Skip to comments.(Vanity) Why Is The Stock Market Doing So Good, When The Should Be Tanking
Posted on 07/29/2012 8:12:01 PM PDT by OneVike
For the life of me, I cannot explain to my wife why the stock market keeps doing so well. I keep telling her it should be tanking, but it keeps going strong. From everything I have ever understood, and firmly believe about economics, the stock market should be down to about 5000 or below, yet it isn't. I have heard many experts say that they are themselves baffled?
I could give all kinds of economic numbers from various key industries, along with numerous statistics pointing to the way Obama has indebted our grandchildren's grandchildren. I could also give economic information that shows almost every country in the world is an economic basket case from China to the European Union, yet the stock market keeps defying reality.
I keep wondering if Bernanke is pumping the stimulus money into the market to fool the masses that still think a great stock market equals a great economy. If that is the case, does anyone besides me expect the market to crash next year after Romney is sworn in?
Anyway, back to my vanity question.
WHY? WHY? WHY, is the stock market soaring when in reality is should be fighting to survive?
Yes, even though I, and many like me, will not be voting for a president but still voting down ticket, I do believe Romney will win in a huge landslide.
Look back at 1980 when Reagan defeated Carter. Even with Anderson on a third party ticket taking 7% of the vote, Ronaldo Maximus still won in a landslide.
Now I do not expect anything close to 7% of the electorate not voting for either Romney or Obama. Besides, Obama makes the peanut farmer look like a friggen genius.
There is no market, only manipulation.
I’ve been wondering who has been proping up the market for the last several years. Everyone I know, myself included, either doesnt have a 401 anymore or is barely participating.
So, what is going on??
I am beginning to believe that.
Let’s just say that you have a point of view as to how the market should behave, and it is violating that prejudice or that supposition. You may believe that the market should reflect the economy; but “the economy” is one of those terms that means different things to different people. Is it employment? Corporate profits? Growth?
There are tremedous wads of cash lying around, much of it in bankster hands, and the government has effectively demonstrated to bankers and large hedge funds that as long as whatever theft or fraud is committed is of sufficient size, as long as good sized donations to the DNC are made, the prospect of prosecution is an utter joke. If the penalty for bank robbery was less than 10% of what was stolen, how many banks would be robbed?
Corporate profits are fairly impressive at present, and, many companies have refi’ed debt at generationally low rates and also shed employees. So large costs have gone out of corporate balance sheets.
Additionally, HFT trading controls the vast majority of trading on the NYSE and surely the NAS as well. These forces do not need the market to make large-scale secular sweeps in terms of trading ranges. They can make boatloads of money on these 100-200-300 DJ swings that don’t seem to do anything but cover territory already covered.
My belief is that there simply isn’t any other place to invest....not that there is a heck of a lot of investing going on...but the great thing about the market is that the opportunities for fraud are so juicy, yet almost entirely unprosecuted, while the liquidity of getting out of something before 0bama or Congress changes a law or does something (else) idiotic is also attractive. Eg; liquidity.
The point being, there is a behavior difference between how the market is behaving and your opinion. Guess what? The market is always right.
Isn’t the Fed propping up the stock market? That’s why it’s higher than it should be.
On aug 1st i pull 50% of my 401k as a loan. its the only option i have. i am of the same belief as you. something or someone is propping this up to the election.
I’m no expert, but I suspect a lot of people (from all over the planet) who used to have investments in Europe have decided that investing in US stocks is a little bit safer.
Because everyone thinks that the fed will bring on QE and devalue the dollar, causing the market to go up. If the jobs number sucks this week, they might be correct.
go to zero hedge.com
The market trades on future value, right? Maybe the market is expecting a big change that will somehow increase valuations. Let’s hope.
Here’s a thought- think about millions of people with 401ks whose money gets automatically pumped into the market each time they get paid. That would keep a market full of money even if it were tanking.
understand what you are saying, but the one thing that does not jive with your theory, is the volume of trading is not nearly what it should be if it were so.
Total volume is down from what I understand.
Why should it be tanking. You do not explain. There is an old adage: “The markets climb a wall of worry”. The more negative the sentiment the better it usually does. ‘Contrarians’ usually prosper. the mob usually loses. Keep in mind however that a few variables are helping corporate profits: layoffs and budget cutbacks have increased profit margins in many large enterprises; and the low dollar has greatly increased export sales. Also the consumer has been spending a lot more than in the past 3 years.
I heard that some Democrats are now passing around the idea of confiscating 401K’s.
Really you dont know? In part the government is printing money and buying bonds. Ever heard of expressions like QE1, or QE?
Wait for it...
It is money chasing money. It is just plain gambling, it has nothing to do with reality it is like a very complicated Monopoly game.
Probably the best bet is to go to ZeroHedge.com and read it for a few weeks.
It seems to follow the latest rumors regarding the european debt crisis and how they’re robbing Peter to pay Paul. IMHO this is a house of cards waiting for a tornado.
How much are bonds returning? <2%, therefore stocks are outperforming bonds right now.
Zimbabwe’s stock market soared during its hyperinflation/crash
These new highs, as far as I can see, are not widely confirmed, and are on low volume - but don’t fight the FED.
wads of cash in banksters hands because they no longer have any good investments to park them in. The government has seen to it that the US is a terrible investment and that money has no place to go.
"I have heard many experts say that they are themselves baffled?
These are folks that are deeply saddened that no one gives a flip about their pricing scheme.
"I could give all kinds of economic numbers from various key industries, along with numerous statistics pointing to the way Obama has indebted our grandchildren's grandchildren. I could also give economic information that shows almost every country in the world is an economic basket case from China to the European Union, yet the stock market keeps defying reality.
Reality is the real deal, not bags of feelings and data. Reality understands the data and acts accordingly, while at the same time ignoring the feelings and desires of those that play nothing more than an imaginary hand.
"I keep wondering if Bernanke is pumping the stimulus money into the market to fool the masses that still think a great stock market equals a great economy."
Bernanke isn't "pumping stimulus money". The market activity represents economic activity.
"If that is the case, does anyone besides me expect the market to crash next year after Romney is sworn in?"
Depends on what happens in the future. The only major economic problem that stands as a threat is forced participation in the healthcare "insurance" scheme.
"WHY? WHY? WHY, is the stock market soaring when in reality is should be fighting to survive?
Consider the fact that some folks do stuff, while others just feel what ought to be. The doers won't stop until they're dead.
You have several factors going on. 1. The new norm is the slow markets and businesses adapt to the market and start to make a profit again, even if the overall economy is in a downturn. 2. After the steep crash, people are starting to re-enter the market hoping for a turn around.
However, all is not as great as it appears. One thing to look at is the volume. Outside the blue chips, there isn't a lot of movement, especially on OTC market stocks. This means that small investors are dropping out and it is mostly institutional investors doing the trading. I've noticed this on a lot of OTC Pink Slip stocks I have. There are many days where you have virtually no trades on the stocks. I have one that is a supplier to AAPL so you would think it would do well, but it has very little attention at all in the market. It is just the institutions playing the big names.
This is also why investors sold hard in Fall of '08...they saw Obama and socialism coming. It was not Bush who caused it, it was Obama.
Now investors see lower taxes and a businessman about to take office...so the opposite of a crash is taking place.
If I were you, I would put some money in BEFORE Romney moves way ahead. That's what smart investors are doing now.
Dang..you beat me!
At least there is more than just me that believes this whole scenario is a giant manipulation.
My wife and I retired last year. We decided we could not chance the loss of our 401K’s and IRA’s because we cannot make up the loss of them again after losing so much in the fall of 2008 when we were still working. So we pulled all of our funds out of our market investments and bit the bullet on the taxes we owed. We still have inflation devaluing our cash to worry about and other shenanigans this money-grubbing government might employ to empty our wallets, but we will take our chances and protect our principle on our own.
We don’t need more growth at this stage in our lives. We need less loss of our capital. We took a big hunk of it and built a new home without a mortgage for retirement and the rest is hidden from view in one of our pastures on our homestead. We will hunker down and try to control our own destinies by weathering the storm in our own safe harbor. The stock markets and the banks be damned.
Heard that too
Now that is the one thing that keeps coming up, the volume is down.
So would I be correct in thinking that if no one trades much, but all of a sudden someone involved with the institutional investors makes a few trades at the end of the day with some blue chippers, the stock market then goes up when the rest of the stock market has not moved or even worse dropped.
So sure the blue chippers, which is what is basically reported for the overall markets losses and gains, may show an increase. However, as you say the overall volume is way down.
I still question the whole reason they changed the makeup of what companies are used to track the DOW.
If the old blues chippers where still the basis for the stock market rating, I wonder if we would get a better idea of what it really is.
The American stock market today is not about manufaturing in the domestic American economy. It is about American stock holders and name only American companies, investing in and producing their profits abroad.
The American stock market cheers on Apple, Microsoft &c, making their money by using cheap slave labor in China and other countries.
Besides climbing that worry wall, the market buys on the rumor, sells on the news.
I was thinking the same thing.
When I felt Obama was going to beat McCain in early October “08”, took 1/3 of my investments and put it in gold which eventually doubled. Maybe it’s time to reinvest that back into my old stocks, or at least something less shaky then gold will be come next year.
Anyway, I will take that into consideration in the next few Months.
I have $1000.00 dollars that says Romney wins going away.
Would you really like to put your hatred for Romney where your pocket book is?
As part of QE, the Fed has been buying stocks with the money it is printing.
Anyone outside the United States can invest in the stock market. To some overseas, our market is the safest thing out there. It’s all relative.
The market reflects opinion, confidence, and human aspirations more than financial metrics. Right now there is no other place to make money, so despite all you cite, people believe in the market and thus, the market responds.
I do believe Romney will win in a huge landslide.Romney will win in a huge landslide. There are not enough of us, who dislike baby killing Rhinos, to throw the election to a man who lost his re-election bid the day he was sworn in office.
Look back at 1980 when Reagan defeated Carter. Even with Anderson on a third party ticket taking 7% of the vote, Ronaldo Maximus still won in a landslide.
br /> Now I do not expect anything close to 7% of the electorate not voting for either Romney or Obama. Besides, Obama makes the peanut farmer look like a friggen genius.
Probably the best snapshot proxy for overall NYSE volume is SPYders. Here's a 5 year chart showing volume. Volume down? Yeah, a little, not gargantuan.
I think you have to consider the investing alternatives, and you also have to consider various market dynamics. For example, IMO there are very few forces in the market stronger than "performance envy" among hedge funds (and, conventional mutual funds) seeking to attract and keep capital. Bonds, paying poor coupon, are very unattractive, it would be easy to call them bubble-like. Who wants to earn 1.4% on a ten year bond? Yet the bond market is said to be 3x the size of the stock market, so it doesn't take much of an exit from bonds to pump the stock market pretty well. And there is the perception that Bernanke simply HAS to keep a floor under the market lest a widespread perception set in that his policies have failed.
The investor's task is not so much to assess where things are and how much those things reflect a current perception of reality; but to assess where things will be next, next, and next-next. I agree with what I *think* you are saying, which is that looking forward, the market appears quite fully valued and thus is less than attractive as far as putting in new money for returns down the road. That's of course a very general statement, but we are making general statements. I find the market not that attractive for new investment on a value basis, but the market has absorbed and begun to run its game on new elements. The market eagerly awaits the next infusion of Fed easing---as if it's an entitlement. Europe looks like crap, so lots of Euro money is flowing over here. I've said before in several posts here and there that there are a baffling array of moving parts going on in the world economy and politico scene, completely forgetting the screaming frauds perpetrated by MFGlobal and PFGBest that have scared people (justifiably) out of the market...as well as the flash crash and let's not forget that little episode circa 2008-2009 when the market dropped to HALF its current value. The markets are skittish now, that much can be said. We just got what, the TWENTIETH Euro rescue?
Sure, long term investing will be a good thing to do as the economy turns around, but I think many stocks are a good deal now and worth at least a little investment (as long as Romney keeps his lead).
I read somewhere that the FED was propping up the markets with printed money it gave to the banks.