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Thread: weekend commentary - US disposable income

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    Default weekend commentary - US disposable income




    Lowest of any time in the past 25 years. The chart also shows the overall average of disposable income vs. GDP and does not therefore address the issue that the poor may be getting poorer while the rich are holding their own.

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    Default Re: weekend commentary - US disposable income

    I liked the comment on Real Time w/ Bill Maher, 40% of home sales in the US are second+ homes.

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    Default Re: weekend commentary - US disposable income

    ^^^ absolutely true ... lots of spec buying has taken place lately, and those that can afford two mortgage payments are usually earning six figures to start with. However, there's some pretty strong indication that many of these spec buyers are going to take some serious financial lumps as interest rates rise, real estate market prices fall, and fewer would-be home buyers can qualify for tightening credit.

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    Default Re: weekend commentary - US disposable income

    What always impresses me (but usually in a very negative fashion), is the herd mentality which is the driving force behind so much of these business decisions made, by so many who you would think ought to know better...

    I first became aware of this in Austin, Texas, during a real estate boom there--developers were foaming at the mouth in their frenzy to build anywhere, viewing very favorable absorption rates as justification to do so. I saw some of those guys go bellyup for it, too.

    It's apparent to even someone as unschooled in economics as myself, that way too many of the movers and shakers in the business world are driven far more by this mentality than by good business sense--especially good long term business sense...

    So it comes as no surprise to see so many moderate investors doing the same thing, as you observe here, Melonie.
    Last edited by Djoser; 05-16-2006 at 11:44 PM.
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    Default Re: weekend commentary - US disposable income

    ^^^ agreed that the 'herd' mentality is an extremely powerful force ... which affects stock markets, futures markets, commodities markets etc. as well as contributing to many non-economic issues. The root problem of course is that the underlying economic fundamentals of all of these markets tend to be based on 'past performance' i.e. assumptions that past conditions/results will be repeated again tomorrow. Unfortunately, we're actually living in a 'different' economic world these days (a global one), and this fact hasn't really been recognized in all its aspects.

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    Default Re: weekend commentary - US disposable income

    Quote Originally Posted by Melonie
    ^^^ agreed that the 'herd' mentality is an extremely powerful force ... which affects stock markets, futures markets, commodities markets etc....The root problem of course is that the underlying economic fundamentals of all of these markets tend to be based on 'past performance'...
    It has never failed to infuriate me that the stock market--perhaps the single greatest important variable in the economic health of the entire world (since the 'global' economic trend works both ways)--is so dependent not only on all-too faulty perception of how 'past performance' is likely to predict future growth, but the 'panic' and opposite 'frenzy' instinct, which does so much to ruin the lives of so many people who have nothing to do with it.

    If aliens were to view the economic (or rather, herd/emotional, in fact) factors influencing world prosperity or the lack thereof, they would no doubt have the same reaction we do when we observe the behavior of some primitive aboriginal tribe...
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    Default Re: weekend commentary - US disposable income

    That's why you buy when the market is down, sell when its high, and ALWAYS be liquid and diversified to handle the swings. The average Joe chases the trend, tries to time the market, or ties up his cash in investments he can't touch till he's 59....and someone else is making money off of that mentality.

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