I sold at DOW 12,100 just before the run-up to 13,000. I told y'all that it would spike too; it always does after I sell! But I figured it would pass 12,100 on the way down.
Good for you! I wish I had the cajones to invest like that.
So, anyone, is the US going down the tubes alone, or is it eventually going to take other major countries down with it? I'm really tempted to get out of the US dollar.
So, anyone, is the US going down the tubes alone, or is it eventually going to take other major countries down with it? I'm really tempted to get out of the US dollar.
This is a long response...SUMMARY at the bottom.
I'd say neither exactly. In the short term, I have stopped being concerned by an outright crash. Things have been looking ripe for a crash for a bit now. It's all but official we are in a recession, oil prices have more than tripled from "already high prices" in 2004. Housing prices were plummeting on a national scale. And the dollar was weakening compared to virtually every other currency in the world. All of that and the stock market only had about a 10% drop from previous highs.
The only new news yesterday was the unemployment figures. They took quite a jump, but 5.5% is dang low compared to pretty much any other nation, or pretty much any other time in US history. I expect the next week to be a little rocky, and maybe settle just a bit below where it is now.
That said, the real problems facing are economy are significant. The 5.5% jobless numbers don't really tell you how many people have good jobs. I'll arbitrarily define a good job as one that pays at least 3x average rent for a 2 bedroom home or apartment in your area. In much of King County, it takes at least $1,000 a month to rent such a place, so $36,000 a year requires an hourly rate of $17.31 (if you work full time with some standard holidays off).
OK, so even with low unemployment, a lot of people are hurting. The new figures make it that much worse. But where does that put us in relation to the rest of the world? The key insight here is that the US of A is not a superpower anymore. We are the most influential nation in the world still, but we are not a superpower. A superpower has more influence on virtually any world stage than any other nation. China is more influential in much of Asia than we are. The European stage is now a hybrid between a number of influential nations and an economic power that rivals our own. Russia is more influential in their neck of the woods as well.
In the aftermath of the Bush years, you can even question how influential we are in the western hemisphere. Would rising nations like Brazil bow to our influence? Probably not. Venezuela is openly hostile and they are not far away at all. Shoot, we don't even have that much influence with Mexico or Canada at a policy level anymore. The rest of the world is starting to figure this out. A superpower should not have such a difficult time fighting insurgents. It was one thing to lose in Viet Nam, because the other superpower (USSR) was helping the other side. It's a completely different thing to not be able to beat a bunch of guys being armed by Iran.
============SUMMARY=================
So here's the deal, USA is not a superpower. But we are still the most powerful nation globally in terms of economic might, military power, and even cultural influence. What that means is that the we as a nation may not have an immediate crash, but we are quite likely in for a protracted period of general decline.
Finally, does our reversion to the mean hurt other economies? That depends a lot on how it happens. If it's fast, it does, but nobody else will be as effected as we are. Take China. Maybe 25% of their goods (this is made up, but reasonable and the real number doesn't matter much) are exported to USA. If the USA economy collapsed by 30%, and all spending collapsed accordingly, it could cut about 8% out of China's exports. But they would still be exporting to Europe and other places. So it's not a bad idea to diversify anyways, because even in the worst case you'll do less bad in other currencies than in dollars (at least over the long term).
You could hardly call it investing. I had practically doubled my money in about 4 months, but hten I lost all of the increase during that massive rally. Then I had to withdraw a bunch to pay for car maintenance and a vacation so the nearly 50% I made on Friday was really very little money.
I'm looking like a genius now for selling at DOW 12,100 in March, and predicting a rally afterwards. Unfortunately the universe does not allow me to make money from my predictions. I can only not lose money.
I'm still resisting the urge to get out of the US dollar. The universe may construe that as a bet, in which case the dollar will rise.
So it's not a bad idea to diversify anyways, because even in the worst case you'll do less bad in other currencies than in dollars (at least over the long term).
I'm not confident about that. Without getting too political here, Obama is probably going to restore some of that superpower status. Plus it seems that real estate bubble pops around the world are lagging behind the US's, which can largely explain a lot of the US dollar decline.
Monday 6/30 seems to have the makings of another Black Monday.
Karl over at the Market Ticker seems to think so too and he seems more confident than usual. I don't get why this monday is any more crash worthy than other days. Seems there's no panic in the air at all. VIX even went down on friday.
It could be that from a technical analysis side that most of the lower end support was breached on all three indexes, and breached convincingly. We've lost about 19.8% on the S&P (20% is an official bear market) so the market psychology is changing amongst even some of the hardest headed bulls.
I think it's hard to predict exactly when a market crash is going to occur, they usually happen when you least expect it. I do know however, that the long term trend is down. I've been short this market since the S&P was at 1514 and will continue to add to my positions on the way down. I think the next wave of opportunity will be to short tech (GOOG, AAPL, etc).
And another thing, it doesn't matter who gets elected president. Come November it is going to be very clear that this country is in for a long deep recession. Neither Obama nor McCain have a chance in hell of restoring any luster to America.
We'll still be in Iraq and Afghanistan, the housing market will still be in the dumps, the American consumer will still be tapped out (even worse by Nov.), and banks will be imploding. The next POTUS will have inherited a disaster, and will most likely be in office for only 4 years.
As for strength in the US dollar, it will continue to weaken. The ECB has already hinted at a rate hike next week and the dollar moved south on the news. The only thing that can help the US dollar at this point is for the FED to raise rates and signal that they have shifted their monetary policy to fight inflation.
There are huge housing bubbles in other nations, such as Spain and Australia. However, the ECB has shown that it is prone to fight inflation and not worry nearly as much about their housing correction. They are more apt to let their bubble burst, rather than let it slowly leak. We'll see how this thing plays out, but right now Bernanke and Trichet appear to be in a staring contest and Trichet is flipping B-52 Ben the bird.
The next POTUS will have inherited a disaster, and will most likely be in office for only 4 years.
Could easily be true. After all, dumb voters is what got us into this mess. Sad that a party can retain power by ruining the country. We're doomed then.
I wouldn't necessarily give the election to Obama quite yet either... If the Democrats have shown us anything the last 50 years, it's been how to snatch defeat from the claws of victory. Only one democrat has received more than 50 percent of the popular vote since 1950 (LBJ in 1964). I think it is going to be a closer race than many people think.
Could easily be true. After all, dumb voters is what got us into this mess. Sad that a party can retain power by ruining the country. We're doomed then.
That's too easy of an excuse. Dumb voters didn't help matters, but the rough markets of this decade are shaped by a confluence of factors just as the easy markets of the 90s were.
Oil prices are heavily influenced by significant economic growth across the globe.
Regardless of our president, China is overdue to export inflation, after years of the opposite.
Private policies towards outsourcing of jobs and more importantly expertise were due to come back to roost.
Unelected Federal Reserve members have encouraged policies of inflation and debt. Note, Greenspan was chairman during Republican and Democratic presidencies/senates/houses.
...
The list really goes on here, but regardless of what you focus on it's lazy thinking to put much blame on the presidents.
Monday 6/30 seems to have the makings of another Black Monday.
And because it was predicted, it did not happen. Dow up $3.50 today.
I think it's possible that the markets are now managed to a point where a true Black Monday event is no longer possible. Sure, we might see a 5% drop or gain in one day, if it gets too bad they just shut down the markets until they can start sending out a bunch of good news.
The biggest threat is computer trading. If all the algorithms sell at the same time, we might not have mechanisms in place to prevent it.
The list really goes on here, but regardless of what you focus on it's lazy thinking to put much blame on the presidents.
I suspect the $5 trillion in new national debt (actual & inevitable) is the lion's share of the reason for the US's downfall. A different president could have easily avoided most of that debt.
Wouldn't hurt to do more preparation for another Great Depression. I've still got some things on my to-do list for that. I'm not planning to buy a gun; if it gets to that point then we're all f****ed anyway (the gun owners just a little later). In the long run the US needs this, to stop or at least slow the destruction of the middle class. I have faith that the voters will pull their heads out when push comes to shove, like they did the last time. Hopefully today's renters will come out ahead of the game.
The best way to survive another Great Depression? Enjoy being frugal. Most of us here probably already are. Oh, and yeah, Ramen futures.
I suspect the $5 trillion in new national debt (actual & inevitable) is the lion's share of the reason for the US's downfall. A different president could have easily avoided most of that debt.
Yes, of course. Because the majority in congress voted against the war. And in 2003 the majority of American's (in a number of polls) made it clear that they wanted no part in a war with Iraq. And when it became clear we were going to war, the majority of people across this country held demonstrations, wrote their congressperson, called into talk radio, or tried in any way they could to
While the Bush administration was the primary cheerleader and trumped false intelligence for a war, we as a society bit it hook line and sinker. Yes, Bush deserves the largest chunk of individual blame (and perhaps credit if 10 years from now Iraq is a vibrant democracy which radically alters the power structure in the Middle East). But a larger culprit was a combination of American fear, and pride that we're the best. We're such a great nation, we thought, that not only did we deserve to wipe out any terrorists we could find, but we could do it easily, quickly, and cheaply.
It just didn't go down that way. Feel free to place all the blame for the war at Bush's feet, and by extension the huge deficit spending, and by extension the financial lowering of American elitism across the globe. After all, everyone else does; usually because they feel complicit to the whole thing. Just realize that it's overly simplistic and insincere.
Futures? Like you'll be able to collect on those futures when you really need ramen.
The best move is to simply stock up on Ramen. It lasts forever. Throw out some old clothing that doesn't fit anymore and replace it with ramen.
Actually, don't throw out those old clothes. The old styles are coming back, and you'll be losing weight on a diet of home-grown food and ramen. Maybe toss out old camping gear you don't use instead.
Wait, keep the camping gear. You'll need that to cook your ramen when you lose your house. I guess you'll just have to shove all the ramen into a closet or something.
Yes, the president is just a figurehead. The voters are always the ones to blame, or share in the credit. I don't think believe that's overly simplistic. We better hope it's not, or else we'll really need that closet full of ramen.
Comments
So, anyone, is the US going down the tubes alone, or is it eventually going to take other major countries down with it? I'm really tempted to get out of the US dollar.
This is a long response...SUMMARY at the bottom.
I'd say neither exactly. In the short term, I have stopped being concerned by an outright crash. Things have been looking ripe for a crash for a bit now. It's all but official we are in a recession, oil prices have more than tripled from "already high prices" in 2004. Housing prices were plummeting on a national scale. And the dollar was weakening compared to virtually every other currency in the world. All of that and the stock market only had about a 10% drop from previous highs.
The only new news yesterday was the unemployment figures. They took quite a jump, but 5.5% is dang low compared to pretty much any other nation, or pretty much any other time in US history. I expect the next week to be a little rocky, and maybe settle just a bit below where it is now.
That said, the real problems facing are economy are significant. The 5.5% jobless numbers don't really tell you how many people have good jobs. I'll arbitrarily define a good job as one that pays at least 3x average rent for a 2 bedroom home or apartment in your area. In much of King County, it takes at least $1,000 a month to rent such a place, so $36,000 a year requires an hourly rate of $17.31 (if you work full time with some standard holidays off).
OK, so even with low unemployment, a lot of people are hurting. The new figures make it that much worse. But where does that put us in relation to the rest of the world? The key insight here is that the US of A is not a superpower anymore. We are the most influential nation in the world still, but we are not a superpower. A superpower has more influence on virtually any world stage than any other nation. China is more influential in much of Asia than we are. The European stage is now a hybrid between a number of influential nations and an economic power that rivals our own. Russia is more influential in their neck of the woods as well.
In the aftermath of the Bush years, you can even question how influential we are in the western hemisphere. Would rising nations like Brazil bow to our influence? Probably not. Venezuela is openly hostile and they are not far away at all. Shoot, we don't even have that much influence with Mexico or Canada at a policy level anymore. The rest of the world is starting to figure this out. A superpower should not have such a difficult time fighting insurgents. It was one thing to lose in Viet Nam, because the other superpower (USSR) was helping the other side. It's a completely different thing to not be able to beat a bunch of guys being armed by Iran.
============SUMMARY=================
So here's the deal, USA is not a superpower. But we are still the most powerful nation globally in terms of economic might, military power, and even cultural influence. What that means is that the we as a nation may not have an immediate crash, but we are quite likely in for a protracted period of general decline.
Finally, does our reversion to the mean hurt other economies? That depends a lot on how it happens. If it's fast, it does, but nobody else will be as effected as we are. Take China. Maybe 25% of their goods (this is made up, but reasonable and the real number doesn't matter much) are exported to USA. If the USA economy collapsed by 30%, and all spending collapsed accordingly, it could cut about 8% out of China's exports. But they would still be exporting to Europe and other places. So it's not a bad idea to diversify anyways, because even in the worst case you'll do less bad in other currencies than in dollars (at least over the long term).
You could hardly call it investing. I had practically doubled my money in about 4 months, but hten I lost all of the increase during that massive rally. Then I had to withdraw a bunch to pay for car maintenance and a vacation so the nearly 50% I made on Friday was really very little money.
I'm still resisting the urge to get out of the US dollar. The universe may construe that as a bet, in which case the dollar will rise.
Good point. This might buy us some time.
Karl over at the Market Ticker seems to think so too and he seems more confident than usual. I don't get why this monday is any more crash worthy than other days. Seems there's no panic in the air at all. VIX even went down on friday.
It could be that from a technical analysis side that most of the lower end support was breached on all three indexes, and breached convincingly. We've lost about 19.8% on the S&P (20% is an official bear market) so the market psychology is changing amongst even some of the hardest headed bulls.
I think it's hard to predict exactly when a market crash is going to occur, they usually happen when you least expect it. I do know however, that the long term trend is down. I've been short this market since the S&P was at 1514 and will continue to add to my positions on the way down. I think the next wave of opportunity will be to short tech (GOOG, AAPL, etc).
Got puts?
We'll still be in Iraq and Afghanistan, the housing market will still be in the dumps, the American consumer will still be tapped out (even worse by Nov.), and banks will be imploding. The next POTUS will have inherited a disaster, and will most likely be in office for only 4 years.
As for strength in the US dollar, it will continue to weaken. The ECB has already hinted at a rate hike next week and the dollar moved south on the news. The only thing that can help the US dollar at this point is for the FED to raise rates and signal that they have shifted their monetary policy to fight inflation.
There are huge housing bubbles in other nations, such as Spain and Australia. However, the ECB has shown that it is prone to fight inflation and not worry nearly as much about their housing correction. They are more apt to let their bubble burst, rather than let it slowly leak. We'll see how this thing plays out, but right now Bernanke and Trichet appear to be in a staring contest and Trichet is flipping B-52 Ben the bird.
That's too easy of an excuse. Dumb voters didn't help matters, but the rough markets of this decade are shaped by a confluence of factors just as the easy markets of the 90s were.
Oil prices are heavily influenced by significant economic growth across the globe.
Regardless of our president, China is overdue to export inflation, after years of the opposite.
Private policies towards outsourcing of jobs and more importantly expertise were due to come back to roost.
Unelected Federal Reserve members have encouraged policies of inflation and debt. Note, Greenspan was chairman during Republican and Democratic presidencies/senates/houses.
...
The list really goes on here, but regardless of what you focus on it's lazy thinking to put much blame on the presidents.
Agreed, the bubble has spanned both Democrat and Republican presidencies.
And because it was predicted, it did not happen. Dow up $3.50 today.
I think it's possible that the markets are now managed to a point where a true Black Monday event is no longer possible. Sure, we might see a 5% drop or gain in one day, if it gets too bad they just shut down the markets until they can start sending out a bunch of good news.
The biggest threat is computer trading. If all the algorithms sell at the same time, we might not have mechanisms in place to prevent it.
XLF. It's been hit or miss with others, but I always manage to do well with XLF.
What are you talking about? I've got compelling evidence that the DOW will drop to 8,000 by early 2010. Check it out:
</sarcasm>
In all seriousness though, is there some good reason why the market should have deviated from its long-term growth rate since the late '90s?
Stop it! You guys are scaring me!
Is it time to buy gold, guns, and ammo?
The best way to survive another Great Depression? Enjoy being frugal. Most of us here probably already are. Oh, and yeah, Ramen futures.
Yes, of course. Because the majority in congress voted against the war. And in 2003 the majority of American's (in a number of polls) made it clear that they wanted no part in a war with Iraq. And when it became clear we were going to war, the majority of people across this country held demonstrations, wrote their congressperson, called into talk radio, or tried in any way they could to
While the Bush administration was the primary cheerleader and trumped false intelligence for a war, we as a society bit it hook line and sinker. Yes, Bush deserves the largest chunk of individual blame (and perhaps credit if 10 years from now Iraq is a vibrant democracy which radically alters the power structure in the Middle East). But a larger culprit was a combination of American fear, and pride that we're the best. We're such a great nation, we thought, that not only did we deserve to wipe out any terrorists we could find, but we could do it easily, quickly, and cheaply.
It just didn't go down that way. Feel free to place all the blame for the war at Bush's feet, and by extension the huge deficit spending, and by extension the financial lowering of American elitism across the globe. After all, everyone else does; usually because they feel complicit to the whole thing. Just realize that it's overly simplistic and insincere.
Futures? Like you'll be able to collect on those futures when you really need ramen.
The best move is to simply stock up on Ramen. It lasts forever. Throw out some old clothing that doesn't fit anymore and replace it with ramen.
Actually, don't throw out those old clothes. The old styles are coming back, and you'll be losing weight on a diet of home-grown food and ramen. Maybe toss out old camping gear you don't use instead.
Wait, keep the camping gear. You'll need that to cook your ramen when you lose your house. I guess you'll just have to shove all the ramen into a closet or something.