The stock market is not the economy

[Clocker]

Many people here, and in the media, point to the booming stock market as a sign that the government's economic policies are working and that the economy is returning to normal. Here is an article, short and to the point, showing why the market and the real economy are not necessarily connected.

The article looks at 3 reasons that the market is doing much better than the economy:

1. The recession forced companies to become more efficient. They are therefore now more profitable with a smaller work force.

2. In the current uncertain environment, many companies find that it makes more sense to use those profits to pay dividends or buy back their own stock than to spend it to expand.

3. Low interest rates make stock more attractive than bonds. This drives up stock prices, and makes borrowing for those companies that do need money to expand harder to get.

[badcompany]

The stock market is a game of accumulation and distribution. As long as the right institutions are long stocks, the market will keep going up, no matter what the economy is doing or who is in the White House.

How many times have you heard that the retail investor is on the sidelines? Yet, I haven't heard a single "expert" on CNBC, Bloomberg or FBN point out that this is a tacit admission that insiders can run up stock prices without the public's participation.

[thaskalos]

When you have companies buying back their own stock, while the Fed is, at the same time, pumping billions of dollars a day into the bond and stock markets...then you have an environment where more money is chasing fewer stocks. Stock prices don't go down in a scenario such as this.

It's nothing but smoke and mirrors...IMO.

[lamboguy]

Originally Posted by badcompany

The stock market is a game of accumulation and distribution. As long as the right institutions are long stocks, the market will keep going up, no matter what the economy is doing or who is in the White House.

How many times have you heard that the retail investor is on the sidelines? Yet, I haven't heard a single "expert" on CNBC, Bloomberg or FBN point out that this is a tacit admission that insiders can run up stock prices without the public's participation.

i have been watching the filing's of the gold miner's recently and have seen that there have been a ton of hedge funds and mutual funds buying them, but suspiciously absent from this has been Fidelity and Wellington. i am waiting to see some serious volume in those stocks before i jump in. today they took apart the gold market and might get it some more one of these nights. that might be the time to jump back in.

[Clocker]

Originally Posted by thaskalos

Stock prices don't go down in a scenario such as this.

It's nothing but smoke and mirrors...IMO.

Exactly. The stock market is not a sign that the economy is growing. It is a sign that the economy is stagnant, and the stock market is the only game in town.

And the Fed has to keep the smoke machine going or the whole thing falls apart.

[badcompany]

Originally Posted by lamboguy

i have been watching the filing's of the gold miner's recently and have seen that there have been a ton of hedge funds and mutual funds buying them, but suspiciously absent from this has been Fidelity and Wellington. i am waiting to see some serious volume in those stocks before i jump in. today they took apart the gold market and might get it some more one of these nights. that might be the time to jump back in.

I took a short position in SLV @21.5 using the 12 day SMA. SLV is now @ 19.14, and over 15% below the 200 SMA.

The only trend I see in the Precious Metals is downward. IMO, a lot of the Hedgefunds are averaging down and throwing good money after bad.

[reckless]

I've never tried timing the market but knowing the way Obama politicizes every single move he makes ... I expect the market to continue to rise until the November 2014.

This rise will 'show' the financially ignorant on the left that Obama is 'good' for the country. These are the same stupid liberals that mostly doesn't have a penny invested in the market and always wails about inequality when a Republican is in the WH and the market rises.

What will happen then, either leading up to the election, or just after... the Federal Reserve will announce no more stimulus monies and no propping of the markets.

This Fed announcement will indeed cause the market to drop.

If this happens days before the election then Obama will say the drop was cause by the possible takeover of both Houses of Congress by Republicans (polling up to the election will have the GOP winning big). The fear factor works well for those parasites on the public dole.

Obama will use this to rally his freeloading base in hopes of salvaging any chance of reversing a potential disaster for the Democrats.

That's my prediction.

If my timing is wrong on Scenario #1, then after the GOP takes over Congress, my Scenario #2 has the Fed stopping the tapering with a huge drop in the market happening.

This now 'forces' the GOP -- against their will -- to bail out all of Obama's friends, cronies and money launderers on Wall Street, such as Goldman Sachs, Citicorp, Warren Buffett's insurance companies, Pimco and the rest of those Democrat Party bundlers and assorted ilk.

[thaskalos]

Originally Posted by reckless

I've never tried timing the market but knowing the way Obama politicizes every single move he makes ... I expect the market to continue to rise until the November 2014.

This rise will 'show' the financially ignorant on the left that Obama is 'good' for the country. These are the same stupid liberals that mostly doesn't have a penny invested in the market and always wails about inequality when a Republican is in the WH and the market rises.

What will happen then, either leading up to the election, or just after... the Federal Reserve will announce no more stimulus monies and no propping of the markets.

This Fed announcement will indeed cause the market to drop.

If this happens days before the election then Obama will say the drop was cause by the possible takeover of both Houses of Congress by Republicans (polling up to the election will have the GOP winning big). The fear factor works well for those parasites on the public dole.

Obama will use this to rally his freeloading base in hopes of salvaging any chance of reversing a potential disaster for the Democrats.

That's my prediction.

If my timing is wrong on Scenario #1, then after the GOP takes over Congress, my Scenario #2 has the Fed stopping the tapering with a huge drop in the market happening.

This now 'forces' the GOP -- against their will -- to bail out all of Obama's friends, cronies and money launderers on Wall Street, such as Goldman Sachs, Citicorp, Warren Buffett's insurance companies, Pimco and the rest of those Democrat Party bundlers and assorted ilk.

I pray that I never craft a sentence such as this...while calling someone else "stupid".

[reckless]

Originally Posted by badcompany

I took a short position in SLV @21.5 using the 12 day SMA. SLV is now @ 19.14, and over 15% below the 200 SMA.

The only trend I see in the Precious Metals is downward. IMO, a lot of the Hedgefunds are averaging down and throwing good money after bad.

I laugh when those experts on Bloomberg, Fox and CNBC talk about a 'bubble' in the stock market as I heard at least 3-4 times this past week alone.

It is true that the Dow Jones and S&P 500 are way, way up off their 2009 lows, but all the other investment vehicles -- gold, silver, oil, housing -- are down, and retail sales are actually cratering.

In a 'bubble' environment this scenario usually doesn't happen.

Good luck on your SLV position, badcompany.

[reckless]

Originally Posted by thaskalos

I pray that I never craft a sentence such as this...while calling someone else "stupid".

What was ill-crafted??

Since you quoted the entire post of mine, I guess you confuse whole paragraphs as sentences... if so, you should be careful on calling people stupid.

[davew]

The Dow Jones is a joke - they keep changing their stocks in the industrial average getting rid of poor performers and adding good ones. Does anyone know where I can find a list of the stocks they have changed in the last 50 years?

[thaskalos]

Originally Posted by reckless

What was ill-crafted??

Since you quoted the entire post of mine, I guess you confuse whole paragraphs as sentences... if so, you should be careful on calling people stupid.

You can't see the sentence in the bold letters?

Is this how you plied your craft when you were a newspaperman?

[Clocker]

Originally Posted by reckless

I laugh when those experts on Bloomberg, Fox and CNBC talk about a 'bubble' in the stock market as I heard at least 3-4 times this past week alone.

It is true that the Dow Jones and S&P 500 are way, way up off their 2009 lows, but all the other investment vehicles -- gold, silver, oil, housing -- are down, and retail sales are actually cratering.

In a 'bubble' environment this scenario usually doesn't happen.

A bubble is a run-up in prices in a sector or commodity not supported by real values or general business growth. The housing bubble was supported by easy mortgages and low interest rates. A lot of people consider the current stock market to be a bubble, supported by the factors described in the link, without regard to the long term worth and profitability of the companies. The fact that other investments are not going up in step with stocks is a strong indication that it is a bubble.

[Saratoga_Mike]

Where are the following metrics today versus 4 yrs ago?

1) Weekly jobless claims
2) The number of private sector jobs
3) The median house price
4) S&P 500 earnings
5) Auto sales
6) The deficit as % of GDP

Are we experiencing a roaring economy? Absolutely not, but to deny the improvement over the past four years is nonsense.

[lamboguy]

Originally Posted by badcompany

I took a short position in SLV @21.5 using the 12 day SMA. SLV is now @ 19.14, and over 15% below the 200 SMA.

The only trend I see in the Precious Metals is downward. IMO, a lot of the Hedgefunds are averaging down and throwing good money after bad.

it looks like gold is going to $1050 now.