Stock Market bottom? What do you think?

[BenRaines]

The last two weeks have been fairly consistent for the US stock market. Sure there have been daily swings but at the end little change on a weekly basis. Perhaps the governments intervention has calmed things.

It was stated the other day that for every 1 cent drop in the price of gas it adds 1 billion dollars of freed up disposable income. Gas peaked out at $4.17 a gallon nationally. Now is under $2.00 nationally. That is a 217 Billion dollar stimulus package and gas is still falling.

Ben Raines

[Elgama]

my gut for some reason is 5 years, well closer to 4 now I have had my bee in a bonnet about waiting 5 years on buying a house and any major economic decision. And so far in our marriage with finances my gut has proved very accurate.

-Charley

[BenRaines]

So Elgama are you saying that now is the time in your part of the world?

Ben Raines

[lilered]

Ben, I am not yet convinced we have hit bottom. The reason is that it appears that this is a world financial meldown that is affecting near every industry and economy. It is complex and even the "so called experts" seem to not have a clue as to the depth of the crisis. My view is that the U.S. economy has been built on a deck of cards for a very long time and until our leaders and citizens become convinced that we must live within our means both as a Nation and as a citizen, the corner will not be turned. We have many of our citizens that believe in receiving Government hand outs instead of being productive by working. So many of our Congress representatives continue to spend tax dollars on their favorite pork barrell projects as well as many of us continue to buy on credit or plastic. The medicane or the cure is bitter but necessary.

[Elgama]

So Elgama are you saying that now is the time in your part of the world?

Ben Raines

no the same as lilred that now is not the time for any financial decsions I think the market will not look up for another 5 years could be wrong lol but I have been very right about things like this before in our marriage, I was spot on about when our financial situation would improve etc.... and I think that covers the US as its our move to Kansas that has been put on hold rather than what is happening in the UK.

I don't know why I feel this way I just know its what something within me is saying.

-Charley

[Aesa]

This financial crisis is going to speed on to become more international. I see the U.S. completely breaking down, and once that happens so will the rest of us. Especially Australia, as far as I'm aware we owe big monetary debts to the United States.

There are very few good financial experts (Ron Paul, who recieves awards for his monetary papers) who would tell you this is just a normal economic breakdown.

[Hemidakota]

Charley... exactly, we haven't seen the bottom yet.

[Captain_Curmudgeon]

I went to cash in 2005 when I "retired." Cash doesn't do much and I don't want to get too heavily into my really favorite "investments", guns, ammo, and tuna fish. I mean I can only eat so much tuna fish and then I'm dead.

In June of this year, I finally crawled out of my depression enough to do the stupid stuff that had to be done to transfer my wife Mary's Schwab account to her parents (Mary died in 2002). At the same time, the market was in the 12000 to 11000 range and I did talk to my Schwab guy about getting back into the market (= stock mutual funds). Market was down from stuff like 14500. He said it was a pretty good idea and I could start right then (which is what I think you're always going to hear from investment "advisors" (although I really think mine is honest and helpful)).

Because I'm slothful (== depressed), I didn't. But when the market got back to where I'd cashed out in 2005 (around 10,500), I said "Here it is." Well it wasn't. But as it was going down, I bought a little every Friday. And then on Monday, I bought CDs. Until the market kept going down and I remembered the old Wall Street Maxim: "Don't try to catch a falling knife."

For a while I thought 27 October was the bottom. It wasn't. Looking at the charts, I now think I can't decide.

But thinking you can tell the bottom from looking at charts means you think that the stock market is like a physical object. It isn't.

Lots of unknown stuff out there. If OUR crisis is mortgage derivatives, then why are foreign markets in a panic? Why don't the various measures taken by congress and the various agencies seem to work? Why am I hearing about a liquidity crisis and the rate I can get for real, honest cash is next to nothing? And what, really, is going on with the price of oil?

Well, I bought my Friday stock mutual fund today. But I don't know if it was because the DJA was up today or down for the week.

Hey, I really want to hear what other people here think, but even more what they are doing.

[BenRaines]

Capt, glad to hear that you are dollar cost averaging back in to the market. Most people get out when it has dropped 40% and then don't get back in until the market is back up another 25%.

Capt, I would suggest that you look at ETFs, Exchange Traded Funds for your investments. They are much like mutual funds but trade like a stock, if in an IRA it is a matter of overall cost, unless you are using some of Schwab's very low expense indexed funds. You can read about ETFs at iShares ETFs for US investors - Exchange Traded Funds

I have been doing this for over thirty years and there is not figuring the bottom. What has almost always proven worthwhile is to invest contrary to the herd.

The reason that the rest of the world is having a financial crisis is that they were buying our mortgaged backed securities. Nations and municipalities around the world were buying our mortgage backed securities.

Since no one knows how to value them they have no value, since they have no value no one wants to lend on them, since the brokerages and banks have trillions of dollars of them and they have to show them with no value then banks can't lend since they don't have assets to lend against.

LIBOR rates have come down considerably in the last month. Mortagage rates are falling like crazy.

If five, ten and thirty year bonds are at 3% or less how is a bank paying 4% for a one year or five year CD? I would like to know.

Ben Raines

[JohnBirchSociety]

The last two weeks have been fairly consistent for the US stock market. Sure there have been daily swings but at the end little change on a weekly basis. Perhaps the governments intervention has calmed things.

It was stated the other day that for every 1 cent drop in the price of gas it adds 1 billion dollars of freed up disposable income. Gas peaked out at $4.17 a gallon nationally. Now is under $2.00 nationally. That is a 217 Billion dollar stimulus package and gas is still falling.

Ben Raines

Nobody has ever been able to predict precise bottoming or topping on the market, it is too fluid for that type of prediction.

We can say that the laws of economics dictate that fiat currency ALWAYS collapses. When it does, the market goes with it.

There are signs that our fiat currency is collapsing.

Of course the only solution for this problem is a return to real money, as mandated by the United States Constitution.

[Aesa]

The reason that the rest of the world is having a financial crisis is that they were buying our mortgaged backed securities. Nations and municipalities around the world were buying our mortgage backed securities.

It's a little more than that. You also have to take into account that since the Federal Reserve Act was put into place, most of the worlds nations have enacted similar systems of centralised banking control.

This allows for the people who control the federal reserve, yes it is private, to control the amount of money in supply and thus also control society.

And then since it has interest attached to each dollar that is loaned from the central bank, where does the money to pay the outstanding debt come from when you take into account that all money has this percentage of debt attached to it?

The whole system, if you look at the way things are "panning out" is destroying the middle class. The rich are getting richer, and the poor are getting poorer, in other words the wealth gap is increasing.

I had a look at the money management course on provident living. From the words of that course, and especially the voice clips of Gordon B. Hinckley, I get the feeling most Mormons would support a debt free currency (same thing founding fathers wanted, and as Benjamin Franklin said -- was probably the prime cause of the revolution [escaping Britians central bank]) would I be right in thinking that?

[Guest DeborahC]

I've been watching this for over 2 years.

I do not think we're even NEAR the bottom yet.

I look for that in the late Spring, early Summer.

Until then, I'm hunkering down and staying OUT of the market.

My friends are GLD, drypack canned goods, and my BOB.

[JohnBirchSociety]

It's a little more than that. You also have to take into account that since the Federal Reserve Act was put into place, most of the worlds nations have enacted similar systems of centralised banking control.

This allows for the people who control the federal reserve, yes it is private, to control the amount of money in supply and thus also control society.

And then since it has interest attached to each dollar that is loaned from the central bank, where does the money to pay the outstanding debt come from when you take into account that all money has this percentage of debt attached to it?

The whole system, if you look at the way things are "panning out" is destroying the middle class. The rich are getting richer, and the poor are getting poorer, in other words the wealth gap is increasing.

I had a look at the money management course on provident living. From the words of that course, and especially the voice clips of Gordon B. Hinckley, I get the feeling most Mormons would support a debt free currency (same thing founding fathers wanted, and as Benjamin Franklin said -- was probably the prime cause of the revolution [escaping Britians central bank]) would I be right in thinking that?

You are correct.

[kona0197]

Gas peaked out at $4.17 a gallon nationally.

Then why was I paying close to $4.50 here in Oregon?

[Moksha]

Has the stock exchange broken out into a chorus of "Happy Days are Here Again" yet? If they do, you will have reason to be optimistic.

[BenRaines]

Kona, that is why it is called a National Average. I bet the Oregon average is highter as it is in California. In other parts of the country it is lower. :)

Signature deleted

[pam]

lol love the "signature deleted"

[Palerider]

I wanna play too....:D:D

signature deleted due to internet etiquette

[pam]

I wanna play too.

signature deleted due to internet etiquette because people don't want to read names twice.

[Captain_Curmudgeon]

And then there's "Signature deleted because you're not cool enough to understand it."

[gabelpa]

I'm trying to find the source, but there was an analyst who tracked the value of US Currency in circulation vs the calculated worth of the Stock market. As a trend, the value of currency in circulation has always been higher than the value of the Stock Market. Except in the early days of recording (30's or so) whenever the value of the Stock Market equalled the value of currency in circulation, the Stock Market took a nosedive. According to his charts,this had happened somewhere around December of last year if I remember correctly.

this signature is a virus - copy it into your signature and pass it on

[lilered]

I'm trying to find the source, but there was an analyst who tracked the value of US Currency in circulation vs the calculated worth of the Stock market. As a trend, the value of currency in circulation has always been higher than the value of the Stock Market. Except in the early days of recording (30's or so) whenever the value of the Stock Market equalled the value of currency in circulation, the Stock Market took a nosedive. According to his charts,this had happened somewhere around December of last year if I remember correctly.

this signature is a virus - copy it into your signature and pass it on

I must be missing something. I fail to understand the connection between the two.

(This signature was not approved by Pres. Elect Obama or VP. Elect Biden)

[gabelpa]

Basically,the cash in circulation is the "Real" money.The money in the Stock Market is fake, as it represents the good will of the Market towards the Company. But,we can turn the fake money into real money by cashing out our stocks. This money has to come from somewhere, but it aint coming out of the Federal Reserve. It's just computer bits without any real monetary value.

What would happen if everyone in the Market cashed out when the two values were equal? The cash economy would collapse under the sheer demand for hard cash. That's the correlation.

[Aesa]

Basically,the cash in circulation is the "Real" money.The money in the Stock Market is fake, as it represents the good will of the Market towards the Company. But,we can turn the fake money into real money by cashing out our stocks. This money has to come from somewhere, but it aint coming out of the Federal Reserve. It's just computer bits without any real monetary value.

What would happen if everyone in the Market cashed out when the two values were equal? The cash economy would collapse under the sheer demand for hard cash. That's the correlation.

The problem is that our money isn't "hard cash," tell me, what gives our money value?

The amount that's in circulation.

This is also known as inflation.

The other thing that controls our money is the amount of debt owed back to the central bank, which can never be repaid.

But it's backed by absolutely nothing, it is worthless paper.

Commodity standards were removed from currency because it gave the money a value which couldn't be controlled by the bankers (i.e., the value of gold).

[gabelpa]

The conclusion that I cited was not my own, and while there is a correlation between the stock market dipping after it's value equals the cash in circulation, I do not know if this is the cause. I am no market analyst. I also believe that those who truly understand the economy either stay as far away from it as possible, or are locked away in an Insane Asylum.