Can someone explain how the DOW is at 14,000 yet the Sky is falling | TigerDroppings.com

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ThaBigFella
LSU Fan
baton rouge
Member since Apr 2006
2043 posts

Can someone explain how the DOW is at 14,000 yet the Sky is falling


I admit I am an amateur investor, a small business owner, and a fairly knowledgable guy. As far as being a small business owner goes, yes my taxes are higher,my workers are making less,my customers are spending less, and as far as I can see all my bills are rising(car insurance,health insurance,phone,cable, you name it, its up)

Can someone please explain to me how the markets are roaring with confidence when it seems to me the average american is making less and less after all bills are paid....for the record this isn't a rant on obama or anything like that. Im just confused on how the stock market is booming like a runaway train back to pre-crash levels when there is so much uncertainty in all aspects of the world....not to mention the more than likely attack on iran coming up soon prob this year with the US deadline of march in place

Can someone explain where all the confidence is coming from?







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Bestbank Tiger
Tulane Fan
Landmass
Member since Jan 2005
19383 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


A couple of possibilities:

- The bailout/corporate welfare culture in DC (everyone but teh ebil teabaggers). The biggest corporations know they're operating risk free because they own the politicians, and they'll get bailed out if they get into trouble.

- The horrible labor market is good for employers. You can offer lower salaries because there are plenty of desperate people willing to do the job for less. You can easily find good people to work below their pay grade. That's like finding a future Hall of Famer in the fifth round. It's like paying for a Pinto and getting a Cadillac. And that extra productivity goes into the company coffers.







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MoreOrLes
LSU Fan
Member since Nov 2008
16633 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


I also believe some of its the fact that maintaining or even increasing profit does not mean higher overall sales and/or growth of a business.







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GimmieSomeGlitter
Ole Miss Fan
GreenBOW ALABAMA!
Member since Aug 2011
491 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


It also has to do with certainty. We know what the tax structure is now. Regardless of it being bad or good.... It's set in stone.







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I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
32070 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


Historically the market always roars back before the economy. If history is any indicator, 2013 could be the start of something good.





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ThaBigFella
LSU Fan
baton rouge
Member since Apr 2006
2043 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


i love bama always read your posts, your a very insightful guy and I just want more info from you bc Im so lost...how is a good thing on the horizon when this is on the horizon....saw this on another forum and thought Id use it here

Lesson#1
*U.S Tax revenue: $2,170,000,000,000
*Fed Budget:$3,820,000,000,000
*New Debt: $1,650,000,000,000
*National debt: $14,271,000,000,000
*Recent budget cuts: $38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

*Annual family income: $21,700
*Money the family spent: $38,200
*New debt on the credit card: $16,500
*Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38,50

I guess maybe its bc im a small business owner and I see things like this as being quite serious...I dont know...just confused about this huge rally, would I be a fool to go long UVXY right now as a hedge against my long positions






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Zach
LSU Fan
Member since May 2005
63339 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


I don't know what the national trend is but since banks are giving ZERO percent interest on savings, I've been buying stock. I venture to guess I'm not the only person with this motivation.





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
12480 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:

I don't know what the national trend is but since banks are giving ZERO percent interest on savings, I've been buying stock. I venture to guess I'm not the only person with this motivation.


I'm buying stock

Some people are buying Real Estate

Some people are buying bonds ,

Some people are buying gold

Some people are buying Bitcoins .

And 1 in every 5.7 people are living on governmental assistance



This post was edited on 2/2 at 10:49 am


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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
120417 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:


Lesson#1
*U.S Tax revenue: $2,170,000,000,000
*Fed Budget:$3,820,000,000,000
*New Debt: $1,650,000,000,000
*National debt: $14,271,000,000,000
*Recent budget cuts: $38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

*Annual family income: $21,700
*Money the family spent: $38,200
*New debt on the credit card: $16,500
*Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38,50

Can your family print money?






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Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
15184 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


The Dow Jones Industrial Average is an index that reflects how the shares of 30 selected companies have traded during a market session. When the average price rises the DJIA rises, and when the average price falls the DJIA falls.

So your real question is why is the average price rising when the economy is performing as poorly as it is? My theory is that it is mainly a matter of supply and demand. Every day there is new money to be invested in our securities markets from retirement plan contributions, and some of that money must be invested in equities. The supply of equities, total numbers of shares of new companies and existing companies, is not increasing at the same rate as the demand for equities. Thus the prices of existing equities are increasing to levels that exceed historic price to earnings ratios.



This post was edited on 2/2 at 11:42 am


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matthew25
Ole Miss Fan
Member since Jun 2012
3364 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


Correct. Where else are you going to invest your money? Money markets are paying .20. Stocks are up 6 plus percent in January.

8% unemployment is the new norm.

When the markets hit 14,000 in 2007, no one worried about the debt. The 30 companies are not affected by the debt.






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Projectpat
Texas A&M Fan
Houston, TX
Member since Sep 2011
5737 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:

would I be a fool to go long UVXY right now as a hedge against my long positions


Whatever you do, avoid the VIX related ETFs/ETNs.






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Ace Midnight
LSU Fan
Ball, LA - Home, Sweet Home
Member since Dec 2006
29304 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


Because the Stock Market is, at best, only a gross indicator of a particular part of the economy, namely equities.

People buy and hold as part of their retirement planning - this creates a floor of demand, regardless of economic conditions. People don't tend to cash completely out of the stock market, even in bear markets - they just get more choosey (or balance with more securities), and therefore, this provides underlying support for equities as well.

Just off the top of my head as to why the stock market isn't collapsing, despite poor overall economic news.

(Also, energy costs have remained fairly stable, largely due to new technologies and improved fuel efficiency in the modern fleet of automobiles - this is both a drag against inflation, and holds the line on many energy-related business costs.)







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Fat Bastard
New Orleans Saints Fan
Paradise
Member since Mar 2009
15649 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:

Where else are you going to invest your money?


RE?

Futures?

Private Lending?

Tax liens?

just a few examples of more than the stock market.






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Fat Bastard
New Orleans Saints Fan
Paradise
Member since Mar 2009
15649 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:

Some people are buying Bitcoins


Wiki just got a stiffy






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
12480 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:

Wiki just got a stiffy


Bitcoins? Someone say Bitcoins?







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ThaBigFella
LSU Fan
baton rouge
Member since Apr 2006
2043 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


Thanks for all the diff views guys





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djmicrobe
LSU Fan
Planet Earth
Member since Jan 2007
1287 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


My wife is self-employed and she has had to lower prices 20% to generate sales. With the discount her sales are still lower than they were in 2010.

The only reason the market is rising is probably due to the fact that the value of the dollar keeps decreasing.






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Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
15184 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


quote:

just a few examples of more than the stock market.
True, but there are retirement plans that have limited investment options like a family of mutual funds. And the mutual funds can't make investments in other than stocks and bonds traded on public exchanges. Think of your typical emopoyer sponsored 401(k) plan. For administrative purposes the types of investments are limited.






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lsuoilengr
Member since Aug 2008
908 posts

re: Can someone explain how the DOW is at 14,000 yet the Sky is falling


Its waaaaaaaay more complicated than anything anyone has written yet.

Are stocks booming - yes
Is the economy shitty - yes

Can I explain it - no






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