Thud. Down 156 Thursday morning, even agip's beloved SP500 is down.
Economic indicator news appears to be quickly see-sawing as the controlled-release PR machine switches from command mode to response mode, with the quick pace of interesting international developments.
Nothing to see, yet. I'm still waiting, and I still think that assets are overpriced because there is too much funny money around. People in and near retirement are cashing-in like you wouldn't believe, by selling these overpriced assets, including housing and securities. I for one am not buying their stuff so that they can laugh all the way to the bank.
It's a typical screw-job, "buy low, sell high". That only works if others have a need or desire to "buy high". Conventional wisdom works to translate "buying high" into "buying low", reciting the mantra that markets always rise, and often dismissing transaction and opportunity costs, often dismissing inflation, and essentially believing in a static tax code.
There are times when it is good to buy something, and there are times when it is good to sell something. For those who have been in the market a while, it is easy to see how it could be a good time to sell. For those just entering the market, they must be convinced that it is a good time to buy. For those who have been in a little while but are not ready to get out, it is perhaps neither a good time to buy, or to sell, depending on one's specific situation.
You know who's buying? Big entities, that's who. A big thing now is for corps to buy shares of other corps, or in the extreme case to do M&A. The money is coming from the government. This does not represent true economic growth, it represents price inflation.
I see this whole thing as a gigantic pump-and-dump, with a few exceptions of course. The problem is that you need somewhere to go with your money from the dump, and in this sense the world has become very small, and very limited, because it is essentially all interconnected. There's nowhere to go, we are trapped. Those with insane amounts of money just end up buying other over-priced assets, like overpaying for large buildings, boats, aircraft, or vehicles, depending on how much money one has--which is all about wealth preservation, not about productivity and productive assets.
An essential part of the translation from "buying high" to "buying low" is the shift from consideration of a purchase price, to that of a payment, which of course give the psychological impression of "buying low". This mechanism is enabled by the low interest rates, and is part of the entire scheme. Without it, the pump-and-dump wouldn't work, especially as relates to "the housing market", which as we all know, may be the central market in our entire economy.
Even the housing market is equilibrating, and IMO experiencing a "correction" at certain levels. True luxury housing is as overpriced as ever, as is higher-end housing--but where I am, in the middle- and low-range, it's going down. Sellers are constantly having to drop their asking prices, sometimes dramatically, and if a property doesn't sell within the first 3 days, then it will sit for months until the price is dropped. I have a good idea of the local market, and am personally interested in a property on which the seller has gone from listing at a 12% loss, to listing at a 17% loss. I'm considering making an offer at a 28-30% loss, good for only 48 hours. They purchased it in 2006. I have seen local losses much greater than this, happen already this year, and ours is reputed to be a "hot" market. The purchase price in 2006 was $263k
Fortunately I don't "need" it, although it would be nice to have, for office space. The alternative is to continue renting, which is also a decent alternative. My point in all this is that I am lucky enough not to "need" to buy a property such as this one, nor do I need financing to do so--so, not only do I not get suckered into considering a payment rather than a price, I also get to rationally compare it to other options.
Mine is a position of relative strength, and in that observation is, I think, an interesting nugget of truth: the current conditions prey upon the relatively weak. Weak financially, weak in terms of options, weak in terms of knowledge, and weak in terms of need. It's a terrible situation, and IMO extends to securities.
This is no way to let a society be run, and it will end badly, with most pain being visited (as usual) on the everyman. I hope not to be in that category, and work assiduously to look at the defining characteristics of the everyman's position, and work assiduously to not embody them. It's difficult.
Thanks to everyone for entertaining this rambling. DJIA still down 152