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Thread: Dow below 7000...

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    Default Dow below 7000...

    At 6841 as I speak...

    Does anyone else truly believe that perhaps a systematic un-raveling of our financial markets could be planned for "bigger purposes?"

    IE,a new Global Economy? I truly don't know what to think right now.

    It's just so intense to sit and watch all this unfold.

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    Default Re: Dow below 7000...

    Yes. And also that the current admin is talking down the markets/ economy, in a bid to pursue their goals.
    Quote Originally Posted by The Snark View Post
    But then I suppose the sort of people who write this kind of crap generally don't allow their opinions to be tainted by things like "facts" and "reality".
    Distortion becomes somehow pure in its wildness
    The note that began all can also destroy

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    Default Re: Dow below 7000...

    i was expecting a short covering rally when the SPX hit 700, hedged with 2 long ES contracts.


    didn't work.
    Rebecca Avalon







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    Default Re: Dow below 7000...

    Nope...lots of odd "bounces" here and there.

    Auto reports out tomorrow,geting my tequilla ready to slug down.

    Going to see how loud Cramer is screaming or not in a few...

    I think we're seeing a re-defing of "historical" here folks!

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    Default Re: Dow below 7000...

    I don't usually watch the idexes all the closely. With that said, with other economic indicators and fact that since the US is in recession and it is causing economic turmoil all over the planet, a global set of market standards can't be far off.


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    Default Re: Dow below 7000...

    Chances are we will see the Dow at 5000. Why? The Dow was at 5000 before the big credit boom of the 80s, which started this whole mess.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Dow below 7000...

    lol while the Oct drop can be put on Dubya, Jans and Febs are not. They are on the group who is panicking the market. Hate to say it, but the market is only responding to "what's being put out there".
    Quote Originally Posted by The Snark View Post
    But then I suppose the sort of people who write this kind of crap generally don't allow their opinions to be tainted by things like "facts" and "reality".
    Distortion becomes somehow pure in its wildness
    The note that began all can also destroy

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    God/dess britneyireland's Avatar
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    Default Re: Dow below 7000...

    Here's a better reason why we will see 4750 on the Dow: broken Fibonacci Fans, next support is way down there

    chart courtesy of slopeofhope.com
    Rebecca Avalon







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    Default Re: Dow below 7000...

    ASX200 didn't go down much at all really. It was pretty boring most of the day. Aussie interest rates unchanged too.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Dow below 7000...

    ultimately, the 'valuation' of stock shares is a function of corporate after-tax profits / growth potential / dividend payments. As gov't policy and the economic slowdown have cut into corporate profits, have retarded growth potential (or turned growth negative), and as CEO's have resorted to cutting dividend payments, renewed scrutiny is being applied to actual P/E ratios and expected after-tax profits / losses versus current valuations.

    Of course, conspiracy theorists would point out that the 'smart money' may also be front-running the following ...



    (snip)""Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system," said Levin in a statement given to Reuters. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year.

    "We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will."

    Companion legislation is expected to be introduced in the U.S. House of Representatives, the aides said.

    Both bills will face committee review and some political opposition. Bankers at UBS and other financial institutions have long been among the largest contributors to U.S. politicians' campaigns.

    Since last year, three provisions have been added to the Senate bill. One would classify U.S.-controlled foreign corporations as domestic for income tax purposes. Another would close an offshore tax dividend loophole that lets people dodge payment of U.S. taxes on U.S. stock dividends, the aides said.

    The third provision would expand tax reporting requirements for passive foreign investment corporations, they said."(snip)


    ... which, if fully enacted, would take a big bite out of the offshore tax sheltered profits of many US companies - as well as taking a much bigger tax bite out of individual US 'offshore' investors.

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    Default Re: Dow below 7000...

    just why would any one wanna invest atm..we aint hit bottom yet...

    stay positive ...keep smiling and have a great day

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    Default Re: Dow below 7000...

    CNBC has been calling bottom for ages, right?
    http://www.thedailyshow.com/video/in...nancial-advice
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Dow below 7000...

    Quote Originally Posted by person View Post
    CNBC has been calling bottom for ages, right?
    Yes. They should focus on reporting and not speculating. Dry boring facts, Bloomberg style. (Though I am finding Bloomberg is sliding into forecasting.)

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    Default Re: Dow below 7000...

    Quote Originally Posted by retiredangel View Post

    Does anyone else truly believe that perhaps a systematic un-raveling of our financial markets could be planned for "bigger purposes?"
    If one assumes a socialist agenda, could be. I hope to god that most folks remember what principles this country was founded on. Aside from the intelligent folks who post here I am fearful that most Americans are clueless.

    I have protected my assets as bet I could but the "shock and awe" and precipitous economic decline due to the Obama recession (you all decide planned or unplanned) has been out of my league in terms of trying to react.

    I am hunkered down. I've had to lay off over 20% of my work force. It sucks for me and even more so sucks for those folks I had to let go Thank you BO. You and Michelle enjoy your $100 a pound steak at your parties. Was it let them eat steak...or cake...I don't remember. Let's ask Marie.

    FBR
    Once again I have embraced my addiction and have put off the moral dilemma to another day.

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    Default Re: Dow below 7000...

    I have a feeling that future historians will liken recent events to the Tulip Speculation Mania of 1637 or the South Sea Bubble of 1720.

    I would dearly like to know how much of the 'profits' made by financial institutions in the last 5 years were real profits made by trading in financial instruments that had a genuine market value, and how much of the 'profit' was attributable to putting arbitrary values on financial instruments that in real terms were worthless.

    Phil.

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    Default Re: Dow below 7000...

    Quote Originally Posted by FBR View Post
    Thank you BO. You and Michelle enjoy your $100 a pound steak at your parties. Was it let them eat steak...or cake...I don't remember. Let's ask Marie.
    Since she didn't say it, it would be hard for her to know. A more appropriate person to ask is the one that came up with that line of propaganda.

    Quote Originally Posted by FBR View Post
    If one assumes a socialist agenda, could be. I hope to god that most folks remember what principles this country was founded on. Aside from the intelligent folks who post here I am fearful that most Americans are clueless.

    I have protected my assets as bet I could but the "shock and awe" and precipitous economic decline due to the Obama recession (you all decide planned or unplanned) has been out of my league in terms of trying to react.

    I am hunkered down. I've had to lay off over 20% of my work force. It sucks for me and even more so sucks for those folks I had to let go

    FBR
    Even without the socialist stuff, there have been a high number of internationalist. If you want to see some good stuff, do a search on the Yahoo News for Kissinger. You should see the praise he has bestowed upon BO and says he could be "The One". Of course he will still be a pawn.
    Quote Originally Posted by The Snark View Post
    But then I suppose the sort of people who write this kind of crap generally don't allow their opinions to be tainted by things like "facts" and "reality".
    Distortion becomes somehow pure in its wildness
    The note that began all can also destroy

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    Default Re: Dow below 7000...

    I would dearly like to know how much of the 'profits' made by financial institutions in the last 5 years were real profits made by trading in financial instruments that had a genuine market value, and how much of the 'profit' was attributable to putting arbitrary values on financial instruments that in real terms were worthless
    Bottom line always comes back to the fact that true wealth creation is the result of raw materials plus human labor creating something that is worth more than the sum of the individual parts. Paper 'profits' do not create wealth - at best they shift existing wealth from one investor to another investor.

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    Default Re: Dow below 7000...

    Snap - I was told you could only add value to a product by changing the physical form in some way.

    I also understand that a lot of financial instruments are zero sum games - i.e. there is a winner and a loser. If used correctly, the wins and losses are balanced out and the money is earned as a premium charged for the service.

    (This was certainly the case when I used to protect my raw material costs by hedging against changes in price).

    I think the banks forgot or ignored that derivatives, etc, were a zero sum game. They were not content with the income from premiums and tried to make money with unbalanced trades. I've seen more than a few articles stating that some of these financial instruments were so complex there was no way of putting a realistic market value on them - which meant they went into the bank's books at whatever value the trader cared to place on them.

    And that's an insane way of running a business.

    Phil.

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    Default Re: Dow below 7000...

    the dow will have a rally to 7500 then fall to 6500
    god bless america and all those who sail in her

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    Default Re: Dow below 7000...

    Quote Originally Posted by FBR View Post
    If one assumes a socialist agenda, could be. I hope to god that most folks remember what principles this country was founded on. Aside from the intelligent folks who post here I am fearful that most Americans are clueless.

    I have protected my assets as bet I could but the "shock and awe" and precipitous economic decline due to the Obama recession (you all decide planned or unplanned) has been out of my league in terms of trying to react.

    I am hunkered down. I've had to lay off over 20% of my work force. It sucks for me and even more so sucks for those folks I had to let go Thank you BO. You and Michelle enjoy your $100 a pound steak at your parties. Was it let them eat steak...or cake...I don't remember. Let's ask Marie.

    FBR
    Yes, all of the problems with the economy are Obama's fault. It has nothing to do with the Republicans who controlled the White House for the past 8 years and Congress for 12 of the last 14 years. Our economic collapse is all due to the policies Obama has proposed over the past 6 weeks which haven't even taken effect.

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    Default Re: Dow below 7000...

    ^^^ arguably, the stock market is 'forward looking'. In other words, stock price valuations of today are based on expectations of business conditions / profitability that will actually occur many months in the future.

    While not wanting to wallow in economic politics here in Dollar Den, suffice it to say that US stock price valuations began their descent in earnest the day after Obama was nominated as the Democratic party candidate, gained downward momentum the day after Obama won the election four months ago, etc. The reason for this is that corporate executives, 'smart money' investors etc. cannot afford to wait for actual confirmed proof of a 'negative' economic situation staring them in the face before making plans to minimize the future 'negative' economic impact on themselves. Obama's widely publicized positions regarding future US tax increases, future increases in US energy costs ( no offshore drilling + carbon tax), future devaluation of the US dollar exchange rate ( via massively increased gov't spending ), future increases in labor / environmental costs, future increases in cost of capital ( as tax increases divert investment money into tax free gov't bonds and away from fully taxable corporate bonds) etc. really didn't leave much doubt in the minds of major corporate decisionmakers as to the probable future economic conditions that their US operations would be facing.

    On the flip side, those industries that were likely to garner a windfall from likely gov't subsidies, from unionized automakers to wall street banks and insurance companies to alternative energy companies to gov't construction contractors, arguably presented a 'worst case scenario' of their true financial condition in order to improve their chances of being showered with US taxpayer money !

    But returning to the original point, in order to have rising US stock prices as a matter of economic fundamentals ( versus manipulation ) it is necessary for companies to have PROFITS !!! Stock price levels have historically tracked a Price to Earnings ratio which is somewhere in the 12-18 range. At the moment, with very few exceptions, P/E ratios are way above that level ( if not altogether impossible to accurately calculate since real profits do not exist).

    As to recent US stock market action and likely future direction, I refer you to the honorable Professor Roubini, who'se track record has been highly accurate in recent years ...



    (snip)"So, in conclusion and caveat emptor for investors: Dear investors, do enjoy this dead cat bounce and bear market sucker’s rally ... don’t wait too long until you jump ship while the financial Titanic hits the next financial iceberg: you may get squeezed and crashed in the rush to the lifeboats."(snip)

    PS the entire linked article is worth reading carefully, but the above quote pretty sell sums it up.

    and for any who are unfamiliar with Roubini's economic jargon ...

    "A dead cat bounce is a figurative term used by traders in the finance industry to describe a pattern wherein a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement, with the connotation that the rise was not an indication of improving circumstances in the fundamentals of the stock. It is derived from the notion that "even a dead cat will bounce if it falls from a great height". (from Wiki)

    ~
    Last edited by Melonie; 03-15-2009 at 04:53 AM.

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    Default Re: Dow below 7000...

    Sure Mel. ^^^ What are you going to attribute the stock markets inevitable rise in the future to? Republican magic? Supply & Demand, Fear & Greed, these are the things that drive the market up and down Mel.

    You've rejected the U.S. your republican heros created. Give Obama a LITTLE time to clean up the utter mess please.

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    Default Re: Dow below 7000...

    What are you going to attribute the stock markets inevitable rise in the future to?
    well, this week's rise was due in large part to three factors ...

    - options trading to minimize the 'pain' inflicted on domestic investors due to last thursday's options expiry date
    - a deliberate weakening of the US dollar to minimize the 'pain' inflicted on international investors due to last thursday's options expiry date
    - a deliberate smackdown of commodity prices to minimize the 'pain' inflicted on all investors due to last week's commodity options expiry date

    It's pretty easy to see that these short term 'manipulations' started to unwind last friday, and along with them the sucker's rally.



    Whether by coincidence or intent, Jim Cramer just went public with some of the machinations which make such 'manipulations' possible !




    On the other matter, as this is Dollar Den I will refrain from further discussions as to which US political party is primarily responsible for the weak economy. In fairness, I will also refrain from discussions as to which Canadian political party is primarily responsible for Canada's economic problems. But for historical accuracy I will restate my personal position that GWB's economic policies were far from 'conservative' ... and that GWB's holding the record of being the only republican president to institute a new social welfare program (prescription drugs for seniors) was a sad testament.

    ~
    Last edited by Melonie; 03-15-2009 at 05:07 PM.

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    Default Re: Dow below 7000...

    Quote Originally Posted by Melonie View Post
    ^^^ arguably, the stock market is 'forward looking'. In other words, stock price valuations of today are based on expectations of business conditions / profitability that will actually occur many months in the future.
    Stocks are also based on current conditions. When a company's earnings do not meet expectations, the company stock goes down. What is happening at the present has a significant impact on expectations about the future. When millions of homes are going into foreclosure because people are unable to make their mortgage payments, there's a good chance that future profitability for corporations will not be very high, if they're profitable at all.

    Quote Originally Posted by Melonie View Post
    While not wanting to wallow in economic politics here in Dollar Den, suffice it to say that US stock price valuations began their descent in earnest the day after Obama was nominated as the Democratic party candidate, gained downward momentum the day after Obama won the election four months ago, etc. The reason for this is that corporate executives, 'smart money' investors etc. cannot afford to wait for actual confirmed proof of a 'negative' economic situation staring them in the face before making plans to minimize the future 'negative' economic impact on themselves. Obama's widely publicized positions regarding future US tax increases, future increases in US energy costs ( no offshore drilling + carbon tax), future devaluation of the US dollar exchange rate ( via massively increased gov't spending ), future increases in labor / environmental costs, future increases in cost of capital ( as tax increases divert investment money into tax free gov't bonds and away from fully taxable corporate bonds) etc. really didn't leave much doubt in the minds of major corporate decisionmakers as to the probable future economic conditions that their US operations would be facing.

    ~
    This is nonsense. The decline of the stockmart is a result of the financial crisis caused by the large number of foreclosures happening in the economy. It was obvious since the beginning of last year that Obama or Clinton would get the nomination, and there wasn't a significant amount of difference between their policies. In fact, Obama has a good number of people from the administration of Hillary Clinton's husband working for him.

    Warren Buffett is probably the most successful investor ever. If Obama is so bad for the market, why would Warren Buffett have supported him?

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    Default Re: Dow below 7000...

    ^^^ arguably the Oracle of Omaha supported Obama so strongly for the same reason that his Berkshire Hathaway fund is down by a record amount this year. He put more emphasis on ideology and hype than on facts and fundamentals. But who knows ... maybe Warren like George Soros has secretly made a bundle shorting the US markets !

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