Fastest Dow drop in at least 90 years

[DarrinS]

http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aGJ_.gr_awkY


But that mofo sure can deliver a fine teleprompted speech.





March 6 (Bloomberg) -- President Barack Obama now has the distinction of presiding over his own bear market.

The Dow Jones Industrial Average has fallen 20 percent since Inauguration Day, the fastest drop under a newly elected president in at least 90 years, according to data compiled by Bloomberg. The gauge has lost 53 percent from its October 2007 record of 14,164.53, slipping 4.1 percent to 6,594.44 yesterday.

More than $1.6 trillion has been erased from U.S. equities since Jan. 20 as mounting bank losses and rising unemployment convinced investors the recession is getting worse. The president is in danger of breaking a pattern in which the Dow rallied 9.8 percent on average in the 12 months after a Democrat captured the White House, according to data compiled by Bloomberg.

“People thought there would be a brief Obama rally, and that hasn’t happened,” said Uri Landesman, who oversees about $2.5 billion at ING Groep NV’s asset management unit in New York. “It speaks to the carnage that’s in the economy and the lack of confidence in the measures that have been announced.”

A bear market is defined as a decline of 20 percent or more.

Buying shares “is a potentially good deal” for long-term investors, Obama said March 3. He compared daily fluctuations to a tracking poll in politics and said he wouldn’t adjust his policies just to meet market expectations.

Congress last month enacted Obama’s $787 billion package of tax cuts and spending on roads, bridges and public buildings. His 2010 budget indicated the government’s financial rescue may need another $750 billion after an initial $700 billion.

Getting Cheaper

The Dow average has dropped 31 percent since Obama’s election. The 30-stock gauge trades at 8.04 times annual earnings, the cheapest since 1995 and down from 10.06 times on Inauguration Day.

Citigroup Inc. led the plunge, losing 71 percent. The government proposed taking a 36 percent stake in the New York- based bank, cutting the percentage owned by shareholders. Detroit-based General Motors Corp. tumbled 53 percent after the largest U.S. automaker said it needs more government aid.

“It’s the Obama bear market,” said Dan Veru, who helps oversee $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. “We don’t know what the rules are in so many different areas the government is touching.”

The Dow average lost 0.3 percent to 6,577 as of 11:14 a.m. in New York today.

Bank Losses

The U.S. economy contracted at a 6.2 percent annual rate in the fourth quarter, the most since 1982, the Commerce Department said last week. Unemployment jumped to 7.6 percent in January, the highest since 1992, as Americans fell behind on their mortgages and banks seized homes at a record pace.

Losses at financial companies worldwide that grew to about $1.2 trillion sent the Standard & Poor’s 500 Index to a 38 percent retreat last year, the steepest since 1937.

“Prospects for recovery in the financial sector, despite all the government help, still seem rather remote,” said John Carey, who manages about $8 billion at Pioneer Investment Management in Boston. “We’ve had a weak economy for a couple of years, and we aren’t seeing the stimulus working at this point. That is what weighs on investors’ minds.’’

The Dow average took eight months to decline 20 percent following the inauguration of George W. Bush, reaching the level on Sept. 20, 2001, nine days after terrorists attacked the World Trade Center in New York and the Pentagon in Washington.

Herbert Hoover

The crash of 1929 occurred seven months into the administration of Herbert Hoover, who presided over an 89 percent plunge in the Dow between September 1929 and July 1932, the steepest retreat ever.

Only twice has the benchmark gauge slipped in the 12 months after the election of a Democratic president since 1900, after Woodrow Wilson’s victory in 1912 and Jimmy Carter’s in 1976.

The Dow entered its most recent bear market on July 2, 2008, when a 167-point decrease gave it a 20 percent loss from its record 14,164.53 on Oct. 9, 2007. Unlike the Standard & Poor’s 500 Index, the Dow’s rally from its November low of 7,552.29 fell short of a 20 percent bull market gain, ending at 19.6 percent.

“Obama should be listening to the stock market more than talking to it,” said Kenneth Fisher, the billionaire chairman of Woodside, California-based Fisher Investments Inc., which oversees $22 billion. “He hasn’t gotten out of the gate well.”

[ChumpDumper]

It's good to try to pin it all on Obama now. I don't know what else you can do.

Too bad it's not working.

[DarrinS]

It's good to try to pin it all on Obama now. I don't know what else you can do.

Too bad it's not working.



Everyone's 401k's are turning to dust.


YAY!!! OBAMA!!!


We're gonna spread happiness; We're gonna spread freedom; Obama's gonna change it; Obama's gonna lead 'em; We're gonna change it; And rearrange it; We're gonna change the world.

[ChumpDumper]

Everyone's 401k's are turning to dust.


YAY!!! OBAMA!!!


We're gonna spread happiness; We're gonna spread freedom; Obama's gonna change it; Obama's gonna lead 'em; We're gonna change it; And rearrange it; We're gonna change the world.


It's good to try to pin it all on Obama now. I don't know what else you can do.

Too bad it's not working.

[DarrinS]

It's good to try to pin it all on Obama now. I don't know what else you can do.

Too bad it's not working.



Neither is hope.

[ChumpDumper]

You expected everything to turn around less than two months into the presidency?

You are a fool.

Everyone said this would get worse before it got better.

[coyotes_geek]

Obviously it's foolish to try and place all this on Obama. However, this still has to be a pretty significant sign that investors really aren't liking what Obama is pushing.

[ChumpDumper]

Investors don't currently have the best track record in predicting the economy.

[DarrinS]

Investors don't currently have the best track record in predicting the economy.



Well, evidently they aren't predicting growth.

[MannyIsGod]

If I wasn't lazy I'd find my posts last September pointing out that when 2009 came things would be bad at the beginning of the year. It was pretty fucking obvious then so when people like Darrin try to attribute this to Obama I know how smart - or moronic rather - they are. It is like putting on a big red hat with the word DUNCE printed on it.

I just don't get it. Do you think that if Obama hadn't come out with his budget plan the investors would ignore the unemployment reports, quarterly reports, and financial sector troubles?

[ChumpDumper]

Well, evidently they aren't predicting growth.They didn't predict this recession either. That's why they lost all that money in the first place.

[DarrinS]

If I wasn't lazy I'd find my posts last September pointing out that when 2009 came things would be bad at the beginning of the year. It was pretty fucking obvious then so when people like Darrin try to attribute this to Obama I know how smart - or moronic rather - they are. It is like putting on a big red hat with the word DUNCE printed on it.

I just don't get it. Do you think that if Obama hadn't come out with his budget plan the investors would ignore the unemployment reports, quarterly reports, and financial sector troubles?



Note: these aren't my words




“People thought there would be a brief Obama rally, and that hasn’t happened,” said Uri Landesman, who oversees about $2.5 billion at ING Groep NV’s asset management unit in New York. “It speaks to the carnage that’s in the economy and the lack of confidence in the measures that have been announced.”

[LnGrrrR]

So when the economy recovers in 2011, you'll make sure to pin the greatest gain on Obama as well, correct?

[coyotes_geek]

Investors don't currently have the best track record in predicting the economy.

No doubt. It's just an observation that Obama is scaring the shit out of them and that, combined with other factors, is contributing to this decline. That doesn't prove anything one way or the other about whether or not what Obama is doing is good for the economy.

[Bartleby]

“It speaks to the carnage that’s in the economy and the lack of confidence in the measures that have been announced.”

so does that mean the measures went too far or not far enough?

[ChumpDumper]

So what measures would they prefer?

[George Gervin's Afro]

So when the economy recovers in 2011, you'll make sure to pin the greatest gain on Obama as well, correct?

No silly. Conservatives will say the economy turned around in spite of Obama. See conservatives like to have it both ways. They will never give this credit for anything.

[LnGrrrR]

No doubt. It's just an observation that Obama is scaring the shit out of them and that, combined with other factors, is contributing to this decline. That doesn't prove anything one way or the other about whether or not what Obama is doing is good for the economy.

My feeling is that the economy has to contract until supply catches up with demand. There's really nothing anyone can do to change that fact. No matter how great the tax break is, people aren't suddenly going to go buying cars right now, or refitting their house with solar panels, or anything along those lines. You might get a small percentage to respond, but not enough to counteract the contraction.

Who stands to lose the most? Investors. They're the one who are going to see their money supply lose the most on paper, so they're flipping out. The average household that loses 10% of their income probably goes from 70K to 63K. The millionaire has suddenly lose 100gr though. Course they're going to be pissy.

Most normal people can recognize this... that's why they're saving instead of spending. Some financial types are too stupid to recognize this, having spent years living the high life... hence all the 'retreats'.

[MannyIsGod]

:lmao Who thought there would be an Obama rally Darrin? Every economic forcast I read called for no such thing. Please provide me with something that backs up those words, even if they aren't yours.

[LnGrrrR]

No silly. Conservatives will say the economy turned around in spite of Obama. See conservatives like to have it both ways. They will never give this credit for anything.

Of course.

These are the same conservatives that asked for how many Friedman units? That decried 'patience' in dealing with Iraq? And yet they want the President to fix the economy with a magic fucking wand less than two months in office? In the words of Eminem, get the fuck out of here.

[DarrinS]

Of course.

These are the same conservatives that asked for how many Friedman units? That decried 'patience' in dealing with Iraq? And yet they want the President to fix the economy with a magic fucking wand less than two months in office? In the words of Eminem, get the fuck out of here.



Hey, I'm just a selfish conservative waiting to go "all in" again with my stock money. Until this fucker stops free fallin, there's no way in hell I'm moving my money.


Since everyone was so orgasmic over the Obama presidency, I just thought there would be some kind of rally after the inaugural. I'm still waiting.

[MannyIsGod]

link?

[MannyIsGod]

Is it fun to rewrite history Darrin?

[DarrinS]

link?


Just a quick-and-dirty search:


http://articles.moneycentral.msn.com/Investing/SimpleStrategies/if-obama-wins-be-ready-for-a-rally.aspx


By the way, is this how you pronounce "dumbass" if you have a speech impediment? (re: author of the following article)





Editor's note: To view the stock screen mentioned in this column, download the free MSN Money Investment Toolbox.

The world's markets are poised for a broad-based rally with Barack Obama's presidential win.

With U.S. stocks pulling back today after a big Election Day gain, that may seem a bold prediction. But my reasons are simple.

In the short term, at least, stocks respond to sentiment more than fundamentals. For example, even in the face of an oncoming recession, the recent downdraft sank many stocks to prices much lower than justified by their fundamental outlooks.

With Obama's win, the same thing could happen in reverse. Whatever the reality, in many people's minds, the Democrat represents hope for a better future.

That's true globally, not just in the United States. Polls in Russia, Germany, Spain and even China tell the same story. People around the world express optimism that Obama, as president, would change U.S. foreign policy for the better. Further, the win by the Illinois senator proves to many doubters that the American dream is alive and well.

Those positive feelings should be reflected in stock markets, pushing share prices higher in the U.S. and around the world. Eventually, that excitement would diminish, and the market will go back to worrying about how business is going.

Those financial worries are serious, and they could keep the market down. But it's not what I expect. Here's a screen that can help you find stocks likely to participate in an Obama rally.

[coyotes_geek]

My feeling is that the economy has to contract until supply catches up with demand. There's really nothing anyone can do to change that fact. No matter how great the tax break is, people aren't suddenly going to go buying cars right now, or refitting their house with solar panels, or anything along those lines. You might get a small percentage to respond, but not enough to counteract the contraction.

Who stands to lose the most? Investors. They're the one who are going to see their money supply lose the most on paper, so they're flipping out. The average household that loses 10% of their income probably goes from 70K to 63K. The millionaire has suddenly lose 100gr though. Course they're going to be pissy.

Most normal people can recognize this... that's why they're saving instead of spending. Some financial types are too stupid to recognize this, having spent years living the high life... hence all the 'retreats'.

I agree with pretty much all that. No doubt things were going to suck no matter what and obviously the investors are going to be more worried than everyone else. But a lot of that worry comes from Obama spending massive amounts of money and telling everyone that rich people (a.k.a. investors) are going to pay for it all. Investors are also concerned over the government taking ownership stakes in companies. Investors don't want to be business partners with the government, nor do they want to invest in companies who would effectively be business competitors of the government, so staying out entirely is the safest option they have.

[MannyIsGod]

http://www.spurstalk.com/forums/showthread.php?t=110184

Evidence of all those who thought there was an Obama bounce coming.

I see why you say "everybody", Darrin.

[ChumpDumper]

Since everyone was so orgasmic over the Obama presidency, I just thought there would be some kind of rally after the inaugural.Well, you're pretty stupid for thinking that. You should never invest any money if you are that stupid.

[MannyIsGod]

So one guy we've never even heard of? Would you like me to link you what actual respected economists were saying?

[DarrinS]

I agree with pretty much all that. No doubt things were going to suck no matter what and obviously the investors are going to be more worried than everyone else. But a lot of that worry comes from Obama spending massive amounts of money and telling everyone that rich people (a.k.a. investors) are going to pay for it all. Investors are also concerned over the government taking ownership stakes in companies. Investors don't want to be business partners with the government, nor do they want to invest in companies who would effectively be business competitors of the government, so staying out entirely is the safest option they have.


Not only that, but all of us who have 401k's in mutual funds are also affected. I don't know about you, but I don't like losing 20% of my principle every 3 months.

[MannyIsGod]

And as you rag on Obama, I'd like to remind you that John McCain probably still thinks the fundementals of this economy are strong.

[florige]

So when the economy recovers in 2011, you'll make sure to pin the greatest gain on Obama as well, correct?



No the GOP'ers at that point will swear up in down it had something to do with some of their policies that happened to be in the bill.

[DarrinS]

http://www.smartmoney.com/investing/stocks/obama-presidency-will-rally-stocks-briefly-23185/


http://www.associatedcontent.com/article/1167202/stock_bounce_predicted_if_obama_wins.html


http://www.usatoday.com/money/markets/2008-11-30-obama-stock-market-economy_N.htm

[ChumpDumper]

Not only that, but all of us who have 401k's in mutual funds are also affected. I don't know about you, but I don't like losing 20% of my principle every 3 months.1)Are you retiring this year?

2) and this is the big one: were you ever guaranteed a return on your 401k investment?

This is where investors fucked up the worst -- they started acting the investments they were making carried no risk.

[DarrinS]

And as you rag on Obama, I'd like to remind you that John McCain probably still thinks the fundementals of this economy are strong.

I didn't vote for John McCain.


I voted for "that one".

[DarrinS]

1)Are you retiring this year?

2) and this is the big one: were you ever guaranteed a return on your 401k investment?



I'd settle for 0% over -20%.

[balli]

I didn't vote for John McCain.


I voted for "that one".

And I seem to remember you emphatically stating on multiple occasions that you wish you hadn't.

[ChumpDumper]

I'd settle for 0% over -20%.You didn't answer either question.

[RandomGuy]

Investors appear to be less idealistic than you.


Investors always know whats best. Thats why so many of them didn't just lose a shitload of money over the past year.



Please provide the data that supports the assertion that recent stock market declines are primarily due to Obama policy proposals.

The assertion that investors appear to like unicorns is just as supported by available data.

Perhaps you know of some direct causal link that I don't...?

I think conservatives are giving into their collective confirmation bias on this one.

That's ok, I guess, but if you want it that way, then you MUST give credit to Obama when the markets start going up again.

I won't hold my breath on that one.

"Hey I think I can sell some credit default swaps, and make a ton of money, who wants in on the action?"

"Buying stocks on margin is a great idea, where can I borrow some money in order to jump into the market?"

"Hey I think I can sell some credit default swaps, and make a ton of money, who wants in on the action?"

"That Bernie Madoff guy is a genius, here is a few million."

Here's the kicker:

The market does know more than we do, because it is the collective sum of what WE know. That is the defintion of efficient markets. (basic finance/economics theory)

The problem conservatives have in making the case that the markets are ONLY dropping because of what Obama is doing is that there is waaaay more going on at any one time than what the government is doing.

The US governement, compared to the world economy total is rather small, for all of its current spending.

That would imply that whatever Obama does is, by the very definition of efficient markets, far outweighed by whatever else is going on, unless he takes governerment action to extremes far beyond the relatively modest (yes, that's right, I said modest) actions he has proposed.

Anyone who DOES say that the market's reactions are completely due to Obama's actions are simply demonstrating that they don't understand one of the more basic principles of finance.

Further:

Part of the definition of GDP is that it includes government spending (it is the term "G" in the equation that economists use to calculate GDP)

If we double our government's spending, and the total economy STILL shrinks at a 7% annual rate, what does that suggest about what is happening in the rest of the economy?

Fucking ouch is right.

[MannyIsGod]

Darrin, before I go off on you - did you read those articles? If not go back and read them.

[balli]

Holy shit. Cobra'esque.

[DarrinS]

1)Are you retiring this year?


No




2) and this is the big one: were you ever guaranteed a return on your 401k investment?


Of course not.

[ChumpDumper]

No




Of course not.Well alright then.

[RandomGuy]

Darrin, in the end, EVERYONE knew that shit was going to get worse before it got better.

I knew it was going to get worse than what a lot of economists were expecting, and I will tell you that the markets are reacting somewhat to Obama's actions, but his attempts to change the course of the supertanker that is the US economy simply haven't fully had enough time to really do anything yet.

It takes something like 10 nautical miles to turn a super tanker around, if memory serves.

The biggest problem with our financial system is that the extent of losses are yet unknown.

Nothing Obama is doing or could potentially do will really change the underlying nature of most of those losses, and those losses, coupled with unemployment will far outweigh most of the actions of the US gov't in terms of moving the markets in either direction.

[DarrinS]

Darrin, before I go off on you - did you read those articles? If not go back and read them.


Ok, I read them. Are you going to "go off" on me now? LOL.

[MannyIsGod]

That depends, do you still believe they actually make a case for your stupid argument?

Oh, and its really funny you post articles to make an argument without reading them first. Nice.

[DarrinS]

Darrin, in the end, EVERYONE knew that shit was going to get worse before it got better.

I knew it was going to get worse than what a lot of economists were expecting, and I will tell you that the markets are reacting somewhat to Obama's actions, but his attempts to change the course of the supertanker that is the US economy simply haven't fully had enough time to really do anything yet.

It takes something like 10 nautical miles to turn a super tanker around, if memory serves.

The biggest problem with our financial system is that the extent of losses are yet unknown.

Nothing Obama is doing or could potentially do will really change the underlying nature of most of those losses, and those losses, coupled with unemployment will far outweigh most of the actions of the US gov't in terms of moving the markets in either direction.



Ok. That's all pretty reasonable.

Given this amount of uncertainty in the economy, does Obama's massive spending make sense to you?

It's like buying a giant house right now when you now the housing market is shaky at best.

[DarrinS]

That depends, do you still believe they actually make a case for your stupid argument?

Oh, and its really funny you post articles to make an argument without reading them first. Nice.


I didn't see anything in those articles that didn't comport with my OP.

[balli]

Given this amount of uncertainty in the economy, does Obama's massive spending make sense to you?
Jesus. At least make a deficit argument.

[ChumpDumper]

Ok. That's all pretty reasonable.

Given this amount of uncertainty in the economy, does Obama's massive spending make sense to you?

It's like buying a giant house right now when you now the housing market is shaky at best.It's more like having someone else buy a giant house while you are afraid or unable to buy. The effect is a house is sold.

[AntiChrist]

Jesus.


You rang?

[AntiChrist]

It's more like having someone else buy a giant house while you are afraid or unable to buy. The effect is a house is sold.


You've got that right, but we're only buying the homes for those people too irresponsible to pay their own notes.

[ChumpDumper]

You've got that right, but we're only buying the homes for those people too irresponsible to pay their own notes.Damn, darrin -- how can you even walk upright with that little brain capacity? I'm sorry your metaphor sucked in the first place, now you are compounding your stupidity.

[balli]

You've got that right, but we're only buying the homes for those people too irresponsible to pay their own notes.

I'm not going to go find an article about Obama's mortgage rescue plan, but do you seriously not understand that those who irresponsibly got into mortgages they couldn't afford, specifically will not be helped? The housing plan is all about saving the responsible mortgage holders who got fucked over by the irresponsible dead-weight (who again, will not be helped).

Your embrace of mis-information is shocking.

[LnGrrrR]

Not only that, but all of us who have 401k's in mutual funds are also affected. I don't know about you, but I don't like losing 20% of my principle every 3 months.

That is one of the risks of a (relatively) free market.

[MannyIsGod]

I didn't see anything in those articles that didn't comport with my OP.


You really suck at reading then. And you didn't post them to back up your OP, you posted them to back up your argument that everyone expected stocks to rise in the 1Q of this year.


It will probably just be a matter of months before stocks fall from their new highs (http://www.smartmoney.com/investing/stocks/obama-presidency-will-rally-stocks-briefly-23185/?page=2#) — and fall hard.


"If history holds we should expect at least a modest rise in equity prices between election (http://www.associatedcontent.com/topic/31955/2008_presidential_election.html) day and year-end."

Those are from the first 2 articles. They were talkinga bout year end rallys and giving credit for them to the election of Obama. You are talking about 2009 stocks while they are talking about end year 2008 stocks.

And then your last article is about a rally THAT HAD ALREADY OCCURRED.


The Dow has rallied 17% during its current five-session win streak — its best five-session run since 1932. The rallies coincided with Obama-related news and public appearances where he introduced his economic dream team and sent a clear message that he'll do whatever it takes to repair the economy.

[Galileo]

http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aGJ_.gr_awkY


But that mofo sure can deliver a fine teleprompted speech.

good find, DarrinS

[jack sommerset]

Its both partys fault to allow this crap to have happened all these years. Its truly stupid to blame one party or just say "Bush" But thats politics.

For Obama and the Democrats writing and spending a bill that has $600 million to buy more and newer cars for government bureaucrats,$50 million for the National Endowment for the Arts, along with $44 million to refurbish the Department of Agriculture, and $150 million to spruce up the Smithsonian buildings makes this Obamas problem now. Many many more dollars being spent to "stimulate" the economy that even democrats are turning thier heads.

But when you point out Barack said "no ear marks" when there is over 8,000 in this bill you have to hear "BUSH". I'm glad I am not a Democrat or a Republican but a free thinking man who does not choose sides because of my party loyality. Some of you should do the same.

[RandomGuy]

Slash and burn
Mar 5th 2009
From The Economist print edition

Stockmarkets grapple with savage reductions in companies’ dividends


That banks and insurance companies will chop their payments is now understood, but the pain has spread. General Electric (GE) has cut its dividend for the first time in 71 years, Dow Chemical for the first time since 1912. In Europe previously reliable payers like Telecom Italia and Anglo-American, a mining firm, have reduced their payouts, and even BP has said it cannot increase its dividend at today’s oil prices. Income investors were left to ponder Eurotunnel, the operator of the rail link between France and Britain, which will pay the first dividend since its creation in 1986. Its $9m may buy a few tissues for those mourning the loss of $9 billion of annual payouts from GE alone.

...



A share’s value must be the present value of all future dividends—otherwise stockmarkets would be a giant Ponzi scheme. But in theory shareholders should not care whether dividends are paid out today or later. Just as taking money out of a cash machine does not make you richer, nor does extracting cash from a firm you own. Investors who need income to meet pension payments, for example, can raise it just as well by selling a small part of their holdings instead of receiving dividends. It is true that dividends, rather than capital appreciation, have provided a big chunk of long-term equity returns. But this partly reflects the choice of firms to pay out a big chunk of their earnings. Had they paid out less, capital appreciation would, in theory, have been commensurately higher.

http://www.economist.com/finance/displaystory.cfm?story_id=13240730

[RandomGuy]

The main reason why investors are worried is that dividends are a guide to managers’ views of when earnings might reach their trough: they do not want to pay the dividend out of borrowing, or worse, cut it again. Occasionally this floor is breached—in 1933 American earnings per share dropped below dividends. Today, GE has cut its quarterly dividend from 31 cents per share to ten cents. That is partly to reduce gearing, but also suggests managers’ low confidence in analysts’ forecasts for earnings of about 30 cents. Likewise if American dividends fall by a third from their recent peak, then—assuming they set a floor for profits—earnings would bottom out at about two-thirds below the level of 2007. That would be a drop on a par with the 1930s and far below most forecasts. An overblown scenario perhaps, but the scare over dividends suggests that many investors are still too optimistic.

Yikes.

My gut has been saying that it was going to get very bad for a couple of years, and that instinct that it would get worse than a lot of economists were predicting even 6 months ago seems to have panned out.

We just simply spent too much, and saved too little.

We are reversing that, which is better in the long term, but the adjustment will be painful.

[RandomGuy]

Since I brought up efficient markets:


The grand illusion
Mar 5th 2009
From The Economist print edition

How efficient-market theory has been proved both wrong and right

THE past ten years have dealt a series of blows to efficient-market theory, the idea that asset prices accurately reflect all available information. In the late 1990s dotcom companies with no profits and barely any earnings were valued in billions of dollars; and in 2006 investors massively underestimated the risks in bundling together portfolios of American subprime mortgages.

There is now widespread acceptance that investors can behave irrationally, creating very large anomalies. Take the momentum effect, the practice of buying the stockmarket’s best performers over the previous time period. A study by the London Business School found that, since 1900, buying British stocks with the best momentum would have turned £1 into £1.95m (before costs and tax) by the end of last year; the same sum invested in the worst performers would have grown to just £31. In efficient markets, such an anomaly should be arbitraged away.

Belief in efficient-market theory made the authorities reluctant to restrain either the dotcom or the housing and credit bubbles. Perversely, the result has been much greater state interference in the markets than was dreamed of ten years ago, with commercial banks being nationalised or subsidised, and central banks acting as a buyer of last resort for financial assets.

But it is important not to throw out all the insights of efficient-market enthusiasts. Although it is theoretically possible to make money by outperforming the markets, it is extremely difficult in practice. That ought to have made investors suspicious of the smoothness of the returns of Bernard Madoff, who has been accused of a vast fraud. His strategy, as advertised, might have produced less volatile returns than the index, but the absence of negative months suggested almost perfect market timing.

Some fund managers have beaten the markets over long periods. The problem is to identify them in advance. Picking them after they have outperformed may be too late, as those who backed Legg Mason’s Bill Miller have recently discovered. Why is this? Fund managers are human too and subject to behavioural biases. In addition, the larger their funds become (as their reputation spreads), the more difficult it is to outperform.

The temptation has also been to assume that fees are positively correlated with performance—that if mutual fund managers charging 1.5% are good, hedge-fund managers charging 2% (and 20% of performance) are even better. Because investors cannot beat the market in aggregate, all this means is that money is transferred from investors to fund managers. Even David Swensen, the man who led the drive into alternative assets at Yale University, thinks most investors should rely on low-cost index-tracking funds.

But perhaps the area where the efficient-market hypothesis should have had greater weight is at banks. Many lament the demise of old-style banking, the “three-six-three” model where bankers borrowed money at 3%, lent it at 6% and were on the golf course at 3pm. That model broke down because markets were fairly efficient; the margins on lending to corporations became too low.

So banks were attracted to the higher-margin business of investment banking. Commercial banks could use their capital to back up their advisory operations and outmuscle old-style investment banks. The latter duly abandoned the partnership structure and raised money on the stockmarket, or were bought by commercial banks. The same logic required new trading desks to handle the banks’ positions, and those desks quickly became profit centres of their own.

But how were those trading desks making money? Perhaps they were exploiting information gathered by the rest of the group, a tactic that, if not illegal, put them in conflict with their clients. Or they were taking advantage of an artificially low cost of capital. With commercial banks, that cost was low because of the implicit public subsidy provided by deposit guarantees. Without such guarantees, savers would have wanted higher interest rates from banks with trading arms to reflect the risk of a market-related loss. In the good years, when they randomly beat the market, the traders earned bonuses. In the bad years, the taxpayers have picked up the bill.

And that raises a fundamental question. If regulators thought markets were too efficient to interfere with, how come they allowed banks to get involved in an activity which, after bonuses, was a game they collectively could not win?

[DarrinS]

Damn, darrin -- how can you even walk upright with that little brain capacity? I'm sorry your metaphor sucked in the first place, now you are compounding your stupidity.


That was hurtful -- and unnethethary.

http://www.quizilla.com/user_images/A/akemi3167/1056074723_My-Phillip.jpg

[RandomGuy]

God I love the Economist. Those guys rock.

[RandomGuy]

That was hurtful -- and unnethethary.

http://www.quizilla.com/user_images/A/akemi3167/1056074723_My-Phillip.jpg

For what it is worth, I think you are asking a fairly valid question that should be asked, and are getting a bit ganged up on.

I also disagree somewhat with the premise of the OP, as I have made clear.

I would ask simply:

What if he isn't really doing anything wrong, but that bad events have simply moved past his ability to really effect and THAT is what the market is really reacting to?

That is what I think has happened.

I think that no matter what he did or does in the next few months, the markets would be doing the same thing, because the problem has gotten that bad.

[balli]

http://www.quizilla.com/user_images/A/akemi3167/1056074723_My-Phillip.jpg
:lol I loved it when Mike Meyers was still funny.

[DarrinS]

For what it is worth, I think you are asking a fairly valid question that should be asked, and are getting a bit ganged up on.

I also disagree somewhat with the premise of the OP, as I have made clear.

I would ask simply:

What if he isn't really doing anything wrong, but that bad events have simply moved past his ability to really effect and THAT is what the market is really reacting to?

That is what I think has happened.

I think that no matter what he did or does in the next few months, the markets would be doing the same thing, because the problem has gotten that bad.


Or maybe its just time to get a government job?

[jack sommerset]

Or maybe its just time to get a government job?

People may have Government jobs already but don't know it.

[balli]

Actually, around Christmas, I lost about 40% of my hours a draftsman. I recently applied and took a test to be a census worker.

[DarrinS]

I recently applied and took a test to be a census worker.


What's that like?

[balli]

What's that like?

The test? Insultingly simple.

edit: let's just hope the feds aren't into drug testing lowly census workers. Because that would be significantly harder for me to pass.

[PixelPusher]

The DOW knows all...

http://www.thedailyshow.com/video/index.jhtml?videoId=220253&title=the-dow-knows-all

rofl at the DOW plummetting after Truman announces victory in WWII

[cool hand]

companies and there lobbyists are nervous because they are losing clout by the minute......that's all this is.

[Wild Cobra]

That is one of the risks of a (relatively) free market.
Along with the right to fail. The assholes in congress need to stop bailing out their elitist friends. They are making our economy worse.

[Winehole23]

Along with the right to fail. The assholes in congress need to stop bailing out their elitist friends. They are making our economy worse.This is your best post in quite sometime, WC. You might even be right.

[LnGrrrR]

Along with the right to fail. The assholes in congress need to stop bailing out their elitist friends. They are making our economy worse.

Hey, I have no argument there. I didn't have anything in 401Ks, so I was all about letting the banking system tank.

However, I also knew there was no way the boomers were letting that outcome happen.

[Ignignokt]

The DOW knows all...

http://www.thedailyshow.com/video/index.jhtml?videoId=220253&title=the-dow-knows-all

rofl at the DOW plummetting after Truman announces victory in WWII

Wow, excellent source. And the rest of us neanderthals are stuck using the wiki.

[RandomGuy]

Wow, excellent source. And the rest of us neanderthals are stuck using the wiki.

Translation:

"I was unable to actually prove that what they said was wrong, so I will settle for the logical fallacy of ad hominem, because I don't really know how to put together anything that approaches an intellectually honest or logically consistant argument."

'sokay.

Thanks for being a man and admitting that.

[whottt]

I don't really see where Darrin gets off bitching when he voted for Obama. Seriously...

Secondly, the big investors aren't the ones irreparably losing their ass on this, the big investors, who incidentally backed Obama, are the ones crashing it.

The money is going somehwere...it always goes somewhere, where it's going to get the best return. It's just not going into the stock market right now.

It could be going into private investments, in America and elsewhere...could be going into foreclosed real estate...could just be being held as the stock market resets and becomes a buyers market again.

But one you thing you can absolutely certain of, the money hasn't just evaporated...it might change hands(including foreign ones), it might get hidden, but it's still around and it's going to go somewhere, because people that seek to accumulate wealth don't sit around doing nothing with their money...they aren't accumulating wealth if they are doing that.

[Ignignokt]

Translation:

"I was unable to actually prove that what they said was wrong, so I will settle for the logical fallacy of ad hominem, because I don't really know how to put together anything that approaches an intellectually honest or logically consistant argument."

'sokay.

Thanks for being a man and admitting that.


What do i have to prove anyway, You aholes and stewart seem to contend that the dow is like a personal entity that carries it's reputation on deciding good policy, when i believe it's not.

The dow plummeting now has to some do with investors not liking Obamas fiscal policy.

The dow plummeting in WW2 was probably less to do with Truman's Victory (a good thing) but more to do with the fact that the biggest thing that got us out of the depression (ww2) just ended so now a lot of stocks dependent on wartime manufacturing devalued. It was like tjeir own bubble burst.

I don't know what that has to do with Investors being wrong or the Dow Jones being a sort of quasi all knowing politcal being or political indicator.

But i don't claim to know the real reason behind the truman plummet, nor did john stewart provide any reasons for why other than causation.

So forgive me for not wanting to prove a point which has no point.

And seriously, the daily show.... reputable source... ok, i'll use them for academic sources!:rollin:rollin yeah right buddy!!

[clambake]

I don't really see where Darrin gets off bitching when he voted for Obama. Seriously...

Secondly, the big investors aren't the ones irreparably losing their ass on this, the big investors, who incidentally backed Obama, are the ones crashing it.

The money is going somehwere...it always goes somewhere, where it's going to get the best return. It's just not going into the stock market right now.

It could be going into private investments, in America and elsewhere...could be going into foreclosed real estate...could just be being held as the stock market resets and becomes a buyers market again.

But one you thing you can absolutely certain of, the money hasn't just evaporated...it might change hands(including foreign ones), it might get hidden, but it's still around and it's going to go somewhere, because people that seek to accumulate wealth don't sit around doing nothing with their money...they aren't accumulating wealth if they are doing that.

best whottt post ever.

[DarrinS]

I don't really see where Darrin gets off bitching when he voted for Obama. Seriously...


So, if you vote for someone, you can never criticize that person?

[DarkReign]

Obviously it's foolish to try and place all this on Obama. However, this still has to be a pretty significant sign that investors really aren't liking what Obama is pushing.

When did the President become the steward of Wall Street?

Did the nameless, faceless economy listen to every President as intently as it has Obama?

I really dont get the association...at all. I never blamed Bush for the fucking stock market.

Say this sentence aloud..."The President has some control over the stock market."

Now, look in the mirror and say that.

You want to kick Obama in the balls? Look at his budget...plenty of targets in there to shoot at.

I mean, the most you could say is that the Obama Administration is being too pessimistic and this fact somehow discourages investors or trading. Thats the only reach of logic I can come up with, and even that is doubtful.

Whats discouraging trade and investing is the fact that NO ONE IS BUYING SHIT AT THE RATE THEY USED TO. Our GDP was something to the tune of 60% Consumer driven. Most countries/economies strive for the opposite ratio, where less than 40% of the GDP is directly controlled by consumer spending. Seeing as American purchasing power came from lines of credit...well, ta-frickin-DA! Just be happy it isnt worse already because it seems we are far, far from the bottom.

Until a President directly controls the consumption rate of his/her constituency, this really has nothing to do with Obama/Bush. You can blame the cause on previous administrations/congresses, but ultimately, what we're witnessing if the effect.

The inevitable, horrible, unavoidable effect.

[coyotes_geek]

When did the President become the steward of Wall Street?

I never said he was.


Did the nameless, faceless economy listen to every President as intently as it has Obama?

I'm not talking about the economy. I'm talking about the stock market and the investors who make decisions based on their perception of the economy and their perception of what effects the actions of government might have on the economy.


I really dont get the association...at all. I never blamed Bush for the fucking stock market.

Good for you.


Say this sentence aloud..."The President has some control over the stock market."

Now, look in the mirror and say that.

Done and done.


You want to kick Obama in the balls? Look at his budget...plenty of targets in there to shoot at.

I'm not trying to kick anyone in the balls. I'm making an observation and giving a personal opinion that for the most part investors don't like what they're hearing from Obama.


I mean, the most you could say is that the Obama Administration is being too pessimistic and this fact somehow discourages investors or trading. Thats the only reach of logic I can come up with, and even that is doubtful.

When people with perceived influence over the markets speak, the market reacts. That's why whenver Obama or Geitner or Bernake come out and say something positive, the market goes up. Say something negative, it goes down.


Whats discouraging trade and investing is the fact that NO ONE IS BUYING SHIT AT THE RATE THEY USED TO. Our GDP was something to the tune of 60% Consumer driven. Most countries/economies strive for the opposite ratio, where less than 40% of the GDP is directly controlled by consumer spending. Seeing as American purchasing power came from lines of credit...well, ta-frickin-DA! Just be happy it isnt worse already because it seems we are far, far from the bottom.

I agree.


Until a President directly controls the consumption rate of his/her constituency, this really has nothing to do with Obama/Bush. You can blame the cause on previous administrations/congresses, but ultimately, what we're witnessing if the effect.

The inevitable, horrible, unavoidable effect.

You're confusing movement in the economy with movement in the stock market. The economy moves on reality. The stock market moves on the perception of reality. The actions of Obama, Bush or any president has an effect on that perception.

[DarkReign]

You're confusing movement in the economy with movement in the stock market. The economy moves on reality. The stock market moves on the perception of reality. The actions of Obama, Bush or any president has an effect on that perception.

Meh, that post of mine rambled away from the quotation, to be honest. I should have just eliminated the quote all together.

Its this strange perception I have a problem with that says the POTUS has indirect influence on the market. I contend he/she does not. You contend that s/he does.

If the market is prone to this dramatic of a swing based solely or even in large part on the POTUS and his policies, then the market was fucked up and inflated to begin with.

People dont pull their money out of the market because Obama wants to nationalize health care, or create renewable energy sources through taxation. They pull their money out because their investments are taking a beating, which means the companies they invested in are taking a beating. Looking at a 60% consumer-based GDP tells us all we need to know about which companies are taking a beating.

And what, pray tell, does Bush/Obama have to do with the investment practicies of the banking/insurance complex? Not much, save for regulation. But that again is causation.

[RandomGuy]

Whats discouraging trade and investing is the fact that NO ONE IS BUYING SHIT AT THE RATE THEY USED TO. Our GDP was something to the tune of 60% Consumer driven. Most countries/economies strive for the opposite ratio, where less than 40% of the GDP is directly controlled by consumer spending. Seeing as American purchasing power came from lines of credit...well, ta-frickin-DA! Just be happy it isnt worse already because it seems we are far, far from the bottom.

Until a President directly controls the consumption rate of his/her constituency, this really has nothing to do with Obama/Bush. You can blame the cause on previous administrations/congresses, but ultimately, what we're witnessing if the effect.

The inevitable, horrible, unavoidable effect.

There has been a fundamental shift in the savings rate in the US. We are finally paying down our collectively held personal debt, which I think is a good thing in the long run.

Our economy will adjust to this new reality, and we will chug along.

At some point the stock market will stabilize, and those savings will be plowed into stocks, if the savings rate doesn't change.

At that point the cost of capital will drop a LOT for US companies, as a lot of money starts chasing stock shares.

It will be fascinating to see where this all ends up.

[whottt]

So, if you vote for someone, you can never criticize that person?

Sure you can criticize, it just makes you look stupid for voting for him then.

Because there's not a single thing he's done recently that is responsible for the tanking of the market, but rather the fact that he has made it clear that at some point he is going to raise the cap gains tax.

He made this clear...and only an idiot who knows nothing about how interest rates and short and long term cap gains taxes influence the market, would be too stupid to realize this wasn't going to impact the stock market adversely.


The man has never denied or hidden the fact that he is going to raise cap gains taxes at some point.

You think these smart investors are going to keep their money laying around until that happens? While these other smart investors pull their money out? Of course they aren't. That's a ludicrious notion. They pull their money out now so they maximize their profits and shelter their money.

I don't see how anyone worried about the performance of the stock market voted for a guy who ran on a platform of raising cap gains. Raising cap gains likely makes the stock market...not the best place to have your money for the best return. If the stock market is not the best place for money, it's not going to be where the big investors have the majority of their money.


It's not like Obama had a hidden agenda to do this, he stated it pretty honestly, many many times, and that right there meant there was going to be exodus of funds from the stock market.

Wealthy investors are wealthy investors because they don't do stupid things with their money, and leaving your money in a market that's going see an increase in cap gains taxes, is stupid. Even if you aren't worried about the tax, assuming no one else is, is stupid.

This market is not going to come close to performing at the level that it has as over the past 15-20 years long as the looming shadow of a cap gains tax is hovering over it.


It's just stupid for someone who voted for Obama to bitch about this...did you need it tatooed on his forehead that he was going to discourage investing in the market or something?


What's next, you going to be surprised when raising corporate taxes translates to layoffs and is passed down to us by price increases?

IOW, the stock market is not going down because of him, but rather put him in office, so the next time you want to bitch about it...go ahead and go look in the mirror and ask yourself why you were stupid enough to vote for a guy running on a platform of raising cap gains taxes if you were concerned about about the performance of stock market.



:lol what an idiot, it's like you expected this wealthy intelligent investors to leave their money in until Obama hits them with a crushing long term cap gains tax or something :lmao

[RandomGuy]

What do i have to prove anyway, You aholes and stewart seem to contend that the dow is like a personal entity that carries it's reputation on deciding good policy, when i believe it's not.

The dow plummeting now has to some do with investors not liking Obamas fiscal policy.

The dow plummeting in WW2 was probably less to do with Truman's Victory (a good thing) but more to do with the fact that the biggest thing that got us out of the depression (ww2) just ended so now a lot of stocks dependent on wartime manufacturing devalued. It was like tjeir own bubble burst.

I don't know what that has to do with Investors being wrong or the Dow Jones being a sort of quasi all knowing politcal being or political indicator.

But i don't claim to know the real reason behind the truman plummet, nor did john stewart provide any reasons for why other than causation.

So forgive me for not wanting to prove a point which has no point.

And seriously, the daily show.... reputable source... ok, i'll use them for academic sources!:rollin:rollin yeah right buddy!!

Logical fail.

Strawman fallacy
Ad hominem fallacy

I never said that the daily should be cited as an acedemic source, that is your fucktarded distortion.

If the daily show said that the sky was blue, if we simply dismiss whatever they say as false outright, we would then be forced to logically conclude the sky was not blue.

The claims of the daily show, however satirical, either stand on their own or not.

Since you cannot tell me how they are wrong, I can only assume that you cannot do so.

If they could only harness the power of your fail, they could solve the energy crisis.

[whottt]

What's funnier is that there was even an article long ago during the election about how Obama had all his money in tax free munibond funds and other tax shelter investments..That's a neon forecaster if ever there were one. Hell, he might have even made a profit off this, and if he hasn't yet he likely will when it is all said and done.

Basically his economic plan will lead to a transfer of wealth out of this country on several levels...people avoiding taxes, investing in other markets, developing Nations privately, in real estate, corporations relocating their headquarters and manufacturing plants....don't be surprised when all this happens because there were plenty of people on the forum saying this was exactly what was going to happen.

And if that wasn't enough he and Biden had a tax plan to end poverty that was going to transfer a huge porition of our wealth to control under the UN.

That's what I've always meant by saying his backers are externally corrupt, not internally.

But forget about all that, even if there are people that still want to invest in the market(and there will be) it still makes sense to pull a portion of your wealth out now to buffer it from the market decline(and do it with a lower long term cap gains tax in effect).

Why would anyone expect the market to be doing well right now?


I don't even follow the news and I know why it's not doing well. I'd be stunned if it was.


It's still a pretty good time to get into the market if you are going to be in it for a while...lots of companies are going to improve and grow but it's very much a stock by stock case...

[Bartleby]

Not that we're out of the woods yet, not by a long shot. Still, it's encouraging (unless of course it's just a dead cat bounce).


U.S. Stocks Stage Strong Rally on Wall Street Optimism

By Alejandro Lazo
Washington Post Staff Writer
Tuesday, March 10, 2009; 4:49 PM

U.S. stock markets rallied strongly and broadly today, closing up more than 5 percent, as hope on Wall Street spread that the fortunes of some of the nation's largest financial institutions might be turning around.

The surge, which was sparked by morning news that beleaguered financial giant Citigroup had posted profits in the first two months of the year, grew in its robustness throughout the day to touch every sector, from technology companies to utility giants to Detroit automakers.

Although analysts warned that concerns over the economy, housing and credit markets could still imperil any recovery, the scope of the gains led some to hold out optimism that a turning point could be near following weeks of decline.

"There is finally some good news out there for once, and it seems to have gotten the markets rolling on the upside, and we are hopeful we can hold this sentiment," Andrew Brooks, head of stock trading at T. Rowe Price, said. "The selling has been unabated, if you will; one up day does not improve the entire framework, but it sure feels a lot better."

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/10/AR2009031001146.html?hpid=topnews

[whottt]

It's just day trading...you aren't going to see a speech stop the overall trend of the market. As long as there is a cap gains tax increase looming it's going to be a flighty market. People invest in the stock market to make money...not get hit by a wealth tax.

You hurt peoples ability to make money in the market, you hurt the market.

[balli]

People invest in the stock market to make money...not get hit by a wealth tax.
This is the single dumbest argument I've heard lately. If investors are cutting off their own noses over the prospect they might pay a few percentage points more in CG taxes, fuck em.

And furthermore, any monetary gains investors stand to make wouldn't put them into a new bracket as Obama's only going to increases taxes on earnings over a certain threshold.

Like I said the other day, you show me the investor who thinks he can make money in the market, but doesn't because he doesn't want to pay marginally more in taxes on those EARNINGS... And I'll show you a fucking idiot... or whottt.

[clambake]

a few points is a weak argument.

[balli]

5%... back to Clintonian levels I might add. When IIRC, there were plenty of people investing in the markets.

[ChumpDumper]

5%... back to Clintonian levels I might add. When IIRC, there were plenty of people investing in the markets.After an effective rise in the capital gains tax.

Really, if a raise in the capital gains tax could be blamed for killing the market, nobody should have invested in stocks since about 1921.

[clambake]

banks are tacking 2 points on business loans all over the country.

no one is running from that.

[ChumpDumper]

I have a feeling whottt's next response could be a whopper. Anyway it's a little too simplistic to say the capital gains tax rate is the sole determinant in people's investing decisions.

[whottt]

This is the single dumbest argument I've heard lately. If investors are cutting off their own noses over the prospect they might pay a few percentage points more in CG taxes, fuck em.

It doesn't encourage investing in the market.

And no, the stupidest argument ever made is you saying "fuck em", it proves you pretty much know nothing about how the market works.

Why don't you go tell your boss "fuck you" and see if that helps your earnings with him any.



And furthermore, any monetary gains investors stand to make wouldn't put them into a new bracket as Obama's only going to increases taxes on earnings over a certain threshold.

That is quite possibly the stupidest statement ever uttered on a message board.




Like I said the other day, you show me the investor who thinks he can make money in the market, but doesn't because he doesn't want to pay marginally more in taxes on those EARNINGS... And I'll show you a fucking idiot... or whottt.

I can show you a shitload of investors that think a cap gains tax increase will hurt their ability to make money in the market, especially this market. I can just simply tell you to look at the stock market.

Asiude from that, I would be willing to bet I looked at more multi-millionaire portfolios, this moring in 2 hours, than you will look at in your entire life.

[whottt]

banks are tacking 2 points on business loans all over the country.

no one is running from that.


That's really got nothing to do with the stock market.

[whottt]

After an effective rise in the capital gains tax.

Preceded by an effective failing of the savings and loan industry making that no longer the #1 choice. Not to mention the role that the tax changes played in encouraging people to seek out deferred investments, particularly retirment accounts. Beyond all that there was a tech boom where companies drove up the price of their stock just through it's popularity with it's own employees...eye catching gains.





Really, if a raise in the capital gains tax could be blamed for killing the market, nobody should have invested in stocks since about 1921.



I'm not saying the capital gains tax is to blame for killing the market. I'm saying it's discouraging investment in it. And it is.

And it's the number 1 thing about the Obama Presidency that is.

This is not 1990...

[ChumpDumper]

Preceded by an effective failing of the savings and loan industry making that no longer the #1 choice. Not to mention the role that the tax changes played in encouraging people to seek out deferred investments, particularly retirment accounts. Beyond all that there was a tech boom where companies drove up the price of their stock just through it's popularity with it's own employees...eye catching gains. Thanks for fleshing out my point that the capital gains tax rate isn't the sole determinant in people's decisions to invest.


I'm not saying the capital gains tax is to blame for killing the market. I'm saying it's discouraging investment in it. And it is.Investors will get over it, look -- some just did today!


And it's the number 1 thing about the Obama Presidency that is.And that's still pretty far down the list on reasons not to invest.


This is not 1990...Nor is it 1921. Or 1934. Or 1942.

What's your point? I made mine, and you supported it. Thanks again.

[whottt]

I have a feeling whottt's next response could be a whopper. Anyway it's a little too simplistic to say the capital gains tax rate is the sole determinant in people's investing decisions.

I didn't say it was the sole determinant. The sole determinant if there is one, is the attractiveness of the stock market compared to other available investments for your financial livelyhood, and the cap gains tax is hurting that.

It didn't hurt it in 1990, but this really isn't 1990. Back then it was the banks that failed...now it's the banks and the brokerage houses and the auto industry...etc.

And you know...those IRA's aren't going to be near as attractive as they looked in 1990 either.


There are still going to be contrarians that invest in this market, including myself, but we have gotten used to a certain level of performance and without the stock market being the most popular place for your money, it's not going to be performing like it did in the 90's and early part of this decade any time soon...it would also help to have some companies like Microsoft and Dell around...and there aren't any.

About the only thing attractive in the way of new technology is the green stuff and I don't see that having the widespread impact that the PC revolution had.


I mean Chump...why don't you just go take a look at where people are putting their money now...I already know the answer. I was looking at it his morning. It's not the stock market.


These are sparser times...for the past 15-16 years you'd have basically had to have been a complet idiot to be unable to make money in the stock market, especially the late 90's...but this is going to be more like it was before. If you can't pick good stocks...you are going to regret investing in this market. It's not just throw the dart and pick your bullseye like it once was.

[ChumpDumper]

I mean Chump...why don't you just go take a look at where people are putting their money now...I already know the answer. I was looking at it his morning. It's not the stock market.Everybody already knows the answer is "not the stock market." Are you saying you just discovered this and no one else could have possibly known before you posted it?

It's a shitty economy. People will stay out of the market until they think it will be a lot less shitty. I read about it this morning.

[johnsmith]

It doesn't encourage investing in the market.

And no, the stupidest argument ever made is you saying "fuck em", it proves you pretty much know nothing about how the market works.

Why don't you go tell your boss "fuck you" and see if that helps your earnings with him any.







You'd have to be employed to do that.

[whottt]

Everybody already knows the answer is "not the stock market." Are you saying you just discovered this and no one else could have possibly known before you posted it?


Well evidentally all the people that voted for Obama didn't know it.



And if you go look at the sector least impacted by this recent decline...you'll pretty much get the word "tax" stuck up your butt about as far as it can go. Well that and precious metals.

And that's without even taking into account the role it plays in discouraging investment by investors because it's likely to discourage investment by investors, which is a point you and ballijuana seem to be incapable of grasping.



It's a shitty economy. People will stay out of the market until they think it will be a lot less shitty. I read about it this morning.

They'll never come back like it was unless it becomes the best place for their money, and the likely hood of that happening isn't going to be increased with the specter of a capital gains tax looming. It's a negative, not a positive, and this market pretty much has all the negatives it can handle.



And just to win this, because I can, forget about the impact the cap gains has on discouraging investment into the market, WHICH IS THE SOLE DETERMINANT, why don't you and ballijuana go ahead and yank your earnings out of your IRA's...

I mean what hell, it's just a little tax, and no one's worried about that, right?

[ChumpDumper]

Well evidentally all the people that voted for Obama didn't know it.Of course they did. A lot of them have money.


And if you go look at the sector least impacted by this recent decline...you'll pretty much the word "tax" stuck up your butt about as far as it can go.Had that been intelligible, I'm sure it would have been devastating.


They'll never come like it was unless it becomes the best place for their money, and the likely hood of that happening isn't going to be increased with the specter of a capital gains tax looming. It's a negative, not a positive, and this market pretty much has all the negatives it can handle.Yep. Something else will change and the money will come back in again.


And just to win this, because I can, forget about the impact the cap gains has on discouraging investment into the market, WHICH IS THE SOLE DETERMINANT, why don't you and ballijuana go ahead and yank your earnings out of your IRA's...:lol Why don't you start making coherent sentences again. Post again when you aren't high -- and thanks again for proving my point.


I mean what hell, it's just a little tax, and no one's worried about that, right?I'm not at retirement age, so why would I touch my IRA?

[whottt]

Of course they did. A lot of them have money.

Had that been intelligible, I'm sure it would have been devastating.

It was devastating whether you understood it or not.




Yep. Something else will change and the money will come back in again.

Not really true.




:lol Why don't you start making coherent sentences again. Post again when you aren't high.

I'm not at retirement age, so why would I touch my IRA?

Why do you have it an IRA? Must be stupidity...

[whottt]

BTW, this belongs in the above post...wouldn't want to leave you confused and unable to understand what I was saying:


"in"


If you can't figure out where it belongs...let me know and I'll be happy to help.

[ChumpDumper]

It was devastating whether you understood it or not.Not really, you just say stuff to say stuff -- but it's fun to read anyway.



Not really true.Of course it is.



Why do you have it an IRA? Must be stupidity...Because I'm in my thirties and have money. Had you something other than credit care debt, you might understand.

[whottt]

Because I'm in my thirties and have money.

So? Take it out of the IRA and put it in a regular account and don't touch it until you're retirement age...

Thanks for agreeing with me.

PS: Shame on you...there are poor people like myself that could get a meal out of you pulling your cash out of your IRA...hypocrite.



Had you something other than credit care debt, you might understand.

LOL...I have a bunch of shit I didn't spend my own money on, that makes me the smartest of all investors.

[whottt]

I just wish Obama would hurry up and get his ass in gear so you could start paying for my healthcare...it's one of things I'm planning on enjoying the most about his Presidency.

[whottt]

First thing I'm doing when you start paying my health care is seeing if you can get laser hair removal for your face...I hate shaving.

[ChumpDumper]

So? Take it out of the IRA and put it in a regular account and don't touch it until you're retirement age...Why?


Thanks for agreeing with me.You agreed with me first.


PS: Shame on you...there are poor people like myself that could get a meal out of you pulling your cash out of your IRA...hypocrite.Why do you think that is my only investment?


LOL...I have a bunch of shit I didn't spend my own money on, that makes me the smartest of all investors.LOL...Define "a bunch of shit" -- although I guess you just did.

[whottt]

Why?

Why not? Stop being facetious.




You agreed with me first.


I really didn't.



Why do you think that is my only investment?

Link to me saying it was?




LOL...Define "a bunch of shit" -- although I guess you just did.

Hey give it time...it'll probably be worth more than your IRA in 5 years :lmao

[ChumpDumper]

Why not? Stop being facetious.No need.


I really didn't.You didn't think you did.

Probably still don't -- but that's not my problem.


Hey give it time...it'll probably be worth more than your IRA in 5 years :lmaoNot a chance -- it's just a bunch of shit after all.

[whottt]

No need.

Sure...if you don't feel compelled to prove your claim about taxes being a minor nuisance.





Not a chance -- it's just a bunch of shit after all.

Wallstreet is filled with the splatmarks from those who held similar views.

[ChumpDumper]

Sure...if you don't feel compelled to prove your claim about taxes being a minor nuisance.It's a factor, but not the only factor. Thanks again for proving that earlier.


Wallstreet is filled with the splatmarks from those who held similar views.Many more people with similar views made money and more will make money in the future. Don't hate because you can't be one of them.

[whottt]

It's a factor

:lol


but not the only factor. Thanks again for proving that earlier.

Since I was never arguing otherwise, you're welcome, wasn't my intent, and it certainly wasn't my point. But I'm glad you got something out of it, you usually do. If only the stock market were as realiable as you are.




Many more people with similar views made money and more will make money in the future.

And what views are those exactly?



Don't hate because you can't be one of them.

Hey I'm getting into this market. I'm just not getting into it with the foolish delusion that making money simply by being in it is a certainty. Wallstreet is full of the splatmarks of people who held that view....not mine. And it could be decades and well after our lifetimes before people return to the degree they have been in it in recent memory. And a cap gains tax increase isn't going to speed that up any either. It's not going to encourage people to come back. It's not going to encourage them to stay.

Like I said, you'd have to have been an idiot to fail to make money in the market as it has been over much of the past 15-18 years. A true idiot. And that is no longer the case.

Furthermore...I don't where you get off saying that I can't make money in it. I already had a house and a farm totally paid for when I was younger than you are now. I just learned the hard way that money isn't everything...

Spending your entire life a slave in pursuit of a comfortable life the last 15 years of your life is pretty much at the top of my list of ways to completely waste your entire life.

[johnsmith]

Worst "back and forth" EVER!

[ChumpDumper]

:lol



Since I was never arguing otherwise, you're welcome, wasn't my intent, and it certainly wasn't my point. But I'm glad you got something out of it...if only the stock market were as realiable as you are. :lol


And what views are those exactly? That money can be made in the stock market.


Hey I'm getting into this market. I'm just not getting into it with the foolish delusion that making money simply by being in it it is a certainty.Well great, because that was the big problem. Same thing in real estate -- I'm sure you know all about that.


Wallstreet is full of the splatmarks of people who held that view....not mine. And it could decades for people to return to the degree they have been in it in recent memory. And cap gains tax isn't going to speed that up any either.Eh, if you personally could predict the market with any certainty, you would have money because of it.


Like I said, you'd have to have been an idiot to fail to make money in the market as it has been over much of the past 15-18 years. A true idiot. And that is no longer the case.Great.


Furthermore...I don't where you get off saying that I can't make money in it. I already had a house and a farm totally paid for when I was younger than you are now. I just learned the hardway that money isn't everything...:lol I've done with and without money. With is better.


Spending your entire life a slave in pursuit of a comfortable life the last 15 years of your life is pretty much at the top of my list of ways to completely waste your entire life.Of course, your way has to be the absolute best.

Because it's yours.

How could that possibly be disputed?

[johnsmith]

Good lord, when will this get better?

[ChumpDumper]

Good lord, when will this get better?The market or the thread?

[johnsmith]

The market or the thread?

Thread.


Market has a year or two.

[whottt]

:lol

That money can be made in the stock market.

I said money could be made in this market in my first post.

You can make money in any market. You can make money of the market performing badly...but that's not to mean the stock market is doing well.




Well great, because that was the big problem. Same thing in real estate -- I'm sure you know all about that.

Low blow. I never said I was a good salesman...In fact I'm pretty certain I'm one of the shittiest salesmen to ever walk the face of the Earth.

And there is definitely money to be made in Real Estate right now, in fact, that's where the best investment opportunities are right now IMHO.





Eh, if you personally could predict the market with any certainty, you would have money because of it.

Spoken like someone who's never gotten a divorce :lmao






Of course, your way has to be the absolute best.

Because it's yours.

How could that possibly be disputed?

I don't know but people keep attempting to do it...if you figure it out let me know.

[ChumpDumper]

Thread.Never.



Market has a year or two.I've heard that a lot.

[ChumpDumper]

I said money could be made in this market in my first post.

You can make money in any market. You can make money of the market performing badly...but that's not to mean the stock market is doing well. Sure. I'll leave that to the smeagols of the world.


Low blow. I never said I was a good salesman...In fact I'm pretty certain I'm one of the shittiest salesmen to ever walk the face of the Earth.

And there is definitely money to be made in Real Estate right now, in fact, that's where the best investment opportunities are right now IMHO.It's interesting that you take that as an insult, but it wasn't meant that way.


Spoken like someone who's never gotten a divorce :lmaoExactly. The trick was to not get married in the first place and get with someone who had already gone through all that crap.


I don't know but people keep attempting to do it...if you figure it out let me know.If I figure out that your way of life isn't the best way of life for everyone? Done.

[whottt]

Exactly. The trick was to not get married in the first place and get with someone who had already gone through all that crap.

Yeah well...I never said I was an expert on marriage.




If I figure out that your way of life isn't the best way of life for everyone? Done.

No...if you figure out why people keep disputing.

[ChumpDumper]

No...if you figure out why people keep disputing.Lot's of folks have pretty good lives.

[whottt]

Lot's of folks have pretty good lives.

I don't think that's the reason...

[ChumpDumper]

I don't think that's the reason...The reason they keep disputing?

Eh, why not? Other people think they might have an answer too.

[Wild Cobra]

Thread.


Market has a year or two.
The market has longer than that if the democrats keep fucking it up. This could be a second great depression the way they're going.

[Bigzax]

so should i stop contributing to my 401k or not?

[ChumpDumper]

The market has longer than that if the democrats keep fucking it up. This could be a second great depression the way they're going.So they get the credit for any increases too. We'll remember your theory.

[whottt]

so should i stop contributing to my 401k or not?

#1. Never take financial advice from asshats on a message board.

#2. You don't absolutely have to be in the stock market in your 401k, or least, not in the strictest sense, not totally. You've got options...or at least you should.

[RandomGuy]

So they get the credit for any increases too. We'll remember your theory.

You say that as if, when the markets recover and rebound, he would admit that he might have been wrong, and give up his illogical bias.

[Wild Cobra]

so should i stop contributing to my 401k or not?
No.

We are close to the bottom, but the bottom is still illusive. Some day, the markets will return. If I recall, it's about 6800, rebounded a bit. Consider if you invested $1,000 into the market. If they follow the market and go back to say Dow of 14000, these stocks are now worth over $2,000. Buy low. If you wait for the recovery, you wont make the profit. Now of course, this is for long term investing. Not short term.

Since I changed jobs, my old 401k funds have lost about 40% or more and my new investments have been in Security Investments, which have made just under 1%. I'm simply letting the stocks I already have ride it out because I know they will recover. At some point soon, I will roll all those security investments into stocks, and make all my biweekly contributions go to stocks as well. I just haven't decided when is the right time yet. I'm expecting to see below a 6000 on the Dow, but I could be wrong. I actually expect it to drop as low as 5000, but I will place it in at 6000 if it goes that low, so I don't miss a good buying point. If it breaks 7000 however, maybe I'm wrong, and I'll consider putting it in then. It's just hard to say. The market responds fast to democrat policies in the negative, and slow to positive signs. I really think it will still go lower with this congress and president.

[ChumpDumper]

#1. Never take financial advice from asshats on a message board.

[Wild Cobra]

So they get the credit for any increases too. We'll remember your theory.
Should I give them credit for this one day uptick before I see how far it drops again?

The markets have been falling since after the democrats took over congress in 2007 and started instituting their policies. I don't expect to see a recovery until either they see how bad they fucked up, or until the people are fed up with democrats and elect republicans again in 2010. I see a good two years or more of buying stocks at low prices. I just have to figure out when to start buying in.

If by some miracle, the democrats do turn this market around. Yes, I will be dumbfounded and give them credit. I just don't expect it to happen unless they change the approach they have. Their approach is disastrous.

[Yonivore]

I think established wealth -- especially the liberals like Buffet, Welch, et. al.; are trying to put a stop to the madness without looking like the fools they were to support Obama in the first place.

Right now, I think they are trying to stop the madness before He fucks it up even more. So, if there's a turn around, it'll be free marketers who have pinned Obama to the mat.

I won't be anything Obama's done...except fail, of course.

[ChumpDumper]

Should I give them credit for this one day uptick before I see how far it drops again?

The markets have been falling since after the democrats took over congress in 2007 and started instituting their policies. I don't expect to see a recovery until either they see how bad they fucked up, or until the people are fed up with democrats and elect republicans again in 2010. I see a good two years or more of buying stocks at low prices. I just have to figure out when to start buying in.

If by some miracle, the democrats do turn this market around. Yes, I will be dumbfounded and give them credit. I just don't expect it to happen unless they change the approach they have. Their approach is disastrous.:lol

That's a shitload of ignorance stuffed in three paragraphs.

Tell us all what specific policies in 2007 started the decline in stocks.

[ChumpDumper]

I think established wealth -- especially the liberals like Buffet, Welch, et. al.; are trying to put a stop to the madness without looking like the fools they were to support Obama in the first place.

Right now, I think they are trying to stop the madness before He fucks it up even more. So, if there's a turn around, it'll be free marketers who have pinned Obama to the mat.

I won't be anything Obama's done...except fail, of course.Please post your evidence for this.

[Wild Cobra]

:lol

That's a shitload of ignorance stuffed in three paragraphs.

Tell us all what specific policies in 2007 started the decline in stocks.
It's not any particular policy, but the attitude the democrats bring about. Talk of increasing taxes and regulations especially. It has to do with market confidence, and how investors think the laws will change.

[ChumpDumper]

It's not any particular policy, but the attitude the democrats bring about. Talk of increasing taxes and regulations especially. It has to do with market confidence, and how investors think the laws will change.:rollin

[MannyIsGod]

Don't laugh, he's right. I know when I choose my investments I look at political statements before general economic or company indicators. The health of the world financial sector is worth much less to my decisions than what Obama says.