now. I hope we don't go for the second fall

Tip of the ice burg.

Look at the ratios of buying and selling/short positions and long positions; debt to GDP; index rallies to corporate performance; so on and so forth.  Instead of comparing them to historical occurrences; consider that none of the math is right and the basic fundamentals of economics are not being reflected in the results.

You pump funny money into the system, you get funny results.  Any currently-perceived improvement being reported is pretty much bogus. 

I really hate to be a doom and gloomer; but we're in bad shape and, frankly, we're being fed garbage in the media.

The next shoe to drop will be the Fed's reluctance to purchase (with fake money) mortgage-backed securities (with fake values) from banks (which were mandated by the government to lend to unqualified borrowers in teh first place) due to inflation risk.  Inverse relationships will result in an increase in mortgage rates, which will trigger a drop in home sales activity, which will trigger a drop in home values, which will repeat the fun of 2008 all over again.

And this time, it wont be limited to the residential sector.  CapMark (aka GMACCM) filed for Chapter 11 in October last year.  They are one of the largest servicers of CMBS loans in the world and if *they* are filing, that means they ain't getting payments (ex-employee; guess KKR and GS did me a favor...).

Greenspan, Bernanke, Geithner and Paulson should be drawn, quartered and dragged through the streets of Washington DC.

Our economy is a house of cards held together by a phantom system of credit and debt.  Compared to 50 years ago, we dont produce anything and we dont provide any service.  We make money with money.

The model is unsustainable and the current policies designed to "fix" the economy are akin to throwing more wood on a fire in an attempt to deprive it of oxygen.  Good luck.

[AKHog]

Replying to Saurdaukar,

So what do you suggest the middle class working man do with what little savings and investments to best weather the storm?

Is it time to pull everything out and stash it under the mattress? I wish I would have done that 2 years ago!

[Nefarious]

Kind of off topic... Interesting Fictional Web story.

Author claims he is finishing the blovel before the fictional date in the story. (End of February, 2010). Check it out, pretty good.

http://johngaltfla.com/blog3/2009/11/18/the-day-the-dollar-died/

[Saurdaukar]

Replying to Saurdaukar,

So what do you suggest the middle class working man do with what little savings and investments to best weather the storm?

Is it time to pull everything out and stash it under the mattress? I wish I would have done that 2 years ago!

I avoid giving financial advice as I am not a PFA.

What I will say is that *I* have not reallocated *my* (read: this is not financial advice) assets in any significant fashion.  Like everyone else, I took a big hit when the market tanked.

I made an attempt to hedge those losses by taking long positions in mid-cap companies near the bottom and shorting energy stocks near the top.  The attempt, likely attributable to 80% luck and 20% Jedi force powers, appears to have mitigated the damage.

In concert with this, I am paying off high-interest debt.

FDIC-insured accounts are plenty safe, but they never beat inflation so its a net loss at the end of the day - still better than Mattress Bank & Trust Co., NA, as their interest rate is 0.00%.

I'll scream about the current economic policies until Im blue in the face, as a citizen, but if you want financial planning advice, I would seek counsel from someone licensed to give it.

[AKHog]

I would advise seeking counsel from someone licensed to give it.

I was for years and to think where it has gotten me...

[DREDIOCK]

You are confusing the market with the economy.

could be. Well ok is.

But I've noticed that my business has this really nasty habit and tends to go up and down with the DOW.
When the DOW goes up. My phone rings with potentials and usually I get more work.  I had more phone calls with the last rally last week then I've had in the last 6 months
When the DOW tanks or just goes down. So do the number of my phone calls and the cancellations rise.

From a business standpoint I think the economies of a lot of businesses and the services type businesses in particular are more closely tied to the markets performance then people care to recognize or maybe even realize. Our customers often have alot of money in the markets. When the markets are doing well. These people tend to be more willing to spend. When the markets go down. They tend to clamp down tighter on their money then the legs Christain virgin on Saturday night.

Like the markets. Much of it seems to do with emotion of good news/bad news. Because even if their stock is doing well. It makes them nervous that theirs might be next.

I like to call small service oriented businesses like myself a good indicator species. Things tend to effect us first as people tend to cut out the extras on their spending.

Last year for example before the market tanked (08-09)I was already feeling it bad. I had a dropoff over the previous year from GREAT. to good. to ok. Then I had a super busy July, Followed by an August which was literally dead for new business and stayed that way. Just before the markets took their nose dive I had several outright cancellations. A mini rush in Jan 09 kept me alive It was a looong cold winter. Things improved a but withthe spring and summer and this past fall. But still nothing I would call banner. Comming of winter things were better then last winter (the tradtitional slow months) I've had some calls in.

If you look at this graph of the DOW. and the large to moderate rises and drops It mirrors how my business has been almost exactly. With the last surge I had a bunch of calls and prospects that look real good as well as business I've now secured. Barring the unforseen. Im looking to be ok for the next month or so. I couldnt say that as recently as 3 weeks ago when I wasnt sure what I was doing next week let alone the next month.

http://finance.yahoo.com/echarts?s=^DJI#chart1:symbol=^dji;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

From my prespective. Things ARE starting to get better. We are a long way from great but things do seem to be easing jussst a little bit at a time.
IMO the single largest problem we have right now is still consumer spending. They aint doing enough of it. That in itself is doing more then its share to hold things down. and in a way people are sealing their own doom by not spending as it becomes a self perpetuating problem.

[Saurdaukar]

IMO the single largest problem we have right now is still consumer spending. They aint doing enough of it.

I agree.  Problem is... I also think it's the flaw in the model.  The system appears to be dependent upon a level of consumer spending which can only be achieved by taking on additional consumer debt.  This is unsustainable.

[sluggish]

Precious metals.  I bet all of you wish you would have bought a couple of pounds of gold ten or fifteen years ago.  There are talks of gold doubling again in the next two yeras.