[TheCaptainPower]

Turned on my computer this morning right before the market opened, and I couldn't believe my eyes, GDP is -0.1%!!!! AND, jobless claims rising...

That's right, our economy is shrinking. And it is shrinking BEFORE all these added taxes such as the payroll rollback, obamacare, and state increases like in California...

I can't believe how badly they f'cked up our economy. Our government is spending BILLIONS per month in buying up mortgage debt, and keeping interest rates loans, and this is what we have??

But what the most insane thing is that the STOCK MARKET is about to beat its record while the economy is shrinking.....

Let me emphasize that again because it is important: THE STOCK MARKET IS ABOUT TO BEAT IT'S ALL TIME RECORD, WHILE THE ECONOMY IS SHRINKING"

Does that make any economic sense at all? Or we just in the mother of all stock bubbles again??

I also read today that 15% of school loans are now deliquent, and it is getting close to the size and percentage delinquency of the subprime market in 2008.

But why do I think its worse than subprime? Because people stopped getting those mortgages, but every 6 months another 1 million youths in america are taking out larger loans...

I think we are due for another crash...What do you guys think?

[RebelLibertarian]

Probably right man. The stock market is widely regarded as a scam whereby the Bank$ters scam the poor fools who themselves attempt to play it. On the plus side, a market collapse should restrict America's warmongering and exportation of cultural filth.

[TheCaptainPower]

Its unreal that my grandmother is getting 1 percent on her savings at age 80 so that some stupid aholes can afford the house they should have never bought....

And now 4 years after keeping rates too low, and letting things bubble up like student loans, we have NEGATIVE growth...

[_GQ_]

(01-31-2013 08:55 PM)TheCaptainPower Wrote:  

But what the most insane thing is that the STOCK MARKET is about to beat its record while the economy is shrinking.....

It's not so insane at all. If investors believe that it's only a short term blip and that steady growth is around the corner there's no reason for the market to dip much if at all.

[Ensam]

I really think the stock market is causing the downfall of our economy.

Here's my companies story:
We're in the oil&gas business. Our primary product is pretty far down the value chain and is dirt cheap to make once you have the infrastructure in place. It's basically like printing money. It's vulnerable to commoditization so R&D is a huge part of our success.

Our last earning report missed some analysts prediction by a significant amount and the stock tanked. Now we're still well in the black. Fundamentals are good. We've got plenty of excess capacity and when manufacturing picks up we're going to make a fortune. But rather than just roll with it the executive management decided to gut budgets to try and meet the analysts expectations so that the share price will recover. In 10-15 years we're going to be screwed once our current tech gets commoditized and there's nothing in the pipeline because they gutted R&D.

I'm sure the same thing is happening in other companies too. That lack of R&D is going to keep the economy down because all the productivity gains we've seen in the past few decades aren't going to keep coming if companies stop coming up with new ideas.

[scorpion]

We're so far overdue that I'm starting to question if the market will even be allowed to fall more than a modest amount for years to come. It's the worst kept secret in the financial world that the Fed has been backstopping the market ever since the crash. Everyone knows it's not a real market, but no one wants to talk about it, since as long as the Fed is watching the downside everyone can keep on making money through high speed trading and other fuckery. The Fed can just use its unlimited bankroll to buy into any dip to help stabilize the market, then slowly sell off its positions on the upswing. The market used to be an indicator of the health of the economy, now it's just a glaring indicator of how rigged the economy has become.

[_GQ_]

(01-31-2013 09:18 PM)scorpion Wrote:  

We're so far overdue that I'm starting to question if the market will even be allowed to fall more than a modest amount for years to come. It's the worst kept secret in the financial world that the Fed has been backstopping the market ever since the crash. Everyone knows it's not a real market, but no one wants to talk about it, since as long as the Fed is watching the downside everyone can keep on making money through high speed trading and other fuckery. The Fed can just use its unlimited bankroll to buy into any dip to help stabilize the market, then slowly sell off its positions on the upswing. The market used to be an indicator of the health of the economy, now it's just a glaring indicator of how rigged the economy has become.

Is that not the job of the Federal Reserve, to try and keep things in 'balance'?

[TheCaptainPower]

I thought the fed was supposed to stabilize money....

I love how they say there is zero inflation, but gasoline and food are through the roof...

[void]

The casino always wins.

[Rutting Elephant]

Met my broker two weeks ago and was surprised to see that my portfolio went up 11% last year with a bearish strategy.

[Tigre]

(01-31-2013 08:55 PM)TheCaptainPower Wrote:  

But what the most insane thing is that the STOCK MARKET is about to beat its record while the economy is shrinking.....

Let me emphasize that again because it is important: THE STOCK MARKET IS ABOUT TO BEAT IT'S ALL TIME RECORD, WHILE THE ECONOMY IS SHRINKING"

Does that make any economic sense at all? Or we just in the mother of all stock bubbles again??

So don't buy the entire market, but pick stocks based on fundamentals that are not exposed to the downturn you predict.

Also remember that stocks can derive earnings from foreign markets. The US economy is only one component, one revenue stream. The US stock market has many market leaders, and they sell worldwide.

To begin any meaningful analysis you should look at P/E, which you haven't mentioned.

[clever alias]

(01-31-2013 09:57 PM)TheCaptainPower Wrote:  

I thought the fed was supposed to stabilize money....

I love how they say there is zero inflation, but gasoline and food are through the roof...

gas and food could and probably are due to other factors, mainly, emerging economies that now want what we want. Huge growth in demand for oil and food from China and India are shifting the prices upward, not necessarily the money supply.
Now I know that's a bold statement, but if you look at the increase of food and oil prices over the last few years, even when the fed was contracting the monetary supply (2010 was almost all contraction) the prices STILL went up for food and oil.

[Samseau]

(01-31-2013 09:18 PM)scorpion Wrote:  

We're so far overdue that I'm starting to question if the market will even be allowed to fall more than a modest amount for years to come. It's the worst kept secret in the financial world that the Fed has been backstopping the market ever since the crash. Everyone knows it's not a real market, but no one wants to talk about it, since as long as the Fed is watching the downside everyone can keep on making money through high speed trading and other fuckery. The Fed can just use its unlimited bankroll to buy into any dip to help stabilize the market, then slowly sell off its positions on the upswing. The market used to be an indicator of the health of the economy, now it's just a glaring indicator of how rigged the economy has become.

+1

Here's some financial history for you guys:

In other inflationary regimes, such as during the Weimar republic, stock markets SOARED while the rest of Germany plummeted into debt and destitution.

Why is that?

Because when the central banks print money, they give the money to all of their rich investor friends.

Rich people already have everything they want, so what is left to spend their money on?

Putting the money into "on the ground investments" makes no sense, since during inflationary times saving money loses you cash.

Thus the only way thing left to invest on during inflationary periods is stocks. Stock markets generate fast, immediate returns, which is the only way to make money during extreme inflationary periods.

So right now, the FED is printing mad cash, giving it to their buddies at Goldman, JP, and BoA, and then these banks, rather than loan it, put the money into select stocks to ride the ponzi.

And it is a ponzi; freshly printing money is put into the same stocks that all the big banks with their printed cash already invested into. For example, APPL during the years of 2009-2012, and now APPL is unpopular and crashed hard as printed money is being moved to other stocks.

So the only way stocks with inflated values can continue to increase is if the FED prints more and more $$$. As soon as the FED stops printing, the economy will begin a backslide into insolvency and then the market will crash.

Since the FED will never stop printing money, America will go bankrupt and experience hyperinflation first - but stocks will not crash.

Keep an eye on Japan - they are going to go bankrupt before the end of the decade and the yen will hyperinflate into worthlessness. They've been printing money for over 20 years and are already spending 25% of their tax revenue just on interest payments. They are so fucked it's not even funny.

[bacon]

recommend reading this article
http://www.zealllc.com/2013/highcomp.htm

[BIGINJAPAN]

(01-31-2013 10:11 PM)Tigre Wrote:  

(01-31-2013 08:55 PM)TheCaptainPower Wrote:  

But what the most insane thing is that the STOCK MARKET is about to beat its record while the economy is shrinking.....

Let me emphasize that again because it is important: THE STOCK MARKET IS ABOUT TO BEAT IT'S ALL TIME RECORD, WHILE THE ECONOMY IS SHRINKING"

Does that make any economic sense at all? Or we just in the mother of all stock bubbles again??

So don't buy the entire market, but pick stocks based on fundamentals that are not exposed to the downturn you predict.

Also remember that stocks can derive earnings from foreign markets. The US economy is only one component, one revenue stream. The US stock market has many market leaders, and they sell worldwide.

To begin any meaningful analysis you should look at P/E, which you haven't mentioned.

Using P/E is not the way to go. Let's look at a few examples of large cap stocks who have strong fundamentals vs weak fundamentals.

Apple has 130 billion in the bank and pays a dividend. P/E= 10.33. Also has around a 40% net margin on products. Stock is 35% off its all time high

Amazon has no cash. Pays no dividend and an operating margin of about 0.5%. P/E=3793. Stock is all time high.

LNKD has no cash, pays no dividend barely makes a profit. P/E= 800 stock is all time high.

INTC. Pays dividend. 10 billion in the bank. Operating margin around 20%. Nowhere near its all time high and a P/E =9.33

Not trying to rip on you, but I am just showing how distorted the market is.

$85 Billion a month of FED money printing will do that to you.

[BIGINJAPAN]

Fuck this little example shows why the stock market can continue to go up. Nominally anyways

http://www.zerohedge.com/news/2013-02-01...se-january

[Samseau]

It's like Zerohedge was reading this thread - look at the latest post they just put up:

http://www.zerohedge.com/news/2013-02-01...r-zimbabwe

"Zimbabwe's stock market was the best performer this decade - but your entire portfolio now buys you 3 eggs"

For those who don't know - Zimbabwe recently had the worst inflationary crisis in the history of mankind. And stocks soared, but the entire country is in shambles.

[Faust]

Samseau:

Quote:

In other inflationary regimes, such as during the Weimar republic, stock markets SOARED while the rest of Germany plummeted into debt and destitution.

This sounds really interesting. Do you have a source that can give more information on stock market behavior during inflationary periods?

[Samseau]

(02-01-2013 08:57 PM)Faust Wrote:  

Samseau:

Quote:

In other inflationary regimes, such as during the Weimar republic, stock markets SOARED while the rest of Germany plummeted into debt and destitution.

This sounds really interesting. Do you have a source that can give more information on stock market behavior during inflationary periods?

I read this book: https://mises.org/store/Product2.aspx?ProductId=10438

[WestIndianArchie]

The market will stay irrational longer than you will stay solvent.

And the fat tail/long tail event is when this rule does not happen, and you've got a Nassim Taleb style investment strategy where you bleed a little bit everyday until ....you win....or don't.

The people that bet against the housing market also bet against sovereign wealth. The housing markets bets paid off for those that stuck with it, but will the sovereign wealth bets pay off?

Japan is still sorting out their banking mess that started in the 80's.

WIA

[elabayarde]

Make sure you get your Naked put options on.

[Samseau]

(02-02-2013 01:04 AM)WestIndianArchie Wrote:  

The market will stay irrational longer than you will stay solvent.

Guaranteed. This is why I tell people one of the best jobs they can have right now are government jobs... because those jobs aren't going away until the irrationality finally ends.

[Bronze Age Pervert]

I don't know about meltdown but Marc Faber is predicting a 20% drop very shortly, certainly in 2013. Check out youtube for his latest vids...

The big thing coming is a sovereign debt/currency crisis, some say in 2014-5 at the latest. That will be the big collapse of the US economy.

[Ensam]

(02-02-2013 01:29 AM)Samseau Wrote:  

(02-02-2013 01:04 AM)WestIndianArchie Wrote:  

The market will stay irrational longer than you will stay solvent.

Guaranteed. This is why I tell people one of the best jobs they can have right now are government jobs... because those jobs aren't going away until the irrationality finally ends.

Depends on the type of government job. Local government jobs were some of the first to go during the recession and make up a large percentage of the current unemployment figures. Make sure it's federal and in a department that doesn't get its budget messed with when the shit hits the fan. Hint: DoD contractor vs National Park Service.

[Smitty]

Furloughs are coming for Federal employees. They've been protected up until now, but once sequestration hits (I believe it will) the Federal Gov't will have no choice in order to meet the budget. The Pentagon is already preparing for it...and these aren't just scare tactics by the DoD. Many who work for the DoD, even government civilians, think the the civilian corp is filled with too many shitbags who do nothing every day but cannot be fired because they are protected by the union. A furlough will be welcomed by many.
http://www.federaltimes.com/article/2013...ughs-April