Dow Has Worst Four-Day Start Ever

Discussion in 'Politics, Religion, Social Issues' started by shinji, Jan 7, 2016.

  1. shinji macrumors 65816

    shinji

    Joined:
    Mar 18, 2007
    #1
    http://money.cnn.com/2016/01/07/investing/stocks-markets-dow-china/

     
  2. 1458279 Suspended

    1458279

    Joined:
    May 1, 2010
    Location:
    California
    #2
    Ok, I'll start things off. The recovery in the US was mainly fueled by low interest rates and mainly effected the investment side of the economy. The labor side of the economy has not recovered and has gone down in terms of pay rates or quality of jobs. The labor side has recovered somewhat in terms of number of jobs.

    The investment side has had a huge run up and is supported by a low number of high growth stocks, several of them are in a new tech bubble.

    China went from one bubble busting to another by building ghost cities. Their past growth numbers were mostly faked and they've pushed people to create a new stock market bubble.

    The US Fed talked about raising rates for so long, they had to raise them just to remain credible.

    The data didn't support the raise, the truth about the labor market is coming out in sales growth numbers. If you look at the number of jobs and compare to the sales numbers, you'll see the per person numbers aren't good.

    Last year was the worse since 2008 and there has been little response from our leadership concerning this. They've not responded with any plan to do anything about this and the people see this inaction loud and clear.

    Some 63% have less than $500 saved. We're shipping jobs out, building factories outside the US and our tax policy is making businesses want to leave the US.

    We've expanded the labor laws and increased the min wage, meanwhile, companies like Amazon is hiring robots.

    Robots work cheap, don't sue and can be trained quickly.

    Expect the next gen robots to be much more universal and will be able to do more of the jobs humans currently do.

    Meanwhile, global population is growing while we can't feed or employ the people we have.

    Most nations are so deep in debt they'll be paying for the past for as far as the eyes can see.

    Most people have 'job skills' that offer little economic value and no other means of support.

    It's going to be interesting times.
     
  3. Technarchy macrumors 603

    Technarchy

    Joined:
    May 21, 2012
    #3
    Up or down, someone always makes money.

    The headlines and speculation will be sensational, but there are always winners in the worst of times.

    Plan accordingly.
     
  4. sodapop1, Jan 8, 2016
    Last edited: Jan 8, 2016

    sodapop1 Suspended

    sodapop1

    Joined:
    Sep 7, 2014
    #4
    You sound like one of the panic sellers. There is either widespread irrational exuberance or all out doom and gloom. I don't see people starving in the streets and waiting around in bread lines for food. The world is still revolving today and it will continue to do so tomorrow. But keep fanning the flames of fear, all it does it present an opportunity for the brave to continue to build up their wealth at the expense of those who are skittish and disillusioned.
     
  5. Eraserhead, Jan 8, 2016
    Last edited: Jan 8, 2016

    Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #5
    China's stocks aren't overvalued though. They have very low PEs.

    Plus there are fewer poor people globally than ever before and more people employed.
     
  6. Arran macrumors 68040

    Arran

    Joined:
    Mar 7, 2008
    Location:
    Atlanta, USA
  7. NT1440 macrumors G4

    NT1440

    Joined:
    May 18, 2008
    Location:
    Hartford, CT
  8. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #8
    If stocks are overvalued now they definitely were long before 2008 and 2001.
     
  9. nightcap965 macrumors 6502a

    nightcap965

    Joined:
    Feb 11, 2004
    Location:
    Cape Cod
    #9
    Markets go down as well as up. My investment philosophy is based on the simple hope that every day, there are people all around the world who wake up with an idea to make something new, something better, something more efficient, something profitable. There have always been prophets of doom, but they've never been right in the long run. And I'm hoping to be around for the long run. (If not, I guess I didn't need that money anyway.)
     
  10. VulchR macrumors 68020

    VulchR

    Joined:
    Jun 8, 2009
    Location:
    Scotland
    #10
    Regrettably this is not only the US. The FTSE100 seems to be teetering as well, except in the UK the Tories didn't stimulate the economy like Obama did in the US after the 2008 fiasco. The result? The UK's public services have been sacrificed to the austerity fairy, wages have become stagnate, and the UK interest rate is so low that if a bust comes, lowering interest rates to stimulate the economy won't be an option. Oh, and the UK still has quite a budget deficit in spite of the austerity fairy, as economists and those on the left warned the Tories all along. I won't even start on the soup kitchens... I worry that the UK won't be able to cope with the next bust in the business cycle if it is a bad one.
     
  11. aaronvan Suspended

    aaronvan

    Joined:
    Dec 21, 2011
    Location:
    República Cascadia
  12. 1458279 Suspended

    1458279

    Joined:
    May 1, 2010
    Location:
    California
    #12
    Some will short the market, but what if the total shorts is not equal to the total longs? What happened when the price of houses dropped in '08? Who made money then?

    The value of something is what people think it's worth. The market determines the value of a stock or a house. Some made money from the DotCom fall, but most didn't. It was a net loss. Just like the 1929 and 2008 fall. Remember, it costs to short a market, if you call it wrong, you lose.

    It's not a zero sum game, otherwise we wouldn't have had the great depression or the great recession. It's true that not everyone was hurt, but it's also true that net value was lost.

    Although, some in the housing and DotCom bubble came out ahead at the rise of the bubble, that money doesn't always go back into the market to level it off. In fact, many take their gains out of the system, like a poker player leaving the table after a large win. That's what I did in the DotCom bubble, I got out and watched it fall about a month later. Didn't get back in until it was near the bottom.
    --- Post Merged, Jan 8, 2016 ---
    One of the reasons we don't see bread lines like before is that we've put into place safety nets. We didn't have unemployment ins and welfare back in 1929. Look at the growth in the number of people getting welfare. Where would they be without welfare?
    As for people starving in the streets, how many cities have call homelessness a state of emergency? Again, this is with all the money spent on welfare. Take away welfare and see what happens. We have a very different system, it hides much of the effects we had in 1929.
    --- Post Merged, Jan 8, 2016 ---
    That assumes the value will be there. I hear Blockbuster video is a buying opportunity, care to buy some?
     
  13. obeygiant macrumors 68040

    obeygiant

    Joined:
    Jan 14, 2002
    Location:
    totally cool
  14. Happybunny macrumors 68000

    Joined:
    Sep 9, 2010
    #14
    IMO people should understand that the stock market is not a sure thing, it's gambling, and if you cannot afford to lose the money, you shouldn't be in the game.
     
  15. chown33 macrumors 604

    Joined:
    Aug 9, 2009
    #15
    Well, at least I'm not the only one with a hangover.
     
  16. Renzatic Suspended

    Renzatic

    Joined:
    Aug 3, 2011
    Location:
    Gramps, what the hell am I paying you for?
    #16
    The banks. House flippers getting a fresh start.
     
  17. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #17
    Probably not the banks because they had to write off underwater mortgages.
     
  18. 1458279 Suspended

    1458279

    Joined:
    May 1, 2010
    Location:
    California
    #18
    Was it a buyer's market the 1st day it went down or the 2nd, or the 3rd? How do you know this is the bottom?

    Many 'experts' said oil would not go below 40, yet it did. Is this the bottom? Remember, the DotCom bubble took some 15 years to recover.

    How do you know this is the bottom?

    Some point to the unemployment rate as proof of a strong recovery, yet with all the jobs created, we can't seem to get past 2% growth. Look at the sales numbers for retail, people just aren't spending at a ratio that would suggest the 5% unemployment is a valid representation of the true nature of the economy.

    When's the last time we've had U2 in this range? What was spending like back then? Why is retail so slow?

    Sometimes you've got to dig deeper to find the truth.
     
  19. oneMadRssn macrumors 68040

    oneMadRssn

    Joined:
    Sep 8, 2011
    Location:
    Boston, MA
    #19
    Just a side note: can we stop paying attention to the Dow. It is widely regarded by pretty much every modern economist as the worst index to follow. Other than a historical artifact, it's totally useless.

    The reason it's terrible is because it is weighted by stock price of it's component companies, and nothing else. This is stupid because the stock price of a company has nothing to do with the size of a company or it's influence on the market. For example, a change in Travelers Insurance affects the Dow twice as much as a similar change in Microsoft, because one share of Travelers today costs about double than one share of Microsoft, but that doesn't have any sense or logic to it since Microsoft's market cap is about 10 times more. A change in Microsoft should have a much larger impact on the index than Travelers.

    Every other index (Nasdaq, S&P500, and pretty much all of them) are weighted by the market cap. So larger companies affect the index proportionately to their size.

    tl;dr: STOP PAYING ATTENTION TO THE DOW - IT'S STUPID!!
     
  20. chown33 macrumors 604

    Joined:
    Aug 9, 2009
    #20
    How dare you, sir!!

    This is PRSI, where giving extraordinary attention to things that are barely relevant, or are greatly skewed from actual relevance, is the very reason for its existence.

    In short, this is PRSI. Irrelevance is why we're here.

    ...And comedy.

    Well, comedy masquerading as tragedy.

    Or vice versa. I can't always tell.
     
  21. maxsix Suspended

    maxsix

    Joined:
    Jun 28, 2015
    Location:
    Western Hemisphere
    #21
    I wonder if Apple will continue to fall to $65 like some analyst are pondering. Oh sure, I know it recovered a bit from the lowest point today, but Monday's a new day. This ought to be interesting. Although I'm directly affected, I have no emotional ties, I got lucky and sold loads at Apple's high some time ago. Whatever happens at this point will be inconsequential. Let's not forget the Cupertino Company has plenty of reserves.
     
  22. 1458279, Jan 8, 2016
    Last edited: Jan 8, 2016

    1458279 Suspended

    1458279

    Joined:
    May 1, 2010
    Location:
    California
    #22
    Quick thought on the dow, I wonder how much effect it has on other indexes like S&P/Nas. They often follow a similar line. I agree, it's just a headline number for those that don't dig in, but it can be a reference.
    --- Post Merged, Jan 8, 2016 ---
    I've always said that Apple will have a hard time going forward based on where it gets it's profit. It's mainly a 1 product company and it's strength is in it's followers. However, as the iPhone advances, it's tough to justify a new model. At some point, the consumer will say "it's just not that much better"
    That's the point when Apple will have to push other things. Being almost a 1 trick pony with a commodity is a tough spot to be in. The stock (IMO) is based on growth that's going to be hard to get.

    Look at all the hype over tablets, then the crash of tablets. How much better can they make the iPhone? How much better must it be for you to buy one? The size, cameras, speed are pretty much there, what else do you need?

    BTW, their growth needs to happen in nations that are hurting the most right now.
     
  23. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #23
    Compared to, say 1995, China's economy is probably 5x larger and America and Europe are twice as big, India and South East Asia are probably 3-4x as big and South America and Africa are probably at least twice as big.

    So the stock market really isn't doing that well. EDIT: in 1995 the FTSE 100 was at 3000 and now it's at 6000. But the UK had an early 90s recession so it was hardly overvalued then.
     
  24. oneMadRssn macrumors 68040

    oneMadRssn

    Joined:
    Sep 8, 2011
    Location:
    Boston, MA
    #24
    The point is it shouldn't be a reference, even for those that don't dig in, because it's not representative of the thing it's supposed to represent.

    The closest analogy I can think of is this: It's like using a clock in your car instead of a gas gauge as a reference to when you need a fill up. On regular usage it might work out that you need a fill-up every 3 days, but in reality time has nothing to do with how much gas is in the tank, and this reference point will be wrong a lot of the time.
     
  25. thewap macrumors demi-god

    thewap

    Joined:
    Jun 19, 2012
    #25
    Look at all the hype over tablets, then the crash of tablets. How much better can they make the iPhone? How much better must it be for you to buy one? The size, cameras, speed are pretty much there, what else do you need?

    BTW, their growth needs to happen in nations that are hurting the most right now.[/QUOTE]

    Who was it that said " Apple has to remember who it was" to pull it back from going under.
     

Share This Page