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The Go-Go Aughts?
Dow Jones Industrial Average only 35 points away from (nominal) record high.
Dan T.|9.27.06 @ 11:13AM|#
If things are going well, shouldn't the stock market always be at a record high?
|9.27.06 @ 11:51AM|#
I thought the Gnomes were sharp getting gasoline down before the
election, but this just icing on the cake. Well done Gnomes. Well
done.
PS: watch the buy program at 3:00. 11 and 3 every day.
alkali|9.27.06 @ 12:36PM|#
Is there a standard way to calculate the real value of a stock market index? Do you use the CPI or the GDP deflator?
|9.27.06 @ 2:11PM|#
some points (disclosure: i trade stock index futures for a
living)...
"If things are going well, shouldn't the stock market always be at
a record high"
No. markets move in cycles, as they should. the market is always in
a process of price discovery. it rotates around value on different
time frames, and will move to new value when that is
recognized
also, the Dow Jones is not "the market". it;'s an index of 30
stocks. it's somewhat of a proxy for supply/demand, but still...
the DJIA is near these highs. the nasdaq otoh, is WELL off its
highs. the transports set ALL time highs recently. the amex
composite has been on a frigging tear for 5 year. the russell was
doing insane until oil plunged, and since it has a lot of oil
stocks, it also took a hit, etc.
take a look at a 10 yr chart of amex composite, DJIA, S&P 500,
Nasdaq Composite, QQQQ, the Transports, the Utilities, and the
Russell
it's called "divergence"
|9.27.06 @ 4:05PM|#
I think your point that the DJIA or NASDAQ is not the market is something that causes a lot of people to oppose private social security accounts of market indices who otherwise might be open to the idea of actually owning their own retirement money. A lot of people look and see that the Dow has been net stagnant since 2000 or that the NASDAQ has lost more than half its value since 2000 and think that the "market" will result in you losing all your savings in old age, while if you really do diversify your account so you only have market risk and grow at something like the GDP growth, absent an asteroid hitting the Earth, your retirement savings will grow rather respectably.
|9.27.06 @ 4:26PM|#
Herrick. And only Herrick. I'm keeping my gaze perfectly
level.
As someone who opposes private Social Security accounts, I think
you misunderstand the objection.
You wrote, "A lot of people look and see that the Dow has been net
stagnant since 2000 or that the NASDAQ has lost more than half its
value since 2000 and think that the "market" will result in you
losing all your savings in old age, while if you really do
diversify your account so you only have market risk and grow at
something like the GDP growth, absent an asteroid hitting the
Earth, your retirement savings will grow rather respectably."
The "you" in that paragraph is plural. In the aggregate, that is
true, and I realize that. But with private accounts, people won't
reap the aggregate return. There will be winners, and losers. There
will be some body of people who have abysmal luck. 1% of the pool
of retired people in this country in 20 years will be three
quarters of a million people.
Having a diversified retirement portfolio is important. There are
many axes along which you should diversify; among them is the high
growth/high risk vs. low growth/low risk axis. Social Security
provides the lowest risk imaginable. For the unluckiest segment of
the retiring population - let's say they number 200,000 people -
the elimination of the most rock solid retirement fund imagineable
(the American Social Security system) would mean having something,
and having nothing.
Mike Laursen|9.27.06 @ 5:54PM|#
Question for those who know more about investing than I
do:
Isn't it a bit suspect to consider the price of a security as
having any great significance without considering the volume of
shares or portion of the company's total ownership that were traded
at that price? If 10,000 shares of some company's stock were
exchanged at $45/share on some day, seems like it doesn't follow
that 100,000 or 1,000,000 shares would have changed hands at the
same price.
|9.27.06 @ 11:48PM|#
Laursen, volume has merit. Generally speaking (for example) a
retracement in price on light volume is seen as a pullback buying
opportunity, whereas high volume indicates selling pressure and
possibly a breakout to the downside (this is grossly simplified,
but you get the point).
Price tends to rotate around value. The markets reject unfair
prices. High prices tempt sellers, and low prices tempt buyers, so
that price develops horizontally and balances - until it breaks out
on reassessment of value/inbalance in supply/demand curve. It is
certainly true that if the entire float (tradeable shares) of AAPL
(Apple computer) for some bizarre reason ALL decided to sell at
noon today, that the hyoooge volume of sell orders would push the
price down. the volume would literally "eat up" many short term
traders stop loss orders (orders to sell triggered by a significant
drop in price) which would further exacerbate downside move. BUT.
AMong other things, over 50% of trading is program and
institutional basket trading, etc. As soon as these traders saw the
price of AAPL dropping precipitously their limit buy orders would
suck up some liquidity cause nothing had changed fundamentally with
the book value, just a panic selloff. the market then
self-corrects.
But selling can, given sufficient momentum (volume and speed of
order flow) result in more panic selling. See for example, the fat
fingered trader on the Nikkei who dumped it several hundred points
based on one fat fingered trade. It recovered the next day.
But yes, in general volume at a price, and/or time at a price is
important. that indicates that this price level is "facilitating
trade" and is thus a price that is deemed fair by both sellers and
buyers.
on the other hand, a price level that sees little volume/time @
price is regarded as less fair, which is why it didnh't facilitate
as much trade.
or something...
Ayn_Randian|9.28.06 @ 12:22AM|#
the elimination of the most rock solid retirement fund
imagineable (the American Social Security system)
Ha ha ha...did you think you could slip that one in there, joe?
There's nothing "rock solid" about a Ponzi scheme.
The specific proposal of having an index of "safe" companies in
which you are forced to invest (in order to diversify Social
Security) makes me cringe: it really would be the merger of State
and Corporation. And there's no way such an index would be immune
to politicking; and you would have to do all the right things to be
the company that makes it on "the list".
No thanks; Social Security reform should come in one form:
gradually reducing the amounts that people are forced to contribute
to FICA.
|9.28.06 @ 12:24AM|#
Joe, diversification means DIVERSIFICATION. it doesn't mean just
buying a basket of nasdaq stox, or even a S&P index fund
(solely). it means something like the wilshire (entire stock
universe) and of course not fully invested in stocks, but a ratio
of stocks/bonds/cash/commodities/reit's, etc.
sure, it's not a "sure thing". neither is SS. a very high %age of
social security contributors receive negative return. iow, they put
in thousands and thousands of dollars over their career, then die
before they get benefits, and get NOTHING. that would be the
equivalent of every single investment made in a diversified account
going to ZERO.
which is better? lol
at least with a privatized retirement system, a beneficiary gets
your assets.
social security sux. and of course,a dirty secret is that some
minorities (specifically african americans) disproportionately pay
far more into SS for each dollar that they get back vs. other
demographic groups. that's an established statistic.
also, everybody wanks about the market crash of 29. yea, 29 sucked
if you were heavily margined, as many bucket shop "investors" were,
whereas these funds use ZERO margin/leverage.
second of all, if you dollar cost averaged, through the late 20's
into the 30's, etc. you did not suffer the massive wealth depletion
didthat all the high risk traders did.
please explain how you can have an "unlucky" segment when people
are invested in broadly diversified retirement vehicles. we are not
talking VERT and ENE here.
|9.28.06 @ 9:11AM|#
Ayn Randian,
"Ha ha ha...did you think you could slip that one in there, joe?
There's nothing "rock solid" about a Ponzi scheme."
Not a single Social Security recipient, in the 80 years of the
program's existence, have ever gotten a penny less that they were
scheduled to receive. Engage in all the name calling you want,
that's pretty rock solid.
whit, I know what diversification means, thanks.
Having something as unipeachably reliable as Social Security in
your basket means you can be a little more aggressive with the
rest, because you've got the most solid foundation on the
globe.
" a very high %age of social security contributors receive negative
return." Numbers? Citations? "A very high percentage?" I guess we
don't have to worry about the program's fiscal health, if there are
so many people whose contributions outweigh their return. Oh, wait,
that's not true, because you made that up.
|9.28.06 @ 11:33PM|#
joe, are u disputing that MILLIONS of people die before they are
eligible and thus receive nothing from SS? are u seriously asking
for a citation for that?
get real. if i die tomorrow, i get exactly ZERO return from social
security. actually, i get negative return, because i have put many
thousands into it. So, it would be a negative return. do u need a
citation to understand this?
Furthermore, i know tons of cops and firefighters who work for
agencies that were allowed to "opt out" of social security. they
are doing just fine.
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