Dow 20,000 vs. Dow 3,000
Edited by Cy McCaffrey - 7/23/12 at 8:12pm
lol right on kevin... i always get a kick out of those calling for the extremes either bull or bear... but in this case i'll have to say i don't think the guy calling for 3k is a totally outrageous or unrealistic one, as i kind of agree w/ him in some aspects... while i don't agree with his timeframe (i think it was 2013 or 2014?) that's too soon imo. but i think in the next say 5-10yrs it could become a reality... i hate to sound so down and gloomy, but unfortunately i just don't see the light at the end of the tunnel... however that being said truth be told, and contrary to popular belief, i'd love to be more optimistic and would welcome a healthy u.s./world economy and see the markets rallying on for the right reasons, but i just don't see it anytime soon. it just don't feel good out there, and i think it gets worse, much much worse longer term... again i'm thinking 5-10yrs out with this. but, you're right it's pointless debates, as it's looking too far out anyway... and as far as the guy calling for dow 20k? lmfao. keep on drinking the my friend wow....
the funny thing is you never really see anyone (or do you??) calling for longer range bound flat stuff (contexts/environments etc..) after the nuetral normal bear secular, which 2015* or pre 2020, doesn't really matter bc it will be priced in as we go accordingly.. Also some things aren't realities until they happen, and while that secular thing may be apparent, the brewing flat ranges head may not, but if flat ranges are a reality then than wouldn't they be now*(now: entry to 2013/2015ish^^^)?
The fabric only stretches so much until it rips, calling for big crazy numbers only makes it worse on certain aspects. I always keep my hopes high for good changes and innovations along the way though..
u expect to get on t.v. with sane calls??
anyways i see 20,000 before 3,000 for $dji. i don't even know if the economy is doing well or not. imo economy is a pos. but i think the current state will become the norm soon enough and new perceptions will be created on what a pos and good economy is.
John Maynard Keynes:
"Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities."
I think this is why Tones, you feel the way you do. I don't believe the stock market is clear and real-time index to our economic conditions. The market reflects confidence in the economy to be sustainable. Economy is cyclical and wealth consolidates over time.
However, because we are not operating on a bimetallic standard, we rely heavily on trust to back out money of which the supply is controlled in the US by the Federal Reserve. Simple economics courses go over the 3 tool the Federal Reserve have to stabilize money supply. One option is for the Federal Reserve is to lower interest, but because low interest rates have an inverse relationship to bonds you eventually fall into a liquidity trap, where you can no longer reduce the interest beyond 0. Which is the situation we're in. From here on out, monetary policy by the Federal Reserve is useless and we're dependent on an incompetent government for fiscal policies to stimulate economic growth.
Part of the reason I believed we rallied for most of the year is because we've been in this slowed down economy for 4 years now. In the past most recessions and depressions last only several years. How long before the market self corrects itself? Part of the reason, maybe the Federal Reserve's monetary policy is doing its job keeping the economy above water.
If you want a fundamental reason on why the market is starting to break down, much of it has to do with reality. The Federal Reserve is in a liquidity trap, and in a liquidity trap monetary policy becomes ineffective. The FED buying long term bonds from here on out is basically saying they will eat the loss on depreciating assets (because again bonds and interest rate have inverse relations). According to Keynes our economy becomes dependent on fiscal policies to stimulate growth. Whether it's to increase government spending (Keynes divide spending into two categories giving and investing) on public infrastructure or public services or further reduce taxes. So which will it be? Naturally Repubs are pro-business and private sectors, Dems are naturally pro spending. The issue is the current and future government competent enough to invest the money rather than give it away?