Down goes the Dow

You are clearly not very bright.

No need for you to continuously drive this point home. I get it. Believe me, I get it

If we cannot quantify QE, then why are we doing it?

K5 wrote:

You are clearly not very bright.

That's funny coming from you.

fisky wrote:

If we cannot quantify QE, then why are we doing it?

we can't quantify ANYTHING do to with macroeconomics - we just try to steer the ship in the direction we want to go.

Many feel all the tinkering with interest rates and the like do more harm than good, and create massive unintended consequences.

Like the emerging market boom...and current bust. At least some of that boom was casued by cheap money borrowed in the uS at 0% and invested in, say, THailand at 6%. Now that flow is going the other way, causeing serious probs in those small markets.

K5 wrote:

Grasp this you pompous, illiterate twit.

Fair enough; I accept this as your concession that you have failed your argument on this point and have resorted to vacuous insults. You will probably try (vainly) to insult me again in response to this post.

K5 wrote:

Grasp this you pompous, illiterate twit.

Fair enough; I accept this as your concession that you have failed your argument on this point and have resorted to vacuous insults. You will probably try (vainly) to insult me again in response to this post.

agip wrote:

fisky wrote:

If we cannot quantify QE, then why are we doing it?

we can't quantify ANYTHING do to with macroeconomics - we just try to steer the ship in the direction we want to go.

Many feel all the tinkering with interest rates and the like do more harm than good, and create massive unintended consequences.

Like the emerging market boom...and current bust. At least some of that boom was casued by cheap money borrowed in the uS at 0% and invested in, say, THailand at 6%. Now that flow is going the other way, causeing serious probs in those small markets.

We cannot quantify the side effects. We certainly DO know the quantity of money the FED has injected and the what is in their "trading" account. And, unfortunately, we can quantify the risks, skews, and such of carry trade, and how rapidly carry trades can unwind and blow up in the faces if not just the originators but the world economy. Don't ignore that the title of this paper is "Carry Trade and Currency Crashes":

Those who choose to ignore the history of Long Term Capital Management are doomed to repeat it. It is shocking just how quickly the very modest Fed taper so far threatens to crash EM currencies:

And on top of that:

I kind of expect all of this may be positive for the US bond and equity markets in the short run and may result in 2014 returns higher than you think right now. But 2 years out or so, I bet that K5 beats Flagpole if both keep their present positions

coach d wrote:

It is shocking just how quickly the very modest Fed taper so far threatens to crash EM currencies:

Shocking?

No.

What's shocking is how little of an action from the FED it took to cause currency crises in minor currencies around the world. What happens when they get serious? I also find it almost impossible that the FED would actually be able to maintain a taper at the same time the ECB is having to fight DEFLATION. In 1987, the opposing monetary policies between the FED and the Bundesbank (but in the opposite direction) was the primary cause of the 1987 crash.

I think it's fairly easy to predict now that present policies will cause a serious currency crisis in a major currency, which will cause the FED and ECB to throw even more money out there, which causes both equities and gold to go up significantly until EVERYTHING becomes horribly overvalued and everyone heads for the exits at once. And that's how the 2000 top occurred.

I don't think I'd want to be Janet Yellen right now.

I agree with "Predictable". This is no surprise. As agip pointed out, the QEs had the effect of propping up Europe. Take it away and anyone could see what would happen.

Is this it boys?

"Global stocks continued to fall on Monday, extending a rout begun last week, as investors worried about a slowdown in growth in China and other developing economies that is causing big losses among emerging-market currencies.

When investors worry about global growth, they first pull back from riskier trades in emerging markets. That combined with concerns about specific countries — economic stability in Argentina and a political scandal in Turkey — to convince investors to sell off even more sharply.

After sharp losses in Asia, Europe was also trading lower. Around midday, London's FTSE 100 index of British companies skidded nearly 1.5 percent to 6,565.61."

dumb wrote:

K5 wrote:

Grasp this you pompous, illiterate twit.

Fair enough; I accept this as your concession that you have failed your argument on this point and have resorted to vacuous insults. You will probably try (vainly) to insult me again in response to this post.

My point was simple, clear, concise and well made. I do accept the fact that you will never admit this. So, from that point of view, I have failed. But I knew that going in.

coach d wrote:

I think it's fairly easy to predict now that present policies will cause a serious currency crisis in a major currency

really? That's a massive prediction. Feel free to back away from it, but until you do, I'll put it in my calendar for 12/31/14 to see if a major currency crashes this year.

Could happen, but there hasn't been a serious crisis in a major currency for a long, long time. There is probably a reason for that - some form of stability that the market has found.

K5 wrote:

My point was simple, clear, concise and well made. I do accept the fact that you will never admit this. So, from that point of view, I have failed. But I knew that going in.

I'm still laughing that you called me illiterate. Also S&P up at the bell so looks like we didn't have too many investors waiting to sell off US equities on emerging currency jitters

this fastest wrote:

Yep, and all those regular purchases Flaggies made above 16,000 in 2013 are now in the red.

What a ridiculous way to look at the stock market. Dips are EXPECTED, and most of the time they are HEALTHY. So far, this little dip hasn't even been enough to be of the healthy variety. I would LOVE to see it get into correction territory.

Remember that Klondike, the OP, got out at 15,000 back in July, so I have put in thousands of dollars since then while he has done nothing. That money has GROWN since then too, dividends included.

Still being 12+ years away from retirement, I don't get concerned about big drops. Keep putting money in, and the market ALWAYS comes back. I will be a LITTLE more concerned when in retirement, but if a big drop happens then, I'll just take from bonds or cash reserves or Social Security while I wait the the stocks to bounce back.

This trying to time the market thing just does not work. Fortunately for Klondike, he has a pension, because he doesn't have the stomach for the stock market.

Also S&P up at the bell so looks like we didn't have too many investors waiting to sell off US equities on emerging currency jitters

It's down now.

Flagpole wrote:

Remember that Klondike, the OP, got out at 15,000 back in July...

My bad, he got out in JUNE...even worse!

K5 wrote:

Also S&P up at the bell so looks like we didn't have too many investors waiting to sell off US equities on emerging currency jitters

It's down now.

The market goes up. The market goes down. Repeat.

Not a runner, yet wrote:

Could somebody explain, in the simplest of terms, WHY the aggregate market indexes should always rise over the long term?

And once that is accomplished, can anybody explain WHY that rate of increase should be expected to be greater than the ACTUAL rate of inflation?

Inflation is based on prices of goods and services.

An increase in market stock prices is based on return on investment.

Lets' say you have a tool box.

Buy some wood and nails at one combined price.

Use those materials to build a table.

Sell the table for more of the cost of the materials.

You can even factor in the cost of your time or maybe the cost of outsourcing the work.

If things work out well, you will have a return on investment that it is higher than inflation.

But maybe not if you didn't do a good job.

Good investments on average should beat inflation.

A lot of times investment are overvalued or investors don't really know what they are buying or business models fail or diminish.

And these are mixed with the aggregate market.

Up and down. But if good business practices are used it should on average be up over time.