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re: Can someone explain how the DOW is at 14,000 yet the Sky is falling
Posted on 2/2/13 at 11:38 am to ThaBigFella
Posted on 2/2/13 at 11:38 am to ThaBigFella
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.
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 2/2/13 at 11:42 am
Posted on 2/2/13 at 12:02 pm to Poodlebrain
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.
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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