DOW goes north of 13100. But Oil is near 66 a barrel?

what? you crazy? take profits now.

Don't want a repeat of Feb. 27th times 3 do we?

earnings are a lot higher than in 2000.

I am not saying we won't have a correction but there is nothing special about DOW and 13000.

And your analysis sucks. Higher oil prices is not inflationary unless the Fed monetizes it and that isn't happening right now. Higher oil prices mean people have less money to spead at the mall, so it does not expand the economy. It restricts it since it potentially lowers consumer spending. And the money that is spent on higher oil prices goes outside the US so that doesn't increase spending in the US either.

Girlfriend help wrote:

Adjusted for inflation the stock bubble of 2000 only reached 13k for the dow.

The bubble was NASDAQ. When that gets to 5000, give me a call.

We are due for a normal correction.

Price of gold is down briefly and has not cracked 700 since last year - POG is the best indicator of where the world thinks things are headed.

When gold reaches an all time high, then I might bat an eye, till then ... yawn.

My oil holdings are making me wealthy! America: Please keep buying SUVs for another few years and filling those monsters each week.

mcgato wrote:

Girlfriend help wrote:

Adjusted for inflation the stock bubble of 2000 only reached 13k for the dow.

The bubble was NASDAQ. When that gets to 5000, give me a call.

Very true. Crazy how far NASDAQ has fallen and not yet recovered -- only about half of where it was. Good thing I was not heavy in tech stocks then.

When the techs start to do well again though, it's going to climb fast.

Speculative investors are heading for solar energy farms now to start sinking their money into. More efficient solar panels that use more spectrums of the sun's rays to product energy, mirrors that heat contained oil systems that then heat water to steam which turns turbines. It's all coming. Every year oil will become less and less a factor for Americans. Still will be a big thing for 20 years, but just lessened each year as the technology for other sources of energy gets better and better.

Don't worry too much about the price of oil. When the demand here in the US goes down (and it will slowly) the price of oil (adjusted for inflation) will have to go down too.

dunderhead wrote:

I am not saying we won't have a correction but there is nothing special about DOW and 13000.

Only because Bush is President...if Clinton were in office this would heralded as the greatest day in US history

Not to be an alarmist, but look at the crash and great depression and you can see a lot of similarities. Back when it occurred you had a very high debt to income ratio and lots of people over extended. This was in stocks at the time and when the margin calls came in lots of folks lost everything.

Back to today, we have a lot of people over extended on homes with interest rates that are going to cripple them when they adjust. If the foreclosures start coming like they think and are starting to see then we could all be in for some big trouble. Stock market won’t survive the crash of the housing market and subsequent mortgage company bankruptcies.

As for Gas, they oil and gas companies have been systematically raising and lowering our prices for the past few years to prepare us for 3.50 a gallon. If they are making record profits they have not needed to raise the prices do to demand. We are all just suckers and have been allowing ourselves to be pulled deeper and deeper into this mess. With the big cars and crappy mileage we have allowed ourselves to be screwed. When people actually stop driving as much and fight back by getting off there lazy asses then prices will come down again. But because everyone has to have there own car and driving has become a staple of our daily waste process we had better just get used to higher prices.

so many defeatists on Letsrun

What if al-qaeda nukes the oil fields? Oh dear...

The markets are far more sophisticated and insulated than in 1929.

Mortgage bankers won't adjust interest rates up to a point where massive foreclosures would take place. Why? Because they don't want to be saddled with unsellable inventory. They will smartly encourage those in trouble to refinance at a reasonable fixed rate with a longer term. The people who process paper at the banks are the ones who will get screwed with job losses.

The market will correct but not crash. Defeatists on Let's Run need to chill.

So should oil stay at what? $10? Everything in economics can be traced to supply and demand. The days of $10 oil and 10 cent bread are far and gone.

Alan

whats obvious, is that euphoria is clouding many people's judgements.

Flagpole: To make the solar panels and electric grids necessary for oil not to become a factor, we would have to actually up oil consumption to fabricate so many electrical cables and PV cells. Not to mention Silica and Copper are in short supply, so you would also have to ramp up mining of those materials. Basically switching to an all solar economy would take well over 30 years. We started in the 70's and stopped. We are finally starting again, but it will take at least 25 years.

Biofuels are not a reliable answer and neither is synthetic petroleum. They might at most represent 10% of the liquid fuels market. However the cost to farm productivity and subsequent inflation from a secondary consumption source of food would be potentially destabilizing, as would the loss in topsoil, already eroded to crisis levels.

Basically we need 20 more years of oil. And Oil has to match relatively demand. It has too. If it plateaus, with China and India consuming more, and more and more countries nationalizing their oil industries its doubtful we have that long. I would say we don't have 5 years. We aren't ready.

The only answer is new urbanist policies and rapidly decreased consumption. And we would still be fighting over Fresh water, Oil, and Minerals for decades. Not fun.

How long this Dow Euphoria can go on, I don't know, but I do enjoy making money from it.

Tech stocks are having great earnings so far. Other than YHOO all other techs have reported pretty good numbers. GOOG blew out there quarter, as did AMZN (+27% today), and AAPL just a couple of hours ago. SUNW and YHOO had poor earnings, but techs are really gearing up. The only problem is that they are blowing out numbers that were already revised down. So S&P was expected to grow at 3% this year it is currently (after about 217 companies reporting) at a 6.7% growth, which would still be the slowest in years.

So people are rejoicing about lower numbers because they are better than the revised lower numbers.

It is like your boss telling you your salary is going from $50,000 to $30,000 next year, and you end up making $40,000 you should be happy, but how happy should you be? Especially considering inflation is around 2-2.5%.

Some points:

1) The crash of 1929 is very different from today in many ways too. First of all, such a greater percentage of Americans are in the market now as opposed to then. Also, the companies invested in are of a more global scale. Fund managers, upon seeing things go south in one part of the world or sector of the market, advise that people invest elsewhere. A crash the likes of 1929 that sustains the downturn is not likely to occur.

2) Retired Fed Chairman Alan Greenspan recently said that the American housing crisis isn't big enough to keep stocks down in this global economy. Very myopic to think it would. The housing crisis is bad for those who did the subprime mortgages or the ARMs and can't get out of it, but for those who didn't do that, no problem. Stock market will not be affected long term because of that.

3) To I love peeps - Dude, just in the last 2 years solar farming has become big. Of course it takes some oil to make those things, but the amount of oil it saves immediately is huge. Within 10 years most homes will have solar panels on their roofs UNLESS they don't because all new homes are painted with nanotechnology paint that gathers energy from the sun and powers the house that way.

Don't lose sleep over it peeps.

Have you looked around lately? $66/barrel oil is irrelevant. People are still driving like crazy. The economy is stll growing. The fact is that rising oil prices do not necessirly hurt the economy, unless there is a sudden shortage of oil on the market (ie 1973-74). Let's face it, the US economy is accustomed to $60+ oil and most people are unaffected by paying $3/gallon for gas vs $2/gallon for gas. We're taling about an extra $1,000 a year spent to drive. And as another psoter pointed out, rising oil prices are not inflationary unless the Fed increases the money supply to compensate, which they have not been doing. You want a reason for Dow 13,000 - how about that corporate earnings have been growing double digits since 2003 and have increased at a much faster rate than the market has, especially in 2004 & 2005 - thus a current market PE ratio of 15, which is fair by historical standards, especially when you consider the 10-year is at 4.6%. People who compare this market to the 1999/2000 market probably weren't actually following the market back then - back then you had a PE of 30 on the S&P 500 with higher interest rates and similar earnings growth.