The Great Recession - post mortem

[molson]

Originally Posted by Edward64

IMF predicting US deep recession next year.

Is a prediction that "Growth would screech to a virtual halt in 2009, barely budging at just 0.1 percent" a prediction of "deep recession"? It's sounds like better than I would expect from all the panic going around.

[Flasch186]

considering what they consider average sustainable growth worldwide, then yes dropping to barely above .1 percent is a massive slowdown especially considering globally what each .001% change actually means. Youre last sentence, again, is making light of the situation when even that factual % change number is smacking you in the face to wake up.

[SportsDino]

I can easily see stocks being dropped or significantly altered 100 years from now. People forget, the original mechanism is to gather capital... that has clearly been compromised the moment everything goes through a giant IPO where the banks get 'sure money' from being the actual capital source. Everything else is derivative....

The one thing that is important about a stock, is the dividend, which actually is the basic component of stock valuation (all else is speculation to be honest). It has become increasingly ignored in modern finance, we are focusing on spot prices and losing track that those prices are supposed to reflect theoretical returns from dividends.

So the basis of stocks is shaky right now, it is hard to invest in an actual company, you are to some degree always investing in the market confidence of a company which leads to some bad situations (such as short term focused CEOs gutting the company for a one time bonus).

Some things I could see happening are:
- Return to the dividend as a major consideration of a stock's value.
- Alternative instruments for raising capital that are basically what stocks were supposed to be, but no longer are in modern finance (aggregating small investors with enough capital to build at the scale they need to).
- Individuals with huge amounts of capital ignoring corporations altogether and building some new form of private company setup.
- total collapse of the system from corruption and replacing today's quasi-socialism for the elite with another form of socialism, both will collapse inevitably if you study the problems of socialist economies. Today's oligarchy is pretty much a single party state of a mutated nature in my opinion, which is why we are decaying.
- Some sort of method for pricing the volatility of a stock that is not a speculative gamble (like the volatility indices of today), but actually pushes the stock towards stabilizing its value to actual value of the company. Okay I'll admit this one is my pet derivative (which I'm trying to discourage at the moment in general, although I like them in theory).


To get back to the New Deal, I agree that a lot of programs were just plain stupid, but I don't see a natural solution arising out of the chaos in that time period... the natural course probably would have been a fascist state, but it would be an amusing what if discussion to have. I think the general concept of the New Deal gave us enough structure to avoid alternatives we would not have liked, although I disagree with many of the specific policies which were heavy handed or ill thought out.

So that brings up another thing that may change in 100 years, we might see severe regulation of how a company reports its status, and prices stabilize due to greater information flow and semi-predictability, but opportunities for speculation and the need for whiz kid brokers diminishes (so banking becomes a boring industry again). So if we get some sort of Neo Deal, which we are in danger of looming towards with these trillion dollars worth of bailouts, we could end up gimping our growth in exchange for day to day stability. This is one thing I do agree about the New Deal with Bishop, government intervention often slows or damages the economy, although i do think it has a role in 'stopping the bleeding'.

[Fidatelo]

SportsDino, in my estimation you have all 10 of the top 10 posts in this thread. Well done.

[Edward64]

Glenn Beck and author were talking about the 5 stages of grief the author wrote in the WSJ.

• Denial, anger, bargaining, depression, grief

Where are you? I think I am at the latter part of the bargaining (please God, let my 401K and IRA recover).

[Fidatelo]

I think I'm still in anger.

[MikeVic]

I'm in anger too. I looked up exactly how much I've lost, and it's 22% of my initial investment in one year. Nice.

[Mac Howard]

Originally Posted by molson

Do you believe there's a point where it's too much and the money just becomes fake and worthless?

What if in six months we need 5 trillion to keep things running smoothly? What if in a year it's 100 trillion?

Or is just "hey, it's the government, they can take on debt"?

The question was asked of an analyst on CNN "Where does government borrow the money if the credit market is frozen?". The answer apparently was "they print it" then then then

So there you go. All we need is a few trees. I don't pretend to understand how that works but, heh, what a solution

EDIT:

Just googled "printing money" and came up with this from the Financial Post (18th September):

The U. S. Treasury cranked up its printing press yesterday to help the Federal Reserve extend an US$85-billion loan to American International Group Inc., the latest in hundreds and billions of dollars of government assistance that will undoubtedly end up in the lap of U. S. taxpayers.

But while anxiety is rising over the United States' ability to foot the gargantuan bill for the credit crisis, analysts say the US$14-trillion U. S. economy should be able to absorb the shock.

Apparently the consequences might be a mild inflationary effect - not necessarily a bad thing in a recession - or a small change to the value of the dollar.

[SportsDino]

While I don't see it going that far, remember that hyperinflation was another component of the world wide Great Depression.

Inflation in moderation may help growth, as currency is the lubrication of the economy (as we all have heard repeatedly with the credit freeze scenario being played out). But in itself it is not a good thing, printing more money relative to real goods and service value in the economy means goods and services increase in price... if that inflation trickles into higher wages (we all know thats not going to happen) the real effect is minimized... you pay 10% more for bread, but you get paid 10% more, so meh.

But this inflation is not going that direction, its effects are pretty much going right into debt devaluation... yes if we double the money supply, all that debt becomes half as big a problem on the balance sheet (internally, the effects on the international debt scene where the US has to pay the bill is more complex). The problem I see with that is some of this debt needs to default, with the negative (and positive) effects thereof... some companies will be in danger based on how much they exposed themselves to bad debt.

To a degree we are all exposed to the bad debt due to its scale and the entangled nature of all banks (US and worldwide). So yes, something needs to happen, and I'd hate to see the collapse, but I'd rather choose where the inflation goes to if at all possible. Buy up real assets and absorb the losses from their market value compared to the government support value... real assets generally adjust to inflation in the long term (an acre of land still has value whether our currency buys bread for $1 or $1000).

Real assets also can fall only so much, so they are to a degree immune to inflation, I'd rather have land or even personal debt of Americans funding the 700 billion than contracts very few people can unravel (some are in my opinion criminally obfuscated).

My political position at the moment is fix the banks, in my opinion you do this by ejecting criminals and incompetents, beefing up oversight, and since I don't trust the government to do all that well, encourage the smarter companies to increase their market share and reduce obstructions to entrants, we obviously need new blood, and a lot of new low level banks will be more likely to tie their value to real banking like houses, cars, small business loans, stuff that will help the economy get back to growing.

Government should do a better job of auditing, and it should do this by simplifying wherever possible. Make companies release more info about financials, if there is concern for corporate secrets come up with ways to make the money visible without giving up strategic information... but otherwise it shouldn't hurt to give shareholders more data about whats going on in the company. It might even encourage investment (I know for me it would...). So make a simple open standard, less places to hide money will make it easier to find the fraud, and maybe make the government capable of the job.

I think we should avoid the 'big is better' mantra for a while and encourage specialty banking. It should be more profitable as an experienced banker to know a particular area and make good investments in it (like mortgages to people who can afford them). Right now our banking is getting mixed in with investment banks, which are more about longshots and super returns, and obsessed with quick bucks over actual investment (buying a million shares of Exxon and selling it for a million shares of McDonalds, and rinse/repeat does not pump a single gallon of gas or fry a single hamburger, its all zero sum 'investment' one winner and one loser, no real economy change).

The best result of this disaster is a revitalized small banking industry that seeks out good investments, and decreases the amount of money tied up in billion dollar paper transactions (granted billion dollar loans have their place).

My personal position, is save all my money made from counter-speculating (its like counter-terrorism, in fact EXACTLY like counter-terrorism given the damage done recently). I'll probably lose money in the short run now since the slump will no doubt continue, but I'm hoping that particular companies and commodities will beat the market, I'm trying to value things 5-20 years out and ignore hype (of course I'm so paranoid at this point that I'm averaging my timing over about a year to minimize the impact of one of my chosen companies having a hidden weakness come out).

[Butter]

Any chance we will see stagflation?

I don't know what it is, I just like typing the word "stagflation".

[SportsDino]

Gosh all that and what I really should have said:

If we are printing 1 trillion dollars just for this particular situation, and the economy is 14 trillion dollars, to oversimplify we are looking at a one time inflation event of 7%. Granted it won't all hit real prices like that, but imagine your entire portfolio dropping 7%... even if you picked the safest assets possible (say T-bills). You made maybe 2%, and lost 7%!

We end up subsidizing risky investors by making grandmas and supermarket shoppers poorer. It only works to a point... risky investors can always drop their expected portfolio return from 20% to 10%, the rest of us can't stop eating for a month unfortunately. Thats the 'moral hazard' cost.

[Flasch186]

Originally Posted by Butter_of_69

Any chance we will see stagflation?

I don't know what it is, I just like typing the word "stagflation".

Im more worried about a small tick in deflation (which could be good) turning into a deflationary spiral. Again, I pray Im chicken little and this is nothing more than a mild recession that we see us climbing out of next summer to lead the world out of it.

[SportsDino]

Stagflation is an example why inflation in and of itself does not create growth.

To quote wikipedia:

Stagflation is an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a period of time.

-----

Its why I say that inflation is an indicator that the economy is lubricated, but cannot be pumped up to help the economy (unless we really did have a credit freeze, but in that case you do not buy assets, you print money and distribute it to jumpstart economic transactions, and take an interest rate on it).

I personally think we already have the inflation on the way (not hyperinflation mind you, but prices I think are only going to go up with current public policy). The recession also seems inevitable, although it may recover if we ever stop shooting ourselves in the foot. I say that because the supply of resources, productivity of the labor pool, and availability of labor are all there... but we are all locked into this consumer confidence dependency and have not realized that people not spending 1000s at Christmas time on luxuries does not mean the economy ends... especially if they are spending it on real growth and higher efficiency.

So yes, I think stagflation is possible, but we need a longer recession to actually be in that state. If unemployment keeps going up and we keep printing billions of dollars without using it sensibly, I think that recession is likely.

[SportsDino]

I'm not afraid of deflation, I know for a fact that consumer prices are not going down anytime soon. The current oil thing is a speculation correction, it won't last. And the government has already shown that it is not going to decrease the money supply, we might lose a lot of money through deleveraging, but I don't think it will spiral. If it looks like it is going to spiral I hope someone in the government finally gets smart and says "we're pulling the plug, we own the banks until all the bad mojo is shaked out".

I think there will come a point where banks just admit to taking a loss, the stock market will oscillate a bit (in the process damaging a lot of people's hard earned savings unless they protect for it)... but in the end the book value of the banks will survive at some level where only mild money supply effects occur (and those will be wiped out by government injecting money through normal processes... the Fed loves to lend in normal situations, and there will be lots of opportunity out there).

I'm much more afraid of inflation, the banks trying to 'double down' to chase their losses and still look good, and then our book values go off kilter because the price of everything goes up for no real reason.

And with that, I'll shut up for at least a day, because I'm due to be wrong any moment now (and probably already have been at least once or twice already).

[sterlingice]

Originally Posted by SportsDino

I'm not afraid of deflation, I know for a fact that consumer prices are not going down anytime soon. The current oil thing is a speculation correction, it won't last. And the government has already shown that it is not going to decrease the money supply, we might lose a lot of money through deleveraging, but I don't think it will spiral. If it looks like it is going to spiral I hope someone in the government finally gets smart and says "we're pulling the plug, we own the banks until all the bad mojo is shaked out".

I think there will come a point where banks just admit to taking a loss, the stock market will oscillate a bit (in the process damaging a lot of people's hard earned savings unless they protect for it)... but in the end the book value of the banks will survive at some level where only mild money supply effects occur (and those will be wiped out by government injecting money through normal processes... the Fed loves to lend in normal situations, and there will be lots of opportunity out there).

I'm much more afraid of inflation, the banks trying to 'double down' to chase their losses and still look good, and then our book values go off kilter because the price of everything goes up for no real reason.

And with that, I'll shut up for at least a day, because I'm due to be wrong any moment now (and probably already have been at least once or twice already).

We're already talking about that now with the US making noise about nationalizing banks ahead of the G7. It looks like the best financial solution, too. However, it opens up so many bad doors that it's a scary hallway to look down. But, hell, even a lot of fiscal conservatives are looking at the government as being able to better run these banks than their current management and the "free market".

FYI: The short selling ban is over. Doesn't seem to have helped much

Oh, and as Fidatelo said, excellent, excellent posts!

SI

[Flasch186]

ask MS if the short selling ban helped.

[Young Drachma]

From: Henry Paulson
Date: 9/23/2008
Subject: Urgent transaction - need your help

Bright Greetings Dear American:

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I am working with renowned Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren [email protected] so that we transfer your commission for this transaction. After I receive you’re information, I will respond with detailed information about safeguards that will be used to protect the funds.

Wonderful salutations to you cherish friend from Republic of America.

Yours Faithfully,
Minister of Treasury Paulson

[stevew]

hmm, funny, never saw that before.

[Bigsmooth]

Originally Posted by Mac Howard

The question was asked of an analyst on CNN "Where does government borrow the money if the credit market is frozen?". The answer apparently was "they print it" then then then

So there you go. All we need is a few trees. I don't pretend to understand how that works but, heh, what a solution

EDIT:

Just googled "printing money" and came up with this from the Financial Post (18th September):



Apparently the consequences might be a mild inflationary effect - not necessarily a bad thing in a recession - or a small change to the value of the dollar.

This video (58 mins) sums it up pretty well. Check it out, it's called Fiat Empire:

http://video.google.com/videoplay?docid=5232639329002339531&q=FIAT+EMPIRE&hl=en

[Gary Gorski]

anyone think we might be looking at the bottom real soon here in the market? Down 550 today at 8700 - 62 on the VIX...one of these massive selloffs has to be capitulation at these levels doesn't it?

[Flasch186]

you'd think but who wants to step in front of the buzzsaw? I mean every time you try to average in you get crushed. Im done averaging in at this point and am simply taking lumps.

Shouldve kept my short on from May

[Fidatelo]

Originally Posted by Gary Gorski

anyone think we might be looking at the bottom real soon here in the market? Down 550 today at 8700 - 62 on the VIX...one of these massive selloffs has to be capitulation at these levels doesn't it?

Friend of a friend who works on wall street said he saw it going down as low as 6000, and that was months ago. I wish that guy managed my money.

[Kodos]

Nothing to make a day brighter like yet another 5-6-7% loss on their 401(k)s and IRAs.

[Mustang]

Originally Posted by Kodos

Nothing to make a day brighter like yet another 5-6-7% loss on their 401(k)s and IRAs.

Thankfully since July 1st, I've only lost .369% of my money in 401K. I spread my money into the most stable funds I could find back in July.

[sterlingice]

I rebalanced mine a couple of weeks ago into 50% bonds to minimize my losses...

SI

[Flasch186]

more chicken little behavior:

Credit crisis hits Canada
Thursday October 9, 2:07 pm ET
By Rob Gillies, Associated Press Writer
Canadian finance minister looking for ways to keep credit flowing

TORONTO (AP) -- The global credit crisis is starting to restrict the ability of Canadians to obtain loans for mortgages, cars and investments, Canada's finance minister said Thursday.

Finance Minister Jim Flaherty said he is looking to increase liquidity in the market but declined to release details.

In an indication of the uncertainty in the markets, Canada's private banks declined to pass on to consumers the full half percentage point cut in interest rates announced by central banks around the world. The banks cut interest a quarter of a point instead.

Prime Minister Stephen Harper said he was disheartened by the banks' decision and predicted the savings would be passed on eventually.

"We're obviously disappointed with the fact that the rate cut won't be passed on immediately," Harper said at an election campaign stop in Richmond, British Columbia.

"I think we will see that rate cut passed on in time."

Harper said Canada's banks are the world's strongest, citing a new report by the World Economic Forum.

"There is no question, no possibility of bailing out the banks," Harper said. "The banks aren't seeking to be bailed out."

Flaherty said earlier that Canada has a competitive banking system and that Canadians should wait and watch for further rate cuts. He pointed out that Australia's banks only passed along 80 of the 100 basis point cut their central bank made this week.

"What I've said to the banks is do as much as possible in the present circumstances," Flaherty said.

Flaherty called his news conference in advance of his meetings with other G7 ministers in Washington -- meetings he called the most important he's attended since becoming finance minister.

"We have to ensure that credit continues to be available," Flaherty said. "I'm concerned about that. I know many Canadians are because it affects the costs of mortgages, it affects the costs of car loans, it affects loans to small business, the ability of business to invest and reinvest."

Harper has maintained that Canada will avoid the mortgage meltdown and banking crisis that are hitting the United States and Europe hard.

Harper's Conservative party has been sliding in the polls since he said during an election debate last week that Canadians weren't concerned about their jobs or their mortgages.

Harper said Tuesday the stock market was overreacting to bad news and that stocks were cheap.

The prime minister called early elections for Oct. 14 in hopes his party can increase its numbers in the 308-seat Parliament.

[Buccaneer]

I have a question. I just saw that the Dow finished below 9000, close to 8500. I thought, wow, it's probably been a long time since that has happened. Then I saw that it was only 5 years ago (April 2003). I don't recall being in a depression (or whatever) the last time the Dow was this low. Do you think that maybe everything in the past 5 years have been nothing but a hyper-speculative house of cards?

[Flasch186]

A good question and the answer, "Could be." but lets try to avoid digging a basement under it, shall we?

[tucker rocky]

My retirement plan is through New York Life.

I need advice on how to redistribute my allocations.

[Gary Gorski]

Originally Posted by Mustang

Thankfully since July 1st, I've only lost .369% of my money in 401K. I spread my money into the most stable funds I could find back in July.

I did this as well on July 15. Admittedly it was mostly a panic move because of what was going on that day and not some great market foresight but I'm sure glad I did it.

[Gary Gorski]

Originally Posted by tucker rocky

My retirement plan is through New York Life.

I need advice on how to redistribute my allocations.

You should have someone at your company who can help you with this. Talk to whoever it was there that signed you up and they should be able to put you in touch with a financial consultant and he/she will be able to offer you advice on redistributing your allocations.

[tucker rocky]

Originally Posted by Gary Gorski

You should have someone at your company who can help you with this. Talk to whoever it was there that signed you up and they should be able to put you in touch with a financial consultant and he/she will be able to offer you advice on redistributing your allocations.

I can view my plan online, but I'm unsure about the helper programs.

I'll probably just ask about getting in touch with a financial consultant.

[Flasch186]

the question is is now to be heavier stocks or bonds?

[BishopMVP]

Iceland posts - the Iceland situation really doesn't have too much effect on us, or the other large players. Iceland was clearly screwed because the banks they were trying to bail out were several times the size of the Icelandic GDP.

Originally Posted by Flasch186

considering what they consider average sustainable growth worldwide, then yes dropping to barely above .1 percent is a massive slowdown especially considering globally what each .001% change actually means. Your last sentence, again, is making light of the situation when even that factual % change number is smacking you in the face to wake up.

The problem here is that, while at a certain level its nitpicking and arguing semantics instead of substance, when you're discussing macroeconomics words like recession have a specific, technical meaning (2 or more consecutive quarters of negative growth). As someone who recently took a lot of econ classes, it's hard to get out of that mindset sometimes and argue the intent of the words. But just don't get so angry when posters use the technical definition of a word.

It's also worth pointing out that globally the rate is still predicted to be 3%, and terms like average sustainable growth mean less when only short-term slowdowns are expected. (A short-term slowdown being what should happen if the G8 economies, and particularly us, don't screw it up.) Notice how the growth is being driven by Asian economies which collapsed a decade ago but were largely not taken over by government - now they're booming and the long term trendline including 1998 is still averaging well upwards. Just like how the US economy/stock market had a huge correction (25% iirc) in the S&L crisis, but boomed afterwards.

Originally Posted by Mac Howard

Bush is certainly not the "dryest" President you've ever had but the present financial crisis has come about because the financial community has behaved in a thoroughly irresponsible manner that the dismantling of the regulatory system has allowed. It is that "freedom" to act, free of regulation and oversight, that has created this crisis. If you don't see the present system as "free market" then I suspect I'd be horrified by one you do.

The financial and banking sector is the most heavily regulated portion of the economy, and there are several easily-available places where government regulation/policy has directly contributed to the problem.

- the biggest reason behind the asset bubble (particularly in housing prices) was due to the Fed keeping interest rates ridiculously low, thus encouraging a pouring in of foreign currency, particularly from Asia after the 1998 collapse, to our economy.
- this was compounded by Chinese state policy which has artificially kept their currency low (encouraging importing of Chinese-made goods by US consumers/businesses) and poured American dollars back into the US economy (in the form of treasury bonds) and spiraling asset prices higher
- mark-to-market accounting (while a good thing overall, although I would make it quarterly rather than daily) has increased the credit crunch by forcing banks to price assets with positive values at zero on their balance sheets because there is an illiquid market and no one who wants to buy them right now
- Sarbanes-Oxley (the huge regulatory bill passed after Enron in 2002, part of "the most far-reaching reforms of American business practices since the time of FDR") has increased accounting costs for start-up and smaller companies (Section 404) that it has had a monopolizing effect in certain sectors
- politicians such as Barney Frank and Maxine Waters directed Freddie Mac and Fannie Mae (pseudo-government entities) to relax lending standards for first-time minority homeowners despite testimony that these people were more likely to default
- Finally, the bailout and government intervention itself. Borderline companies that desperately should have restructured bonds and taken losses on assets idled and waited in the hopes that a government bailout would provide a better return. Thus, a proper market response has been delayed unnecessarily while companies hope to get better deals from the Fed than the market.


Once again, my argument, and I suspect that of many free-market-esque "ideologues" like me, isn't that no regulation is a good thing. There are many good regulatory measures, and certain areas where naked greed can be channeled in slightly better ways for the economy. The problem is that there was/is huge federal intervention in the economy/markets, and while a large part of it is merely incompetently done, just as much of new laws passed are written up by lobbyists with specific loopholes in mind. With the understanding that any regulations will have loopholes, and people will find these, all most regulation does is channel energy into arcane practices rather than streamline the process and eliminate fraud. Also, the argument that regulations were dismantled needs a lot more evidence imo - yes, there is the CFMA, but in other areas the SEC's budget was doubled in the past few years for example.

[SteveMax58]

Originally Posted by Buccaneer

I have a question. I just saw that the Dow finished below 9000, close to 8500. I thought, wow, it's probably been a long time since that has happened. Then I saw that it was only 5 years ago (April 2003). I don't recall being in a depression (or whatever) the last time the Dow was this low. Do you think that maybe everything in the past 5 years have been nothing but a hyper-speculative house of cards?

Thats the conclusion I came to. My (highly speculative) opinion is that much of this drop is from leveraged investors who are cutting their losses(or taking minimal gains), and (hopefully) reducing their debts.

Otherwise...if the amount of removal of liquid assets is not of the highly leveraged variety...then that means there are a lot of people with a lot of money sitting on the sidelines waiting to invest at some point.

The problem I see with estimating the time period of reinvestment(or event he bottom FTM), is because the government(s) are trying to fix things constantly. This just leads the market to uncertainty as the market doesnt know the "rules" behind what the government will do next. If they know the government will do nothing..they will at least know their next move is not going to be affected by more intervention.

[Flasch186]

perhaps if their first move is into financials or insurers but the bargains are widespread and in many different sectors so unless you subscribe to 'the financials must lead us out of this' mantra I just see a ton of stuff at obscene levels IMO....but follow my lead and get your toes cut off.

[SportsDino]

In my opinion markets don't have bottoms, eventually particular companies just end up at or below their real value (the below is the hard part to deal with). For some companies, that is a big cheerful zero, hence the buzzsaw.

I highly suggest speaking with a financial consultant about your retirement account, and question them vigorously about what exactly your money is being placed in. Mutual funds and index funds are not a good answer btw, such funds could be buying anything (or in the case of index funds, everything!)... if they can't tell you what that fund itself buys please slap your financial advisor for me and take your business elsewhere.

If you cannot value a stock yourself, do not play in the market right now... go towards traditional stable assets (or in my case additionally buy stocks just on the dividend yield and an estimate on stability of said yield, requires analysis though, all market price appreciation/depreciation is an added bonus or loss in the short term). Even cash, facing possible inflation, is probably better than an index (the Dow could drop another 10% or go up 10% tommorrow for all I know, inflation will probably not shoot up quite as fast in the short term given that prices don't adjust as fast as they theoretically should)...

Anyway, back to silence, I'll have to extend it to two days as punishment, haha... just don't want people to think anyone here has any clue about when to jump on the market! The closer you are to retirement the less you really have to lose from dropping your expected return in my opinion. Why risk 500,000 for 10% with a 50% chance at 20% loss, when you can go for 5% with a 25% chance at a 5% loss? Expected value of first scenario is -5%, second scenario is +2.5%.

[Buccaneer]

BishopMVP: very nice post.

[flere-imsaho]

At the height of the dotcom boom the Dow was roughly 11,200. A year after 9/11 it was at roughly 7700. So it roughly doubled in about 5 years (about 14,000 in October, 2007). If you look at any chart you see a real climb in price since 1995 from a starting point of about 3500. If we had kept on the previous trajectory (I'm just eyeballing the chart), I'd say we should have been at about 8,000 now, coincidentally.

I don't know what this all means, but it's interesting. I do think it's hard not to argue that the market's been overvalued since the mid-90s.

[Flasch186]

Asia is crumbling right now

[Buccaneer]

Originally Posted by flere-imsaho

At the height of the dotcom boom the Dow was roughly 11,200. A year after 9/11 it was at roughly 7700. So it roughly doubled in about 5 years (about 14,000 in October, 2007). If you look at any chart you see a real climb in price since 1995 from a starting point of about 3500. If we had kept on the previous trajectory (I'm just eyeballing the chart), I'd say we should have been at about 8,000 now, coincidentally.

I don't know what this all means, but it's interesting. I do think it's hard not to argue that the market's been overvalued since the mid-90s.

Yep.

[Buccaneer]

Originally Posted by Flasch186

Asia is crumbling right now

The last time you cried this, the Dow went up 400 or something the next day. Face it, you really have no clue, as do the rest of us.

[Mustang]

I love the way we get the daily 'rub my forehead and look down at the floor or computer screen in angst' shots on CNN. So, when the market goes up are they goes to have pictures of guys doing cartwheels or flexing?

[Buccaneer]

Originally Posted by Mustang

I love the way we get the daily 'rub my forehead and look down at the floor or computer screen in angst' shots on CNN. So, when the market goes up are they goes to have pictures of guys doing cartwheels or flexing?

It's like the pictures of politicians with a closed-frown face whenever any of them get caught doing something bad.

[Flasch186]

Originally Posted by Buccaneer

The last time you cried this, the Dow went up 400 or something the next day. Face it, you really have no clue, as do the rest of us.

Then ill call it every day.

Youre right, we're taking best shots and hoping for the best as we've said all along. As opposed to your stand back and watch things implode modus operandi.

EDIT to point out: not really you or me, for that matter but what we agree with.

[Buccaneer]

Just saw an article that our region's home sales for September are up 5.6% compared to September 2007 (with existing homes jumping 9.6%). However, the average price of the sales fell 4.8%. That sounds about right, they have been saying all year to expect only about a 5% drop since we never got caught in the speculative boom.

[Buccaneer]

Originally Posted by Flasch186

Then ill call it every day.

Youre right, we're taking best shots and hoping for the best as we've said all along. As opposed to your stand back and watch things implode modus operandi.

Your persistent hyperactive hand-wringing in this thread and the political thread is funny, at times. Maybe it's all that caffeine from your tea?

Seriously, you really need to get out more and stop worrying about things you cannot control. Have you donated to those in need lately?

[Anthony]

hatcher is a very "OMG! THE SKY IS FALLING" kinda guy. he means well. just needs to look up the term "grace under fire" and he'll be all right.

[Flasch186]

Whose the guy in that other thread who defined "need" based on something and another person chewed them out about people in 3rd world countries. I digress, but youre last statement had me pondering the definition of 'need' for a split second.

1. I HOPE youre right! I want you to be right! History may be on your side however the evidence and some interpretations of the past events lead those in my camp (or similar camps) to have legitimate concerns for the future.

2. I cant even drink my tea at night

3. I hope you and most of my FOFC family know that I really do like all of you and I know that Im emotional and I do HOPE it comes through in my posts since my persona on here and my real persona are exactly the same, for better or worse. (thanks Anthony)

[Buccaneer]

Aww, you're ok, at least you know how some of us see you.

As far as hoping we're or you're right, it is irrelevant because it has no effect. We can affect those in our sphere of influence and get by the best we can. It also doesn't matter how one defines "need" (I didn't see the previous discussion) - it is the attitude of the heart in giving to others.