Down goes the Dow

"To understand how paper wealth vanishes, recognize that market capitalization is merely the product of two objects: the number of shares outstanding, and the price of those shares. For example, there are currently nearly 9 billion shares of General Electric outstanding. If a dentist in Poughkeepsie sells a single share of GE to some buyer, just 10 cents below the price of the preceding trade in the stock, fully $900 million dollars of market capitalization is instantly erased from the U.S. stock market as a result of that one $30 stock trade. Nobody “got” the $900 million. The lost market capitalization didn't "go into" bonds, or real estate, or gold, or cash on the sidelines, or anything else. It just plain vanished. Conversely, if our dentist buys a single share just 10 cents above the preceding trade in the stock, fully $900 million dollars of market capitalization is instantly “created” as a result of that one $30 stock trade."

John Hussman, Weekly Commentary, 3/27/2017

"Paper wealth"

LOL

"See, the actual “wealth” inherent in a share of stock is embodied in the very long-term stream of future cash flows that the company will actually deliver into the hands of investors over time. As long as a share of stock is outstanding, somebody has to hold it at every point in time, and that long-term stream of cash flows is actually what’s being traded. Everyone who owns the stock owns a divided claim to those cash flows. Investors don’t get to claim those future cash flows until they actually buy, and they don’t get to claim the market price until they actually sell. Put another way, the only investor who has a reliable claim to the current market price is an investor who is selling at that price."

John Hussman, Weekly Commentary 3/27/2017

There is no more "wealth inherent in a share of stock" than there is in your car, your home, or your baseball card collection. These things have "value", not wealth.

Hussman is playing a shell game and you are falling for the illusion.

"Stocks are a claim on a stream of future cash flows that will be delivered to investors over time. Historically, the most reliable “sufficient statistic” for those cash flows for the U.S. stock market as a whole is not next year’s forecast of S&P 500 operating earnings, but instead, the gross value added produced by U.S. corporations. The comparative reliability is not even close. The next few years are likely to be difficult for those investors who cannot actually tolerate a 50-60% portfolio loss on passive equity investments. Investors who would not be able to maintain a disciplined passive investment strategy over the course of such a loss are encouraged to review their investment exposure based on their actual investment horizon and risk-tolerance."

John Hussman, Weekly Commentary 3/27/2017

More "ifs" and "maybes". Zero facts. Bluster at its best. Manna for those who lack critical thinking skills.

Awesome post. Ya totally. Sure. Un huh.

More nonsense, just like your guru.

Ya sure. Ya know. Two times even.

Igy

More epic failed trolling from Igy.

Bob Pisani told me not to listen to Hussman. Bob is God.

K-5 Detector

Think for yourself wrote:

More epic failed trolling from K-5 Detector.

Ya sure. Ya know. Two times even.

Igy

More epic failed trolling from Igy.

So do we agree that these brilliant responses prove that Hussman is an idiot?

Of course. You can't defend the indefensible, thus the trolling by Fake Igy.

like air out of a balloon, this market. Constant flow out of stocks.

But still, we're only 3% or so down from all time highs.

longest streak of consecutive down days in 6 years apparently.

I'm glad that bonds have risen in value as stocks have fallen - that suggests markets are working as they should.

Profit taking begets more profit taking. If you didn't buy on the dip, it may be too late. Things are looking up again.

Bob Pisani wrote:

Like I said, BTFD.

Be a man, you spineless worms.