Sidebar Sidebar
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.

Stock Market Plummets: Falls to levels not seen since 1997.

trule said:
So long as you loose less than the next guy you come out in front :D In a deflation everyone looses, the differentiating factor is how much. 25% loss sure sounds better than 50%...my mother had a cash option, so she actually made a good 5% this past year, she is now twice as wealthy relative to stock only investors :cool:
Click to expand...

The relative measure you suggest is peculiar. I don't measure my well-being compared to anyone but myself. It's not as though we're seeing any general deflation in the economy, just a sharp decrease in wealth. Not a relative thing at all.

This reminds me of the social sciences experiment where people were asked if they'd prefer to take a job that paid $100,000 a year if their colleagues were making $150,000, or $75,000 a year if their colleagues were making $50,000. Most people picked number two. This may go a long way towards explaining why economies behave as they do. Emotions often trump rationality.

EDIT & CORRECTION: The experiment was a study of happiness and relative earnings among neighbors. The experimenters found that people's reported happiness was highly dependent on them doing better than their neighbors.

http://www.nber.org/~luttmer/relative.pdf
 
IJ Reilly said:
The relative measure you suggest is peculiar. I don't measure my well-being compared to anyone but myself. It's not as though we're seeing any general deflation in the economy, just a sharp decrease in wealth. Not a relative thing at all.
Click to expand...

Sorry, but wealth is a relative measure. Your well being, I don't know what that has to do with wealth? You either have a dollar or you don't, OTOH your well being is purely subjective.

We currently have asset price deflation, perhaps we get it in the broad economy too ...
 
trule said:
Sorry, but wealth is a relative measure. Your well being, I don't know what that has to do with wealth? You either have a dollar or you don't, OTOH your well being is purely subjective.

We currently have asset price deflation, perhaps we get it in the broad economy too ...
Click to expand...

Broad deflation is very bad news. If we get that, we will be in a depression. You don't want to wish for deflation.

Wealth is only a relative measure in our minds; objectively it is not relative at all. As you said, either you've got a dollar or you don't. How much anyone else may or may not have doesn't effect that dollar. But as the paper I linked concluded, people tended to report more happiness when their neighbors were less well off than themselves compared to when the situation was reversed -- even if in the second case they were objectively more well off.

Objectively we all know that $150,000 is more than $100,000, but if the economists who studied this got it right, people will actually feel better off with an income of $100,000 living in a community where their neighbors make $75,000, than they would making $150,000 in a community where their neighbors make $200,000. That's startling. Consider the implications!
 
IJ Reilly said:
Wealth is only a relative measure in our minds; objectively it is not relative at all. As you said, either you've got a dollar or you don't. How much anyone else may or may not have doesn't effect that dollar. But as the paper I linked concluded, people tended to report more happiness when their neighbors were less well off than themselves compared to when the situation was reversed -- even if in the second case they were objectively more well off.

Objectively we all know that $150,000 is more than $100,000, but if the economists who studied this got it right, people will actually feel better off with an income of $100,000 living in a community where their neighbors make $75,000, than they would making $150,000 in a community where their neighbors make $200,000. That's startling. Consider the implications!
Click to expand...

Personal wealth aside, isn't this fact one of the things that keeps the economy going? People wanting more/better things than their neighbors?
 
Unspeaked said:
Personal wealth aside, isn't this fact one of the things that keeps the economy going? People wanting more/better things than their neighbors?
Click to expand...

Yes, but... the results of the study imply that once we're better off than our neighbors, that we don't have as much interest in improving our lot. Maybe this is when people tend to pick up and move. I don't know. Good question.
 
Unspeaked said:
Personal wealth aside, isn't this fact one of the things that keeps the economy going? People wanting more/better things than their neighbors?
Click to expand...

That's called keeping up with the Joneses and is ingrained in American culture.

You could also expand the economy by finding new efficiencies or new customers outside your home market. We have unrealistic expectations for how well the economy should perform - like earning 10% annually. These expectations force companies to think quarterly rather than annually and lead to shorter product cycles and increased marketing convincing us we to need to buy the next new model right now or we're outdated.
 
maestrokev said:
That's called keeping up with the Joneses and is ingrained in American culture.

You could also expand the economy by finding new efficiencies or new customers outside your home market. We have unrealistic expectations for how well the economy should perform - like earning 10% annually. These expectations force companies to think quarterly rather than annually and lead to shorter product cycles and increased marketing convincing us we to need to buy the next new model right now or we're outdated.
Click to expand...

Is it just me, or have these corporate practices also seemingly increased with the rise of online discount brokers and more "common folks" buying shares of companies?

It's almost like television shows. 20 - 30 years ago, a network could easily sit on a show like Cheers or MASH after a few rough seasons and reap the rewards. Now, if you're not in the Top 20 your first week or two, you don't even get to finish your first season.

It seems like investors now forget results as recent as one quarter ago, and focus only on the present, sacrificing the future.
 
Unspeaked said:
Is it just me, or have these corporate practices also seemingly increased with the rise of online discount brokers and more "common folks" buying shares of companies?

It's almost like television shows. 20 - 30 years ago, a network could easily sit on a show like Cheers or MASH after a few rough seasons and reap the rewards. Now, if you're not in the Top 20 your first week or two, you don't even get to finish your first season.

It seems like investors now forget results as recent as one quarter ago, and focus only on the present, sacrificing the future.
Click to expand...

I don't believe so, but I don't have evidence to prove otherwise. Common folks don't buy nearly as much as institutional investors or rich folk who are large block shareholders.

We live in an era of instant gratification. You think TV business is tough, read up on speed dating. You have 30 secs to make an impression and if there's no chemistry you're out!

We are knowledge rich and analysis poor. Just look at how many American companies are relying on offshore outsourcing to reduce costs and raise revenues rather than looking for tougher solutions that keep local jobs. Investors are too influenced by the Survivor mentality, fail one task and it's time to conspire to get rid of you at Tribal Council. Take a look at how long the average tenure of a Fortune 500 CEO is.
 
This is just horrible it keeps going down, and worse every time Obama talks.. I've heard him say:

"Thins are bad - But there going to get worse..."

Who the heck says something like that... Nothing hurts things like people think things are going to be WORSE, the want what he claimed to bring "HOPE"

Geez
 
Every time AIG loses $60 billion in one quarter and needs another bailout. Or Obama speaking.

You chose your cause and effect. Please do it carefully.
 
lpp71 said:
This is just horrible it keeps going down, and worse every time Obama talks.. I've heard him say:

"Thins are bad - But there going to get worse..."

Who the heck says something like that... Nothing hurts things like people think things are going to be WORSE, the want what he claimed to bring "HOPE"

Geez
Click to expand...

Because being realistic is such a bad thing....
:rolleyes:
 
Unspeaked said:
Because things were going so well before February...

:rolleyes:

(But please, let's try to keep politics out of this thread...)
Click to expand...

Ok. It just bothers me that so much $$$ is being spent and yet banks are still sucking, auto makers are begging for lifelines, hundreds of thousands more jobs have been lost, and that was just February. ;)
 
Mr. Giver '94 said:
Ok. It just bothers me that so much $$$ is being spent and yet banks are still sucking, auto makers are begging for lifelines, hundreds of thousands more jobs have been lost, and that was just February. ;)
Click to expand...
Free market is just great without regulations isnt it?;)
 
NT1440 said:
Free market is just great without regulations isnt it?;)
Click to expand...

Free markets as a general concept are good; better than a Communist-style market system by a long shot. Clearly the lack of regulations has come back to bite us in the ... but spending prioritizing on the part of the government is more important to me. I don't need to be paying for Nancy Palosi's "special interest" earmarks.
 
Mr. Giver '94 said:
Free markets as a general concept are good; better than a Communist-style market system by a long shot. Clearly the lack of regulations has come back to bite us in the ... but spending prioritizing on the part of the government is more important to me. I don't need to be paying for Nancy Palosi's "special interest" earmarks.
Click to expand...

Which earmarks are you talking about?
 
Did anyone catch World News with Charles Gibson? Profiling how Dodger Stadium Job Fair had 4,500 people applying for 500 jobs.

California has 8th largest economy in the world and now has a 10% unemployment rate - 2million out of work and rising. It is being terminated! :mad:

What happened?
 
You must log in or register to reply here.
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.
Top Bottom
Back