I think the worst is yet to come.
Compare how many jobs are being created in the private sector versus those created in the public sector. Not enough growth in the private sector, and there isn't going to be if the expansion of the federal government continues.
Capitalism creates growth, socialism, no matter how noble its goals, creates debt.
Just because the market didn't hit 3700 doesn't mean it won't. The market likes to fool the most people possible and public opinion had just gotten way too bearish. Now here we have gone from 6500 to 10,000 and everyone thinks it's next stop dow 20,000.
Like I said before I wouldn't be surprised to see both flagpole and the most bearish guy out there be proven right over the next few years. In the end it will be who can take the most pain that will make money. I think these are still unprecedented times and like someone else said people are becoming numb to it.
The stock market is also disconnected from the economy and is more a vehicle of speculation than ever before. Everyone and their grandma reads financial blogs and gets information that used to be available only to pros. This has changed the market dynamic and how it trades. People are much quicker to get overly bullish and overly bearish and these extreme sentiments lead to stranger patterns.
I changed jobs and am now working for a company that exports commodities to China. So, compared to a year ago my prospects are better. Also I made some budget adjustments and am getting more for my money on a lot of things.
That being said I still have some employable friends and family un or underemployed. After a year though as another poster has said, there is less panic about it. Personally I feel that people are makeing the adjustments that need to be made, but big business and the government are not. The unemployment number is B.S. The gains in the stock market in the last year are not based on production of wealth. Here is a good article I just read.
http://finance.yahoo.com/news/True-Unemployment-Figure-etfguide-2625308293.html?x=0
I changed jobs and am now working for a company that exports commodities to China. So, compared to a year ago my prospects are better. Also I made some budget adjustments and am getting more for my money on a lot of things.
That being said I still have some employable friends and family un or underemployed. After a year though as another poster has said, there is less panic about it. Personally I feel that people are makeing the adjustments that need to be made, but big business and the government are not. The unemployment number is B.S. The gains in the stock market in the last year are not based on production of wealth. Here is a good article I just read.
http://finance.yahoo.com/news/True-Unemployment-Figure-etfguide-2625308293.html?x=0
Numbers are being fudged, markets are being significantly propped up, more jobs are lost than gained, the free market is dead, this is Obama Market V1.0 and it will crash and crash very hard. Harder than the initial crash two years ago. Bet on it.
Your point? wrote:
Don't care about housing? How about consumer confidence?
NEW YORK (Reuters) - Consumer confidence fell in February to the lowest in 10 months, as consumers' short-term outlook for the jobs market worsened, according to a private report released on Tuesday.
The Conference Board, an industry group, said its index of consumer attitudes fell to 46.0 in February from a revised 56.5 in the prior month. February's reading is the lowest since April, 2009.
The median of forecasts from analysts polled by Reuters was for a February reading of 55.0.
The expectations index fell to 63.8 from 77.3.
The present situation index dropped to 19.4 from 25.2 in January, the worst since February 1983.
"Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years," said Lynn Franco, director of The Conference Board Consumer Research Center.
"Consumers also remain extremely pessimistic about their income prospects," Franco added.
Consumers' labor market assessment worsened. The "jobs hard to get" index rose to 47.7 percent from 46.5 percent, while the "jobs plentiful" index fell to 3.6 percent in February from 4.4 percent in January.
(Reporting by John Parry and Wanfeng Zhou; Editing by Chizu Nomiyama)
I didn't say I didn't care about housing. I said I don't care if the VALUE of homes ever comes back to where it was...there's a difference. Where I care about housing (and I said this earlier) is in the occupation of empty homes. Filled homes is what will be good for the economy going forward (in a sustained way), NOT increasing home values.
TheGreatGatsby wrote:
Numbers are being fudged, markets are being significantly propped up, more jobs are lost than gained, the free market is dead, this is Obama Market V1.0 and it will crash and crash very hard. Harder than the initial crash two years ago. Bet on it.
It does not matter what the numbers say. I AM BETTER OFF TODAY THAN A YEAR AGO. I understand that the ignorant right wing will never give credit to the current administration and that is fine. I was out of work and 2 months away from being homeless a year ago. I AM BETTER OFF TODAY.
The worst is NOT yet to come, but things aren't going to turn around anytime soon.
The reason why the worst is not yet to come is because the massive amount of leverage in the system has come WAY down, and that was the number one reason things got as bad as they did.
But here is the downside.
Underemployment rate is still ~20% and I don't see where the job growth is going to come from. We need to change from a service-oriented economy to a producer again. That will take a generation to complete. We also need to stop offshoring IT and Manufacturing. Right there, we would have a million+ Americans employed.
Health Care and SS is going to crush us, but this is an issue that has been around for a decade or longer.
The dollar, though strong today because of what's going on in Europe, long term, has big issues with all the money printing.
The DOW and S&P are up, but there is no such thing as a jobless recovery. Its smoke and mirrors right now..
Housing prices should go up with inflation... assuming the home is kept up to date and is as structurally sound as the day it was built. There is no reason for home prices to appreciate (speaking broadly here) more then CPI. I'm not talking about home prices in areas that become more desirable for some reason. This is good... it will lead to people not levering up their assets as much as before.
If the government can limit offshoring, create sound financial regulation, and solve the health care and social security issues, the rest will take care of itself.
Unfortunately, I don't have faith in our government, near term. Obama can't get anything meaningful done. He's not the problem, though... the Senate and Congress are the problem.
I see the DOW (since Flagpole, that is your favorite measuring stick... even if it is a flawed one), fluctuating between 8500 and 12000. It won't surprise me to see one or the other... so I guess I'm like Loholloran on that one.
Bottom line, I feel most comfortable in cash, hard assets, and speculating in individual stocks that add value to every day lives (like Apple, for example).
Progressionseeker wrote:
I see the DOW (since Flagpole, that is your favorite measuring stick... even if it is a flawed one), fluctuating between 8500 and 12000.
Fluctuating between the two of those points during what time frame?
Flagpole, I'm not sure because I don't know what the catalyst will be for a pop up or a pop down. 1500 point moves don't just happen (typically). There needs to be some catalyst.
That's why I don't want to be invested in "the market" but rather prefer my strategy of individual stocks. The "market"
play is too unpredictable right now.
In 2008 it was easy to short the market. Anyone who does this for a living, and saw what corporate bond spreads were doing the summer before Lehman (really since Bear) could see how irrational the equity markets were behaving. And again in Q1 2009, it was pretty obvious that it was a throw the baby out with the bath water situation. It was easy money the last 2 years if you were smart, simply by plating SDS or SSO, or using puts and calls, or shirting and buying outright.
I made more money in 2008 and 2009, while everyone was losing, to not worry about what happens this year... and why I am buying real estate and taking advantage of cheap contractors to add on to my house now. I don't understand why people are momentum traders only on the way up. You gotta play both ways people if you are going to play "the market" as a whole.
Anyway, back to your question. This year its going to be a lot harder for investors to make money in the market. You could make a ton, Flagpole, being long the US economy and buying the market... but you could lose just as easily. So be nimble and don't be wed to your position. Its about as 50/50 as I have ever seen it (unlike in 2008 and 2009, when it was pretty clear what you should do).
Its why I am finding individual stocks that I like and am being opportunistic.
But I know you're looking for a call. So I'll say this:
In 2010, we will see a dip to 9000 and a rise to 11000.
Progressionseeker wrote:
But I know you're looking for a call. So I'll say this:
In 2010, we will see a dip to 9000 and a rise to 11000.
Could be. Here's the cool thing about being a long-term investor though...I don't care what the market does in 2010...I really don't. Well, if the Dow skyrocketed to 18,000 then I'd care, because then I'd be done with my retirement investing and I'd take it all out and be very conservative with it all and likely consider retiring by age 55. But, normal or even within the realm of possibility abnormal fluctuations don't matter to me one bit.
5 more years and my house will be paid off...then, it may be time to invest in some individual stocks in addition to my normal retirement giving. Until then, I ONLY care about the long term.
Flagpole,
If history has taught you anything, you should know that you should not be a long term investor. If you put a $1 into the market in 2000, how much would you have now? What about in 2005? Hint: you wouldn't have enough to retire.
Long term is your dad's way of investing. Its not the new reality.
The spike in the market from 4000 to 8000 was correlated with a true productivity increase. The internet created a new way to conduct commerce. Desktop computing made people more efficient and productive then they had ever been in any point in history.
From 8000 to 14000, the gain was complete and utter speculation, driven by leveraged returns. There has been no productivity growth, no game changer like computing and the internet was.
Fair Value of the stock market is closer to 8000 then 14000 until "the next big thing".
Flagpole, I like you. I don't post under this name usually... you would know me if I used my normal name.
DO NOT BE A LONG TERM INVESTOR. Even my dad, the king of buy and hold and long term investing, realized that mantra is dead.
Go into your investments with a long-term holding plan... fine. But be willing to withdraw and be opportunistic.
In 5 years, the market will not be 15000. It may be 12000.
UNLESS there is a game changer.
Flagpole wrote:
adfdaf wrote:1) Many countries in Europe are about to go bankrupt
2) Unemployment hasn't moved despite loads of govt efforts
3) Real estate is still down despite huge govt and Fed efforts to prop it back up
4) The bond market has nowhere to go but down
5) The stock market is pretty much stagnant despite money at near 0% interest rates from the fed
6) credit is not expanding despite these low rates
1) Could be.
2) Government efforts kept it from being way worse. Employment rate dropped last time.
3) Real Estate PRICES are down. Lots of GREAT bargains to be had out there for people who have a little bit of money. Go to
http://www.realtor.comand search for houses between $50,000-$90,000 in the following cities west of Phoenix: Sun City, Buckeye, Surprise, Glendale, Goodyear. CRAZY deals to be had on some very nice houses that are just a few years old. Low prices benefits the economy (in the way that it SHOULD) because people can spend lots less for their home thus having more disposable income that is spent elsewhere. Low prices are bad for those who want to use their homes as an ATM, but they shouldn't have been doing that anyway.
4) Disagree about the bond market.
5) The stock market since one year ago is not stagnant...Dow was at 6400 in March 2009...it's today at ~10,400.
6) Credit is not expanding as one would expect with these low rates, true...I see that as a GOOD thing though. I don't WANT the economy to get a boost from people borrowing money...then we're back to where we were in 2007. Slow growth for longer while people learn to save money before spending it...that's what's better long term.
Dearest Flag(me,Iamanidiot)pole,
1)The US economy is now just like Europe, Stagnant with little to no growth, like Europe we're borrowing like we dont have to pay it back, the trend that Europe is going broke, was used by the original author to point out, we're following a sinking ship...
2) Government efforts have done nothing to stop Unemployment, and have ramped up underemployment, which is a big problem, a) it creates little growth from those who we as a nation have invested into for the purpose of advancement (ie scientist not getting jobs in high end science related work) b) it creates a long term gap in these fields as those who might enter those fields, instead entering other fields that are for practical purposes (ie growth) are useless
3) Low housing prices is a bad economic marker, good for a select few individuals, but bad for the market as a whole (because it indicates a depletion of wealth)
4) Lets not even talk about it, this is sort of like that thread about Ohio St crushing UF.... sometimes even the best can see the forest from the trees...
5) 10xxx after taking a line of credit for 700billion.... is kind of like saying, "Im glad I got my lunch ($5) money back from Tom, by paying Joe $25"... the growth factor necessary to counter the debt incurred has yet to materialize ( everyone better hope it does, some than later)
6) Few are saving who wouldnt have otherwise, the lack of credit just makes it harder for the unemployed to rally some capital to start businesses/ prevents the development over new competitors/markets... Good if you Apple, GE, Dupont etc. (since you can lowball your employees, and not worry too much about outside competition) bad if youre the Microsoft(s) of 20 years ago.
Progressionseeker wrote:
1. Housing prices should go up with inflation... assuming the home is kept up to date and is as structurally sound as the day it was built. There is no reason for home prices to appreciate (speaking broadly here) more then CPI. I'm not talking about home prices in areas that become more desirable for some reason. This is good... it will lead to people not levering up their assets as much as before.
2. If the government can limit offshoring, create sound financial regulation, and solve the health care and social security issues, the rest will take care of itself.
point 1: yes. thank you for expressing that so clearly. The idea of the home you live in as investment is as dumb as it is dangerous. That was partly my point about housing recovery--if anything, home prices in many places are still bloated when expressed as a multiple of income.
point 2: none of those is going to happen in the foreseeable future. welcome to the globalized future.
I'm just waiting until pension obligations start crushing companies and the Dow.
We Are Toast. Stop running and start drinking.
The U.S. , along with a great number of other countries, must be prepared to live an entirely different lifestyle in the coming years. This will not happen over night. The days of living off the fat of the world are beginning to fade into obscurity.
Some key points for those who are optimistic about the economy:
1) Obama talks about allocating billions in fed funds towards job creation.
What he fails to mention in classic politician-half-truth speak, is that those jobs created will not be American jobs.
2) Corporate earnings are up this past 4th Q.
Much of this is a result of massive employee firings.
3) The stock market rebounded ( last half of '09).
This is largely a result of investment banks going back into the casino with bailout money loaned to them by the Fed at no interest.
4) Economists say...
Quite simply, "Economists" more often than not, don't know shit.
Hard times are coming my friends. We can rationalize away the reasons why we aren't in trouble and that things will remain as they've been for a long time, or we can face the truth. Make no mistake about it - the robber barrons of the world will not be satisfied until they own everything on this planet - including you.
Re: Not with India, China, Pakistan, Russia, Israel and other developing countries in the discount IT job pool.
This is true on some levels, but still very much a fiction in others. The more software becomes a commodity, the more the job function of "IT" changes. I've worked with a lot of Indian offshoring firms and the quality still is pretty poor and a project is not successful without the key people leading the way here in the States. I'm sure things will improve but it's not there yet. And it's not really even close for senior-level type roles that require knowledge of multiple systems and some business sense.
Can you farm out mass-coding efforts? Sure. But, to be brutally honest, if you are in IT and are doing only that kind of work you ought to be aspiring to a lot more. It's the like being a scientist vs. being a lab technician, or something like that.
Personally, I worry more about H1-B visa contractors here in the States. They are often sharp and motivated guys, and they have little leverage to command a competitive salary while they are waiting on a green card. If anything, this is what is really hurting IT in terms of being a well-paying career for larger numbers of people. An American worker in the intermediate and senior levels has his wages somewhat depressed. But it's not the end of the world yet either.
From my own perspective in IT I don't worry about work in 10 years, but I do anticipate the nature of the required expertise to continue to change. The days of sitting tight and working on the same type of stuff for decades at a time are over. This is not much of a gripe compared to other industries.
Progressionseeker,
There are many reasons why I'm still a long term investor:
1) I've already made a ton of money that way...investing heavily since the Dow was at 2700 in 1989. The market could stay flat between now and the time I retire, and I'd be fine, and I'd still get dividends and I'd still have all I put in between now and then, and a flat market over the next 17 years isn't going to happen.
2) I've heard that stocks are dead and long term investing is dead for years. Stocks were famously declared dead in 1978. Ha! Just as recently as last summer I was told the Dow would take 20 years to get back to 10,000. Well, it didn't.
3) I've consistently done better than most, and while I don't have a specific reason for that, I do make changes once or twice a year based on what it appears will be the right balance. I'm always greatly diversified though so that a huge loss in one sector never hurts me too much. By the way, I've done great since 2000...not as good as the 90s, but very good.
4) I don't believe anyone should be "opportunistic" with individual stocks until they are already going 15%+ into retirement accounts and have NO DEBT including a house that is paid off. I'm not there yet as I still have a mortgage with about $100,000 left. When that is gone, I will consider (and probably will for fun) dabbling in individual stocks, BUT I will still keep my current level of investment into retirement accounts and my non-retirement mutual fund.
5) I don't want or need the Dow to be at 15000 in 5 years. If it gets back to 14000 by the time I'm 60, then with investing all along the way, that will more than be enough because of what I'm starting with.
i'm in a sales rep position and I am WAY better off this year. Using some if-than logic, if I am doing very well as a sales rep (running/endurance sports industry) than consumers are spending more making retailers buy more. Last year I wasn't that bad off, but this year I'm getting PAID.
My money market account blows, but my Finance degree, MBA, are about to pay for themselves. With all of the GOOD companies selling at such a discount, i'm taking advantage of this fire-sale. Thanks to all the government/big-business hating lemmings out there dumping all of their investments and hiding their money in their mattresses, I am picking up shares that are selling at 40% of their 5 and 10 year averages.
Thanks, my kids college is just about paid for, AND I DON'T HAVE KIDS YET!