How Deep is your Understanding of Economics?!

BA Economics, MBA Finance, so 6-7, maybe.

More importantly, sold all my stocks and mutuals in the spring of '08, predicting the Dow to 7,000 within a year, 5,000 at the bottom, which makes me an 11.

reply to post by Grumble


Care to elaborate on why you see 5000 as the bottom and what that will look like? I am very interested to hear your opinion.

As much as I want to stay away from admitting I know anything, I am always drawn to saying something. My education in Business Management pales in comparison to knowledge gained from work in three financial institutions. While being as evasive as I can, and still letting on a bit, I worked in various postitions and the audit field with a commonly known bank, another local savings and loan that was recently bought by an “old west” large bank…and lastly one of the oldest stock brokerage firms that was bought by an international banking conglomerate (more audits) located outside the USA…in the cage and then out. Chinese wall but if I could tell stories…

I enjoyed working as a Retail Manager and a Buyer for high end home furnishings and décor much more…giving me a deeper understanding of micro economics. Somewhere in between I home schooled 3 children for 10 years…and gained an extensive knowledge of the history of The United States of America, and many conspiracies.

Add to that a few years at HP, in the Business Service Center and I give my self a 6-7. I will say that I am out of the market completely, retirement and all since 07. Plan to stay out…till such a time which may not come. Recently sold a couple of gold British Sovereigns to see how easy it would be… just fine....at about 960 an ounce.

Romantically speaking I had a great uncle that was a gold coin and jewelry store owner, and also a regular miner of gold. I learned a lot from him; his bed was held up by boxes of ancient silver dollars….and he used to give us silver ingots for Christmas…so I think perhaps being interested in it is in my blood? He would tell us the most wild stories about what he believed about the banks, and the government, which are happening now right before our eyes

reply to post by burntheships

I really enjoyed your reminiscence burntheships. Now, if you'll just tell me that your uncle kept the collected works of Robert Service on his nightstand - the story will be picture perfect.

What begins as a simple curiosity, or fascination with precious metals, has the strong potential to lure one into much deeper, much richer, more colorful odyssey. As you alluded burntheships, we're witnessing a final vindication of the old-timer' like your great uncle.

Thank you for that post.

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Closer to topic - my perception: Coming to terms with basic economic principles, and the US business cycle in relationship to the stock market, has been a new and exciting challenge for many of us - but the stock market is not the economy, and the two often seem to get smushedtogether.

With respect to trading - if I were to place a lofty Jesse Livermore at the top of the OP 1 - 10 scale - then imo - a person with the market acumen of say a '2' - would be capable of discerning the relative level of expertise represented by the posters on this forum, or any other stock related BB. Respectfully - if you are an active trader, or even an aggressive investor/well versed armchair marketeer- it's pretty easy to suss another's experience level - first blush.

Admittedly, the premise of this thread kinda baffles me.

GL

reply to post by pause4thought

How Deep is my Understanding of Economics?

Deep enough to stay clear from all the trouble ------->

Originally posted by TravelerintheDark
I'll give myself a 1 being firmly entrenched in the view that economics is a pseudo-science based on faith.

When I have money I spend it. No money, no spend. That's all I know for sure.

If the government followed this method you'd be a 10.

Since I am more and more leaning toward believing economy has become a faith based science, I would score myself with 1. That's not to say that I know nothing about it, but rather have come to think of it as being flawed or fake if you will.

Sincerely, M.


Edit: There's always one thing you notice only as you're pressing that "Post" button.

[edit on 6-3-2009 by Manawydan]

I think this video about women & economics perfectly encapsulates my feelings on the whole credit crunch thing



PS. I do so love little kittens .

[edit on 6/3/2009 by The Lass]

I don't have actual market experience, but I do have great research skills that I use often, along with my understanding of Geography (my major, it plays in more things than you think), and Economic Development (my minor, focuses mainly on the government side of things in relation to economics). I used to be an economics minor though and like some of the others I just couldn't wrap my head around micro-economics. The numbers and graphs....*shudder*

With this in mind I'd give my self a 5-6. I'm frequently answering people's questions on the economy and correcting them on what should be done according to theory (until I get to them they are still of the "Spend spend spend" thought, not the normal Keynesian thought we should have). I also watch CNBC whenever I'm home and try to keep a close eye on the stocks and understand them, but I don't trade (no money).

My strength though is researching the past and pointing out differences in what happened and what is happening. Like right now, the timelines for the Great Depression and the current situation are lining up pretty well. The only difference is there are no formal tarrifs being implemented, but there was some talk by Obama about "buying American" wasn't there?

reply to post by OBE1

With respect to trading - if I were to place a lofty Jesse Livermore at the top of the OP 1 - 10 scale - then imo - a person with the market acumen of say a '2' - would be capable of discerning the relative level of expertise represented by the posters on this forum, or any other stock related BB. Respectfully - if you are an active trader, or even an aggressive investor/well versed armchair marketeer- it's pretty easy to suss another's experience level - first blush.

Admittedly, the premise of this thread kinda baffles me.

I appreciate this frank admission and the logical premise of what you say here, so I'd like to respond, briefly.

I suspect many in the GM forum have greater insight into the overall workings of the economy than the intricacies of the stock market. (And I suspect relatively few have a really in-depth grasp of both.) However as the one undeniably impacts on the other (in both directions), most such people surely take at least a passing interest in the markets. This thread therefore simply gives the opportunity to explain one's strengths and weaknesses in the respective spheres for the benefit of all.

The intention is that we will each know where the other stands, so it will be easier to know who to look out for as having a better grasp, and whom to address more in layman's terms, for example.

The very fact that you have personally hinted you have strengths with respect to the markets in itself achieves this aim.

Coming to terms with basic economic principles, and the US business cycle in relationship to the stock market, has been a new and exciting challenge for many of us - but the stock market is not the economy, and the two often seem to get smushedtogether.

As I say, please bear in mind some come from the opposite direction, and are learning more about the markets and the chinanigans that surround their workings via the ongoing crisis.

There is actually an extent to which the two are closely intertwined, is there not? Let's just say people are free to assign themselves one score for understanding the economy and another for their grasp of the stock market if they so wish.

Hopefully this clears the air & more will step forward so we can purposefully get to know them a little better.



I've found the contributions to date fascinating. Hopefully I'm not the only one who feels it will be worth referring back here now and then after reading someone's post.

Originally posted by Anonymous Avatar
reply to post by Grumble

 

Care to elaborate on why you see 5000 as the bottom and what that will look like? I am very interested to hear your opinion.

Well, I think we have seen a crash in slow motion. It will continue to "crash," bit by bit, until it reaches a point consistent with the level of legitimate strength in the U.S. economy. In a sense, we are learning that 2/3 of the value of our public corporations was based on fraud, and the depth and intensity of this correction will mean that people will be very, very tough to fool for the next few years. So, expect a stagnant stock market for some time to come. I have put my money elsewhere.

But remember, we will get fooled again. So, at some point, when you see the velocity of the market increases reach a point that clearly indicates bull, jump in. When you see it wheeze, jump out again. It ain't rocket science.

But, hey, that is just the point of view of a hardened cynic who has learned the hard lessons in previous fraud based busts and managed to time this one right. I may get the next one wrong. But one thing I can tell you for sure is that the talking heads on TV will get you broke in a hurry. They are selling snake oil, my friend, at least 90% of them are.

Hey there!,
Seeing as I neary missed my last mortgage payment I'd rate myself as maybe a 0, or -0.5. I have however, two questions i'd like to ask the esteemed gathering.
1) With all the repeated attempts to bail out this and that concern, it seems to me that we are just pouring money into an inverse hole, i.e the more money we pour into this hole the bigger it seems to get. Are we just throwing good money after bad?, or should we just let the market correct itself?.
2) I've heard slogans like "soft landings", "recessions" and now more and more "depressions". As countries tried to climb out of the depression in the 30's, two countries who spent big on military climbed out relatively quickly, namely Germany and Japan. Are we heading for depression and is war the only way out?.
humbly.

[edit on 6/3/09 by feoil]

reply to post by feoil


1) Since there technically there is no good money (good money being currency exchangeable for a good like gold/silver) there is only bad money and worse money. The problem here though is that we are sending debt to address problems created by debt that has compounded in complexity over years of abuse of the system.

At the same time, it wouldn't be a great idea to let the free market rule, I base this off of the Panic of 1837 where the Government did nothing and a meltdown similar to what we are having now. This was pure free market occurrences since there was also no effective national monetary policy organ (having been shot down the year before by Jackson). The depression that followed is argued to have actually been worse than the Great Depression. It took until 1847 to recover the economy from it.

2) War spending is ultimately what quickened the global economic out of the 20th Century Depression. From a pure economics point of view, war is good, because it raises demand for goods a lot and speeds up the circulation of money in the economy. Increased demand and increased circulation means that there is more economic activity. This leads to a percieved "things are better now" mentality and people start popping out kids. These kids grow up not having much due to the fact that the society they are born into is at war and is focused on war production. So when the war ends, there is a huge supply of demand for non-war goods, giving jobs to those who are displaced by the end of the war.

Looking at it a different way, war spending is an effective use of fiscal policy following the Keynesian theory of economics, where in if you are in a recession, the government should spend into a deficit in order to stimulate the economy. Then when the economy recovers, you should tax to pay down the debt (that part never happens though sadly). The people who pay for wars are governments who issue larges amounts of debt in order to purchase those goods and services domestically, leading to that economic growth I was talking about.

Hopefully I cleared things up a little, it was a bit rushed on my part, but I'll try to look back later and see if it got through ok or if I need to get the windex out and clear it up a bit.

Edit: I'm not finished watching it all yet, but a good understanding of the banking industry and explaining how our currency is based on debt not real value is called "Money as Debt" and is on Youtube. I'll post the links to some of them that I found:


Part 1: www.youtube.com...

Part 2: www.youtube.com...

Part 3: www.youtube.com...

Part 4: www.youtube.com...

Part 5: www.youtube.com...

[edit on 3/9/2009 by Sir Solomon]