JTF.ORG Forum
General Category => General Discussion => Topic started by: edu on July 17, 2011, 04:36:52 AM
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Obama's irresponsible spending policies are threatening the US economy with financial ruin and hurt me personally by making the dollar weak against the Israeli Shekel. I also have relatives that still live in the USA.
The question is does JTF have a position on what to do about, the upcoming debt ceiling vote, where if they don't vote to raise the debt ceiling, and the government defaults on its payments, Obama will try to make the demagogic statements that the short term financial costs (caused by a downgrading of the USA credit rating and the upping of interest costs ) and threats to popular Government Programs are the Republicans' Fault. And based on past history, the political commentators think he will be successful in the Blame Game.
But if the Republicans do vote for approving more debt and taxes, they will further sink the economy in the long run and might split the republican party into 2 in the next election which would also probably allow Obama to win.
To Sum up the question, What can be done to make Obama a loser out of this debt crisis or at least what can be done to prevent him from winning?
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I don't think there would be a default on US debt because there are enough tax revenues and don't forget the government can still issue new bonds in the same amount of bonds that reach maturity. Obama might be just crazy enough to play with the idea of defaulting on the debt and anyway he wants to destroy the US economy but he still wants to get re-elected so I don't think he would actually dare not paying bonds.
If the debt ceiling isn't raised I think Obama might try to issue IOUs and use them to pay a portion of the salaries to government employees and a portion of the benefits like Medicare and Medicaid.
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It would not be a first time defaulting. When government borrows this increases the demand for funds and thus pushes up interest rates. So the larger the federal deficit-the higher the level of interest rates. Treasury securities have no default risk premium. Common rule, interest rates up-bond prices down.
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I think there needs to be an increase in the debt ceiling. Otherwise the government would need to balance the budget immediately since it cannot borrow any more. While that sounds appealing the deficit is so large as a percentage of the budget it could not be eliminated in an orderly manner immediately. I like the concept that has been raised of allowing a short term increase in the debt with equal and corresponding immediate cuts in spending.
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I'm gonna go out on a limb here and make a prediction of what's going to happen.
The deadline to raise the debt ceiling is August 2. Now I don't know if it will go right up to the wire on the very last day, but perhaps it will. For sure it will extend into the next two weeks and we will all hear about how obama this and republicans that, and the world is falling apart.
The Republicans and obama will be jockeying with one another trying to arrange the best possible deal. The media will get more and more crazed as the time goes on and we get close to the deadline. The stock market will fall by a few hundred points and fear mongering will reach all-time highs. Afterall, the sky is falling. Then at the last moment, the "heroic" politicians in congress will step in and save the day by reaching an agreement, and the media will have a big celebratory orgy, and the stock market will rally like Obama just saved the world from extinction, as they just escaped having the US AAA credit rating lowered by Standard and Poor and Moody's at the very last minute. And the final deal will include a raise of the debt ceiling coupled with a cut in spending and potentially some type of tax reform but what that will be remains to be seen. But the main portion of the "deal" is legislated cuts in spending coupled to debt ceiling increase.
Take it to the bank. I highly doubt they will let us default, it would be a disaster for the economy to have our credit rating lowered. Everyone says the republicans watch out for the rich, well if that's the case, they know that the pockets of every rich person will be hit hard if the stock market falls, and it certainly will if US credit rating is lowered. Of course, due to all the "fear" and "uncertainty" it will definitely fall in the leadup to any deal.
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Edu, the problem is that if Obama gets what he wants he will obviously be the winner, but if the Republicans hold their ground (fat chance), the media will demonize them to the hilt and succeed in making Obama out to be this magnanimous, bipartisan victim who was thwarted by the cruel, callous right wing.
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I'm gonna go out on a limb here and make a prediction of what's going to happen.
The deadline to raise the debt ceiling is August 2. Now I don't know if it will go right up to the wire on the very last day, but perhaps it will. For sure it will extend into the next two weeks and we will all hear about how obama this and republicans that, and the world is falling apart.
The Republicans and obama will be jockeying with one another trying to arrange the best possible deal. The media will get more and more crazed as the time goes on and we get close to the deadline. The stock market will fall by a few hundred points and fear mongering will reach all-time highs. Afterall, the sky is falling. Then at the last moment, the "heroic" politicians in congress will step in and save the day by reaching an agreement, and the media will have a big celebratory orgy, and the stock market will rally like Obama just saved the world from extinction, as they just escaped having the US AAA credit rating lowered by Standard and Poor and Moody's at the very last minute. And the final deal will include a raise of the debt ceiling coupled with a cut in spending and potentially some type of tax reform but what that will be remains to be seen. But the main portion of the "deal" is legislated cuts in spending coupled to debt ceiling increase.
If the markets were worried about default, ten year treasuries would not be trading at 2.9%
Take it to the bank. I highly doubt they will let us default, it would be a disaster for the economy to have our credit rating lowered. Everyone says the republicans watch out for the rich, well if that's the case, they know that the pockets of every rich person will be hit hard if the stock market falls, and it certainly will if US credit rating is lowered. Of course, due to all the "fear" and "uncertainty" it will definitely fall in the leadup to any deal.
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I'm not a politician, but I am guessing that Obama won't budge. He has convinced himself early on, that the only way to 'create jobs' is to continue to spend and spend.
Remember, Obama said that the reason the New Deal didnt work, was that FDR didnt continue to spend, so he blames FDR's spending reductions in 1937 for putting us back in the depression. So he will try and double down rather than reduce spending... so any of his pseudo-deficit reduction measures will always involve increasing taxes but will only involve token decreased spending.
Also, if we end up becoming Greece in a few years, the media and institutions will blame everyone else but Obama, so he's not worried about being blamed for our country's woes; Its Bush's fault.
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I see it this way also...
Although I don't want something bad to happen, I think something bad needs to happen to really get rid of Obama. I hope agreements do not fall through because Obama will take credit for it later on.
And yes, there would be a depression of some sort, but better now than a much worse one later.
I'm gonna go out on a limb here and make a prediction of what's going to happen.
The deadline to raise the debt ceiling is August 2. Now I don't know if it will go right up to the wire on the very last day, but perhaps it will. For sure it will extend into the next two weeks and we will all hear about how obama this and republicans that, and the world is falling apart.
The Republicans and obama will be jockeying with one another trying to arrange the best possible deal. The media will get more and more crazed as the time goes on and we get close to the deadline. The stock market will fall by a few hundred points and fear mongering will reach all-time highs. Afterall, the sky is falling. Then at the last moment, the "heroic" politicians in congress will step in and save the day by reaching an agreement, and the media will have a big celebratory orgy, and the stock market will rally like Obama just saved the world from extinction, as they just escaped having the US AAA credit rating lowered by Standard and Poor and Moody's at the very last minute. And the final deal will include a raise of the debt ceiling coupled with a cut in spending and potentially some type of tax reform but what that will be remains to be seen. But the main portion of the "deal" is legislated cuts in spending coupled to debt ceiling increase.
Take it to the bank. I highly doubt they will let us default, it would be a disaster for the economy to have our credit rating lowered. Everyone says the republicans watch out for the rich, well if that's the case, they know that the pockets of every rich person will be hit hard if the stock market falls, and it certainly will if US credit rating is lowered. Of course, due to all the "fear" and "uncertainty" it will definitely fall in the leadup to any deal.
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Secular believer I think the default possibility is weighing heavily on equities market even tho it won't happen. And if they merely use it as an excuse for what happens with the market rather than being an actual fear the result is the same.
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Secular believer I think the default possibility is weighing heavily on equities market even tho it won't happen. And if they merely use it as an excuse for what happens with the market rather than being an actual fear the result is the same.
The equity markets are doing quite well for something weighing on them.
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I'm not a politician, but I am guessing that Obama won't budge. He has convinced himself early on, that the only way to 'create jobs' is to continue to spend and spend.
Remember, Obama said that the reason the New Deal didnt work, was that FDR didnt continue to spend, so he blames FDR's spending reductions in 1937 for putting us back in the depression. So he will try and double down rather than reduce spending... so any of his pseudo-deficit reduction measures will always involve increasing taxes but will only involve token decreased spending.
Also, if we end up becoming Greece in a few years, the media and institutions will blame everyone else but Obama, so he's not worried about being blamed for our country's woes; Its Bush's fault.
According to every national poll Obama is probably right-on when he takes this attitude. The vast majority of Americans blame Bush, who has been out of office for nearly three years, rather than the Muslim, for America's woes.
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The equity markets are doing quite well for something weighing on them.
lol, well they were down 2% the day after I wrote my original post, but yeah today the market was flying high. Maybe it's really being ignored afterall. Seems the great bull market continues.
Also, let's not ignore the fact that the media hyped obama's official "deficit reduction proposal" as today's reason for the market's movement.
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High tech stock are overvalued. Just remember internet bubble. :'(
It was in news other day that the Facebook is wort 80 billion!! Based on what statistics? Revenues of estimated 2 billion? At least before an IPO smart people state honestly what they think stock would be worth so the underwriter has a clue on pricing. Do not fool yourselves, the Apple is worn out and overvalued stock. It was already taken advantage of.
My suggestion-look elsewhere to invest, China, India, Vietnam, Indonesia. Only problem could be the language barriers while trying to get correct information to predict, find out about management, or even accounting for some important ratios.
If we all stick here for the next two years we will probably comment on the upcoming bubble and its negative effects.
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High tech stock are overvalued. Just remember internet bubble. :'(
It was in news other day that the Facebook is wort 80 billion!! Based on what statistics? Revenues of estimated 2 billion? At least before an IPO smart people state honestly what they think stock would be worth so the underwriter has a clue on pricing. Do not fool yourselves, the Apple is worn out and overvalued stock. It was already taken advantage of.
My suggestion-look elsewhere to invest, China, India, Vietnam, Indonesia. Only problem could be the language barriers while trying to get correct information to predict, find out about management, or even accounting for some important ratios.
If we all stick here for the next two years we will probably comment on the upcoming bubble and its negative effects.
Ipos in general are being overrated right now and facebook is more like social media than high tech. I do get your point, however apple just had its greatest quarter of profits ever and the PE ratio isn't even high so its hard for me to agree that apple is overpriced even if it is very expensive and anyone who hasn't invested in it up this point seems to have missed a huge growth period. Still google sits at 600 dollars so what is going to stop apple? Everything they do is gold people simply love their products and they sell like hotcakes. They are industry leaders innovators and gamechangers. I strongly disagree. This is not some 2-bit internet company with no business model that gets h"yped just cause". Like so many internet companies were in the tech bubble.
I also strongly disagree when you say to invest overseas. I will take warren buffets advice which he gave in the heart of the market crash in 2008 - buy anerican. The greatest companies are american ones, and if you are really looking for growth get into an american company that is expanding to emerging markets like china and india and selling its wares there.
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Ipos in general are being overrated right now and facebook is more like social media than high tech. I do get your point, however apple just had its greatest quarter of profits ever and the PE ratio isn't even high so its hard for me to agree that apple is overpriced even if it is very expensive and anyone who hasn't invested in it up this point seems to have missed a huge growth period. Still google sits at 600 dollars so what is going to stop apple? Everything they do is gold people simply love their products and they sell like hotcakes. They are industry leaders innovators and gamechangers. I strongly disagree. This is not some 2-bit internet company with no business model that gets h"yped just cause". Like so many internet companies were in the tech bubble.
I also strongly disagree when you say to invest overseas. I will take warren buffets advice which he gave in the heart of the market crash in 2008 - buy anerican. The greatest companies are american ones, and if you are really looking for growth get into an american company that is expanding to emerging markets like china and india and selling its wares there.
The Dow Jones should NOT be used as a metric of our economy!!!
Firstly, The dollar is incredibly low compared with many foreign currencies, so many U.S. multinational companies have seen their international revenue go way up as the dollar has declined. This is not real growth, its just changing the metric used to measure the value of revenue/profit. Its not that they are making more money, its that each time the fed prints money, it makes it appear that they are. Its sorta windowdressing. And if the Dow Jones used Euros, Pounds, Yen, there would be almost no appreciation in the last few years.
Also, the Dow Jones was at nearly 13,500 a few months before the crisis in 2008 occured. This was at a time when all indications were that the housing bust was in full force, so why was it still so high? The answer is that the market is not very good at long term Macro Economics, and hasnt been for quite some time.
Finally, people are so desperate for any return, since the Fed has relentlessly pushed interest rates to near zero, so investors are looking to large, dividend producing stocks (The kind that the Dow Jones is overrepresented with).
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The Dow Jones should NOT be used as a metric of our economy!!!
I didn't say it should be. I'm just talking about the stock market because he brought up IPOs and tech stocks.
However, when the Dow goes down significantly, so does just about every stock. Which means, so does just about everyone's pension, IRA, 401K, and private investment accounts. Less money in the accounts etc is less money to spend and bad for economy, as any simple logic dictates.
Also, the Dow Jones was at nearly 13,500 a few months before the crisis in 2008 occured. This was at a time when all indications were that the housing bust was in full force, so why was it still so high? The answer is that the market is not very good at long term Macro Economics, and hasnt been for quite some time.
This probably explains why the market didn't really pull back much until today. But now the fear is really setting in.
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Fear over debt fight hits Wall St.; Dow loses 198
Dow falls almost 200 points as fear about debt deadline extends to Wall Street
http://finance.yahoo.com/news/Fear-over-debt-fight-hits-apf-2048188094.html?x=0&sec=topStories&pos=main&asset=&ccode=
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It seems he may actually get a second term.
As disgusting as he is.
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Ipos in general are being overrated right now and facebook is more like social media than high tech. I do get your point, however apple just had its greatest quarter of profits ever and the PE ratio isn't even high so its hard for me to agree that apple is overpriced even if it is very expensive and anyone who hasn't invested in it up this point seems to have missed a huge growth period. Still google sits at 600 dollars so what is going to stop apple? Everything they do is gold people simply love their products and they sell like hotcakes. They are industry leaders innovators and gamechangers. I strongly disagree. This is not some 2-bit internet company with no business model that gets h"yped just cause". Like so many internet companies were in the tech bubble.
I also strongly disagree when you say to invest overseas. I will take warren buffets advice which he gave in the heart of the market crash in 2008 - buy anerican. The greatest companies are american ones, and if you are really looking for growth get into an american company that is expanding to emerging markets like china and india and selling its wares there.
Can you name American companies in which you would invest as of today?
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apple google microsoft amazon, many biotech/pharmaceutical companies.
The stocks I named individually are winners for a reason.
You say as of today, I hope that's in the general sense. Any buying should be timed appropriately, for instance maybe after the debt crisis is averted aug 2nd. Technical analysis can help with that too.
If the market crashes or enters a bear market, its of course all for naught. All the ships get pulled down. But other than that, in either a bull market or volatile market going up and down, those are some of many companies I would trade. Personally I like the companies with a strong footing in the smartphone market. I also like biotech companies because I have some expertise in the science behind the products. What can I say, I do not know chinese companies (or other foreign ones), and when the market crashed in 08, the foreign markets fell too. And in the rebound, the American one has outperformed the foreign ones. Although I knew of a fraudulent company called "China Biotics" which voluntarily delisted itself after losing like 70% of its price or something when it was found that there was something fraudulent in their earnings report.
What are these amazing foreign companies that you are into?
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I believe that there is still strength in the Tech stocks... Judging from the employment prospect {there are many good high-tech jobs out there} I think that there is a lot of good development going on despite the poor outlook.
http://articles.latimes.com/2011/jul/23/business/la-fi-california-jobs-20110723
Silicon Valley did even better, with Santa Clara and San Benito counties adding a combined 8,300 jobs. A tech boom is lighting up the area, where venture capitalists are pouring money into start-ups, office rents are rising and more new cars are popping up in employee parking lots.
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apple google microsoft amazon, many biotech/pharmaceutical companies.
The stocks I named individually are winners for a reason.
You say as of today, I hope that's in the general sense. Any buying should be timed appropriately, for instance maybe after the debt crisis is averted aug 2nd. Technical analysis can help with that too.
Timing is pretty much luck, unless you have inside information, OR are trying to out-thinking the market's irrational psychology which can be quite tough to do.
Most of the time, it makes sense to just buy on strong fundamentals and hold; and assuming these fundamentals dont change, it makes sense to actually buy more when the stocks go down or at least, dollar cost average your investment over time.
However, this all becomes tricky, when there is a slow-motion train wreck on the horizon. The impending catastrophe WILL affect everything, and there will be almost no where to hide. Many investors know this, but they are just trying to milk any sort of return they can find, which is why large dividend stocks are quite popular now. Its also why Gold is so absurdly high.
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The House passed Cap, Cut, and Balance. This legislation would have started paying down the debt, cutting spending, not raising taxes, and would have started implementing responsible behavior...The ball is in Obama and the Socialist parties court. They haven't done one thing to improve the economy, jobs, or tell the truth! If we default its on their watch!
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Timing is pretty much luck,
I pretty much predicted what was going to happen, right here in this thread. So far the first part is correct. It remains to be seen if they will all play hero and save the world at the last minute by striking some kind of deal. I was pretty convinced before, but actually I'm starting to question my original assumption (guess that shows the media is really doing its job well in making us all go bonkers).
Timing in a micro sense, is a lot of luck but also can be based on technical analysis. But timing in a larger sense can be done by looking at the big picture and the major events taking place. And if you are cautious and keep your money out, but it turns out you missed out on gains, better safe than sorry. You can get an idea of the prevailing winds, and then when stocks are knocked down (but good stocks of good companies), buy them. This morning was a good day to buy some stocks , if you are prepared to take profits. But we all know it cant last in this environment, so it's important to take profits.
Many people simply buy and hold. In that case, there are two points of view. Your financial planner will tell you, stocks will soar on the day they solve the crisis and u will miss all the gains. The other point of view is look at what happened in 2008 and why would you ever think that Obama and cohorts would not sink the entire economy for their own personal gain, if he/they have something to gain from it? We've already seen it happen!
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Most of the time, it makes sense to just buy on strong fundamentals and hold; and assuming these fundamentals dont change, it makes sense to actually buy more when the stocks go down or at least, dollar cost average your investment over time.
However, this all becomes tricky, when there is a slow-motion train wreck on the horizon. The impending catastrophe WILL affect everything, and there will be almost no where to hide. Many investors know this, but they are just trying to milk any sort of return they can find, which is why large dividend stocks are quite popular now. Its also why Gold is so absurdly high.
Very good points.
The only caveat I'd add to the first paragraph is that sometimes a little technical analysis can go a long way beside fundamentals because sometimes a company is fantastic, but it's stock is not ,for whatever reason (irrational wall street and their love affairs with certain companies, fickle behavior, etc). So fundamentals tell a lot but not the whole story, there are broken stocks out there of great companies. And there are nice companies whose stocks are absurdly popular (chipotle mexican grill, green mountain coffee such and such, certain growth stocks)
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Btw there has been a selloff in recent days just as I predicted but if they don't get a deal done WOW WILL it be a real bloodbath I wonder how low into the 11,000's we'll get just in the first few days. But actually if they get a deal done it seems likely the market will head upwards despite negative growth data recently published. Let's see what happens.
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Now the house has approved the phony debt deal and I think senate votes tomorrow at noon (probably can be assumed they pass it before any vote). I haven't done a detailed tech analysis but the market is probably due for some rebound and it just so happens to coincide with this. Well, let's see what happens.
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It sadends me that America is being destroyed my affirmative action monkeys!
It looks in the next 100 years, there will be a planet of the apes! :'(
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It sadends me that America is being destroyed my affirmative action monkeys!
It looks in the next 100 years, there will be a planet of the apes! :'(
Your mama is affirmative action monkey. Planet of apes is where you belong >:(
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debt limit increased, nothing will change.
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I was updating LIBOR rates today and they are up.
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I was updating LIBOR rates today and they are up.
I'm sure the Fed will put a stop to that when they decide to do another round of 'Quantitative Easing'
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I'm sure the Fed will put a stop to that when they decide to do another round of 'Quantitative Easing'
Lol can't wait for that one. Like PED's for the stock market.
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debt limit increased, nothing will change.
Yup zero affect on market. Tomorrow and rest of week we will find out if it will fall through key levels of support or if perhaps today's action was some selling exhaustion and we will see a rebound within trading range. Really hope it won't fall thru because... well, look out below.
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Yup zero affect on market. Tomorrow and rest of week we will find out if it will fall through key levels of support or if perhaps today's action was some selling exhaustion and we will see a rebound within trading range. Really hope it won't fall thru because... well, look out below.
I will tell you that if and when terrible information comes, thats when the techies often loose their shirt. I am sure that there have been plenty of traders looking at their charts for the last few days, and made a lot of bad short term decisions based upon their charting.
Fundamentally bad information isnt something that markets bounce back from.... thats not to say there WONT be a bounce, but it may be a dead cat bounce. and ultimately... all this bad information will make its way into every sector.
The recent rally has been a bit of a mirage, kinda like the 'recovery'. There never was a recovery, there was only a collapse, followed by a bunch of non-sense Keynesian window dressing to make it seem like our economy was expanding, and now that is fading away, and we are going back into the abyss... in worse shape than before. Hopefully, when we hit bottom, our government will tighten its belt and the Fed will give up on printing money, but I kinda doubt it.... we may be in for stagnation that continues for years... followed by credit downgrading... followed by turmoil... followed by painful austerity measures.
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I will tell you that if and when terrible information comes, thats when the techies often loose their shirt. I am sure that there have been plenty of traders looking at their charts for the last few days, and made a lot of bad short term decisions based upon their charting.
I don't see why. The indexes have just now reached key support levels. If one has the guts to buy and also thinks its not about to fall thru support and enter a bear market, now would be the time to buy, not the past few days. Most of the "news" is just noise and its used to explain what the market does, not really the other way around.
Fundamentally bad information isnt something that markets bounce back from.... thats not to say there WONT be a bounce, but it may be a dead cat bounce. and ultimately... all this bad information will make its way into every sector.
"Fundamentally bad" is a relative term. The data shows a lack of growth which should be there to really call it a recovery. The growth is not zero but very low. Nonetheless, corporate earnings are mostly quite good and stock prices ultimately reflect the earnings and growth of the company. So this counterbalances all the doom and gloom about how much money people are spending. Honestly for me, I don't get it. People are supposed to save money and not just spend it all. It should be a sign of a healthy economy. Nonetheless people still spend money on certain things and those companies turn profits. The importabce of some of the data is overblown imo.
About a dead cat bounce was it also one in march and in late june? How many dead cat bounces will there be then? Look I can see that a head and shoulders reversal MAY have formed but it hasn't happened until it falls through. Perhaps we merely entered a trading range rather than a full blown bear market. I reserve judgement at this point but I don't really get all the doom and gloom.
The recent rally has been a bit of a mirage, kinda like the 'recovery'.
What makes it a mirage? You really think the appropriate response to subprime collapse was the dow losing 600 points? There are companies who never stopped profiting in the billions during that period but saw stock price drop 50% or more. To me the giant collapse was more of a mirage than the recovery of the markets. Its not like we even reached the highs of the pre2008 period!
Its time americans look around and use common sense. Things will have to change we cannot live the way we once did. There will be some painfull changes too and we will not have a ponzi scheme debt expansion going forever til the govt bankrupts itself. People will need advanced degrees more than ever to find work, many will not find appropriate jobs etc. But all of these unfortunate realities do not mean that las vegas sands should be a 1 dollar per share stock! (As 1 example)
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The global market is very sick... A great deal of this money is built on rotting foundations... A good shakeup in the system could bring down the entire house of cards... Even the so called money lender nations will find themselves holding the bag should the worse happen... This stock market will be jumping around for some time to come... People who think a recovery is around the corner will see that the bottom of the market is a great way off and whats worse is still sinking... The system is juggling right now to keep investor confidence up however soon this juggling game is going to start showing it's true colors... At that point the actual real money that sustaining the system will be pulled out leaving the vast majority of investors wondering just what happened... The sad fact is that the financial world just doesn't want to face the fact that the day of reckoning is not very far off... As far as being highly educated goes it may help to some extent however people in India and China can be just as educated and they work for a lot less money... Unless America starts getting things at home in order the wolves at the door will soon be inside calling all the shots... To some extent they are doing this already.
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debt limit increased, nothing will change.
No real cuts were made and the rate of spending will continue to increase.
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The "haves" are the ones propping up the stock market with all their moolah, and the movement of this wealth is what moves the markets. Guys like u and me are just along for the ride, no question about that. But why should all the investors remove their money from stocks? Where are they gonna put it that is any better for them?
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It sadends me that America is being destroyed my affirmative action monkeys!
It looks in the next 100 years, there will be a planet of the apes! :'(
::)
If our politicians weren't a bunch of crooks and thieves they would have cut spending across the board for all of these wasteful social programs for the "minorities" such as welfare, food stamps, Section 8 Housing and Medicaid. Instead our economy is nothing more than a sophisticated wealth redistribution scheme.
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::)
If our politicians weren't a bunch of crooks and thieves they would have cut spending across the board for all of these wasteful social programs for the "minorities" such as welfare, food stamps, Section 8 Housing and Medicaid. Instead our economy is nothing more than a sophisticated wealth redistribution scheme.
How else would the filthy animals buy support... With nearly 40% of the population paying little or no taxes it is almost impossible to get meaningful support for any spending reduction... A politician was speaking on TV the other day and he said that the only way to set things right is to have everyone pay even a little tax... People with no skin in the game could not care less how much money government fritters away... If this situation is not brought under control the 40% will soon be higher and at that point America will be just another 3 world banana republic.
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The "haves" are the ones propping up the stock market with all their moolah, and the movement of this wealth is what moves the markets. Guys like u and me are just along for the ride, no question about that. But why should all the investors remove their money from stocks? Where are they gonna put it that is any better for them?
Yes, this is very true... The big money people are the ones holding the cards... In normal times the money people were happy enough to share a piece of the action with the little guy to keep things moving... Whats changed the picture is government cutting into the profit margin... Big money will always find a safe haven for their wealth... Gold , commodities, minerals... Things the little guy would have a hard time investing in... As for the reason lets just say the existing business model no longer functions as it should.
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I don't see why. The indexes have just now reached key support levels. If one has the guts to buy and also thinks its not about to fall thru support and enter a bear market, now would be the time to buy, not the past few days. Most of the "news" is just noise and its used to explain what the market does, not really the other way around.
Not really. What often happens is, when there is no fundamental data or institutional trading, most trades are from the technicians... its the techies who create the majority of the noise.
The reason I don't like Tech analysis, is that tech traders have a TERRIBLE track record. Techies that are 'brilliant' one year, can't beat a dart board the next year. A lot of the so-called evidence for technical analysis is data-snooping bias or selectively marketing certain tech funds and ignoring all their funds that do poorly.
HOWEVER, I do think that certain forms of short term analysis can work, and this involves being able to identify irrational human behavior influences on stock prices vs. legitamate influences on stocks. This is when you look at the impact of emotions, cognitive errors, irrational preferences, but this is VERY hard to do.
"Fundamentally bad" is a relative term. The data shows a lack of growth which should be there to really call it a recovery. The growth is not zero but very low.
Nonetheless, corporate earnings are mostly quite good and stock prices ultimately reflect the earnings and growth of the company. So this counterbalances all the doom and gloom about how much money people are spending. Honestly for me, I don't get it. People are supposed to save money and not just spend it all. It should be a sign of a healthy economy. Nonetheless people still spend money on certain things and those companies turn profits. The importabce of some of the data is overblown imo.
If you beleive that the recent data is NOT bad and is being overblown, you are STILL making an analysis based on fundamentals, not technicals. You are saying, the data is mediocre, but it WONT significantly bring down a company's earnings because of X,Y, and Z. Hence, if traders suddenly sell because they are missreading the data, they are being irrational so you will buy. That is NOT technical analysis, that is you analyzing fundamentals to a different conclusion than the market.
HOWEVER, if you saw data that you DID beleive pointed to a double dip, and then you saw traders selling off, you would NOT buy, because you would beleive that the data would ultimately affect prices, and the sellers are generally being rational.
Even though I don't agree with your assesment, your methodolgy is sound.
About a dead cat bounce was it also one in march and in late june? How many dead cat bounces will there be then? Look I can see that a head and shoulders reversal MAY have formed but it hasn't happened until it falls through. Perhaps we merely entered a trading range rather than a full blown bear market. I reserve judgement at this point but I don't really get all the doom and gloom.
I am NOT a technical analyst, which is why I said there MAY be a dead cat bounce, prices may stabalize, or prices may fall off a cliff, I just don't know what the short term will bring, and never will try to predict short term trends. But what I said is that IF there IS an upward movement in the short term, it will likely be from the technicians looking at their charts, and saying, hey, the price has past a support level, so now we should buy... and since I beleive there will continue to be bad news, this spike will ultimately (I dont know when) be corrected.
A dead cat bouncing is a rare occurance, simply because downward trends are rare because economic contractions are rare. The economy expands far more often than it contracts.... and events like the great depression or great recession are very rare, once in a lifetime events.
That being said, things are VERY different now than they were a few months ago. (Will go into that in next response)
What makes it a mirage? You really think the appropriate response to subprime collapse was the dow losing 600 points? There are companies who never stopped profiting in the billions during that period but saw stock price drop 50% or more. To me the giant collapse was more of a mirage than the recovery of the markets. Its not like we even reached the highs of the pre2008 period!
I assume you meant 6000 points, Anyhoo, I really dissagree with what you said here.
The subprime collapse was FAR more significant than any other crisis in our lives. I can't say for sure what the appropriate level of the Dow should be at this point in time, but I will explain why it skyrocketed back up to 13,000 and the last couple years has been a mirage.
The economy has been greatly distorted to appear as though we were entering a recovery stage in 2010 so nearly everyone bought into this, especially since they could say, well, its following the patterns of previous recoveries, just a bit slower.
Huge amounts of government spending were used to increase demand, and although it was innefficient, it still affected overal demand, and since companies had already lowered their payroll costs so dramatically, these sudden increases in demand looked great to their bottom line... and like magic.... companies looked profitable again.. and the stock market skyrocketed. Also, the historic printing of money greatly affected prices, especially since it has pulled down the dollar to new lows compared to currencies like the Franc (Now being used as a benchmark).
More significantly, our government made the real estate market look like it had recovered with their tax incentives. This was the biggest trick up their sleeve, since most economists acknowledge that a recovery is impossible withoout first having stabillity in the market that caused the bubble in the first place. And in 2010, most economists said it all worked, and we were in the middle of a slow but steady recovery. Even more amazing... most economists said the real estate collapse was over.... (I am still amazed by this)
However, ask them again now, and they will give you a different answer. Some have even suggested we are already in a double dip. All these programs/incentives/stimulants are dissapearing, and we are finding out that you can't fool the economy and things are simply returning to where they should be... even worse in some instances. This is why it is a mirage and this is why the recent price drops ARE warrented, they are not just noise. And this is also why the news will continue to be unexpectedly 'dissapointing' like they have been over the last few months.
Its not JUST about the fact that the government sugar high is over. The most important factor is that the Real estate bubble hasnt finished bursting. Even though its way down to 2002 levels, it will probably continue to dive below 2000 levels. Remember, even in 2000, Real Estate values were overpriced. Real Estate prices in the United States from 1995 to 2007 soared WAY beyond inflation. Before 95, prices had largely followed inflation. The bubble was HUGE, about 50 times larger than the dot com bubble, and used far more debt, and affected most of the west, not just the U.S. The only thing close for comparison is the Japanese real estate boom, which was still not as large but prices still havent recovered 15 years after the fall.
And none of this is taking into account when we have a credit rating reduction. This will be devastating.... honestly, beyond comprehension. It won't be for a while, but mark my words, tax revenue will continue to be below expectations, and when the GOP attempts to cut spending in 2012, especially entitelments, it will cause absolute pandamonium from the public, and the 'cuts' won't end up being cuts afterall.
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Btw I did mean 6000 points not 600 but u probably knew what I meant
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Briann on the point you raised that I am using the fundamental data. To some extent you are right but not totally correct because I was mainly stating that as my personal opinion not as a reason for trading. But you are right in the sense that my belief there would impact my decisions to some extent. But I would favor an approach that combines TA with fundamentals. Some companies are just junky and I would agree that no matter what kind of trend its in, it would not be wise to play around with its stock. Imo the tech analysis is not something that's going to be a magic formula that can make you millions no matter what, its something that can help a person plan their entry and exit points and it can help limit losses or improve gains if used properly. In some instances it won't work, but in a lot of cases, probably most cases, it can help u avoid turning a small loss to a bigger loss or help u keep a stock a bit longer for better profits. It works actually on the premise you mentioned about sentiment and emotions. These chart patterns are a way of surveying those things even if they seem unrelated, they're not. And when they do work, they work because of the herd mentality.
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Good (and interesting) points about the mirage as you see it.
Personally I don't think the ratings agencies would dare downgrade us because they will experience backlash from the govt who will try to grind them hard and use their 2008 behavior as justification for new regulations that will hurt these agencies. As corrupt as that is that they will basically do what the govt wants to cover their own hides, I think that is what will happen.
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Good (and interesting) points about the mirage as you see it.
Personally I don't think the ratings agencies would dare downgrade us because they will experience backlash from the govt who will try to grind them hard and use their 2008 behavior as justification for new regulations that will hurt these agencies. As corrupt as that is that they will basically do what the govt wants to cover their own hides, I think that is what will happen.
I know that there is a conflict of interest, and we will see alot of warning and postponing, but eventually, they will just not have any choice. We are already past 100% debt to GDP in a league with highly indebted countries like Italy and Belgium., and they theoretically can already downgrade us. I hope I'm wrong but I have zero faith in our politicians.
As far as technical Analysis, its so subjective. For example there are a some technical indicators saying we are on the verge of a massive selloff.
Here is an example, of an article today. I don't really beleive in this, but here it is anyway.
(http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/__Story_Inserts/graphics/__CHARTS_SPECIAL/MISCELLANEOUS/CNBC_chart_SPX_SP_Index_520.gif)
http://www.cnbc.com/id/44005971
The S&P 500 triggered a scary technical signal — a head and shoulders pattern in the chart — leaving investors to wonder if it's the sign of more selling to come — or just a head fake.
The so-called head and shoulders pattern is formed when the chart pattern shows three rallies, with the middle rally peaking higher than the first and second, thus creating a head. If the market breaks the "neckline," that is a trend reversal signal and can mean more selling ahead.
"What we're having is a classical technical breakdown. When the S&P broke down through the 1248 to 1250 region, it violated the neckline on a head and shoulders formation, " said Art Cashin, director of floor trading at UBS [UBS 15.76 0.05 (+0.32%) ].
"If it's a valid head and shoulders then you begin a countdown to where it occurred. I think it counts down to 1120," Cashin said. The market feels oversold and ready for a bounce, but the fact that the S&P is now negative for the year could weigh on sentiment, he added.
"You watch the rebounds. They should be restrained by the neckline at 1248 to 1252. A rally can only be a success if it punches above that," he said.
The pattern doesn't always trigger a break through the neckline and a selloff.
"There have been a few head fakes with this pattern since we came off the 2008 lows," said Scott Redler of T3Live.com. He said the S&P started forming the pattern several times, but it was never triggered. "That's why nobody trusts this pattern, but it feels different this time."
In the chart below, the market first rallied, forming the top of the left shoulder in late February. It then rallied to a higher level, forming a head in May. It then dipped down to a neckline before rallying to form a right shoulder in July. Typically, the neckline is formed at an area of prior support. That would be the 1249 to 1280 zone, according to Redler.
"Today's move down through 1249 was the bottom end of the neckline which traders have been watching," said Redler. "What a head and shoulders tries to do is it tries to measure the potential move of a correction and the way you do that is from the top of the head to the neckline. The high was 1370. The neckline would be an average of 1270. That gives you a measured move for technicians to pick an area to buy. That takes you down to a zone of 1150 to 1180," he said.
"That correlates to a pretty big support level from last year. That will be the level traders are watching," he said.
Redler said another reason he was expecting this formation to be triggered was by the action in the industrial sector ETF, Industrial Select Sector SPDR Fund and the SPDR S&P Homebuilders ETF. Both showed head and shoulder patterns.
Redler, who watches the market's short-term technicals, recommended raising macro cash in longer-term positions last Thursday when he saw the right shoulder start to get fully developed. It was also when the SPY, the ETF representing the S&P, broke its 50-day moving average at 1310.
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Its true there was a head and shoulders pattern. I mentioned it in one of my posts. But the guy who wrote the article didn't wait for a confirmation of the pattern which can be a big mistake. It has to actually fall through the support and also close below it. Well it did that today. So I believe we have now entered a bear market phase. Either way, next stop dow 11,000. I imagine there will be some upticks along the way but that is where we're headed.
Btw, I don't get what you mean by saying its "so subjective" but the patterns are patterns because they have happened before and a different result would actually be a big surprise but usually herd mentality wins out. Add to that the fact that so many TA traders are active these days and it also adds a bit of self fulfilling prophecy to the mix. Look out below.
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Its true there was a head and shoulders pattern. I mentioned it in one of my posts. But the guy who wrote the article didn't wait for a confirmation of the pattern which can be a big mistake. It has to actually fall through the support and also close below it. Well it did that today. So I believe we have now entered a bear market phase. Either way, next stop dow 11,000. I imagine there will be some upticks along the way but that is where we're headed.
Btw, I don't get what you mean by saying its "so subjective" but the patterns are patterns because they have happened before and a different result would actually be a big surprise but usually herd mentality wins out. Add to that the fact that so many TA traders are active these days and it also adds a bit of self fulfilling prophecy to the mix. Look out below.
Subjective meaning 2 different technicians look at the same chart and come up with 2 completely different conclusions to where the price will go. I saw TONS of this in the last few days. There are lots of times when technical theories conflict with one another and give opposite suggestions.
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apple google microsoft amazon, many biotech/pharmaceutical companies.
The stocks I named individually are winners for a reason.
What are these amazing foreign companies that you are into?
I would buy puts for those stocks to at least cover some losses. I am not into any stocks because my mistakes as a very young man in real estate. You have a good point to look for undervalued stocks in this economy. It is much harder to make money in bullish.
Like I said, rates will go up, markets are going down. Little about dollar devaluation:
"The much talked about about advantages which devaluation secures in foreign trade and tourism, are entirely due to the fact that the adjustment of domestic prices and wage rates to the state of affairs created by devaluation requires some time. As long as this adjustment process is not yet completed, exporting is encouraged and importing is discouraged. However, this merely means that in this interval the citizens of the davaluating country are getting less for what they are selling abroad and paying more for what they are buying abroad;concomitantly they must restrict their consumption......
Devaluation, say its champions, reduces the burden of debts. This is certainly true. It favors debtors at the expense of creditors......indebted corporations are helped to the disadvantage of the enormous majority whose savings are invested in bonds, debentures, savings-bank deposits, and insurance policies."