Why the Dow is Hitting 10,000 Even When Consumers Can't Buy And Business Cries "Socialism"

Your first paragraph is totally incorrect (not being mean).

Greenspan was wrong and this was one of the unltimate flaws in his policy.. 99% agree on this

Employment is lagging, look to forward indicators as your guide my friend.

I suppose we are referring to Efficient market Hypothesis (EMH). What a load of baloney lol! Its only efficiency is keeping the majority of people poor.

I would not count Reich as a knowledgeable source of economics. I also would not blame only Obama for the policies or the crisis. Obama is no expert, he's never even run a small business, nor does he view investors in a positive light.

Stocks are more expensive than any time in recent history, they're way overpriced according to PE ratios.

Here's a chart from: seekingalpha.com...
[atsimg]http://files.abovetopsecret.com/images/member/2877bc82c552.png[/atsimg]

Stocks are not a good buy right now. I believe the market has been inflated by the Trillions poured into banks by the Treasury which the banks subsequently invest in T-Bills, Gold, Bonds, Bank stocks, and index funds. This was a sly way of boosting 401k savings which prevented an outright revolt by the general public. As the Treasury withdraws this money, they hope that sucker money will replace bank money in the markets.

Btw - Looking at the chart, the high level PE for the SP500 was 25. It's 150 now.

Consider that delta, if the corrected PE ratio should be 25, is the SP500 6x higher that it should be? If that's too radical a correction, is the SP500 3x higher than it should be? Or is it merely twice as high as it should be?

[edit on 25-9-2009 by Dbriefed]

[edit on 25-9-2009 by Dbriefed]

I dont believe that chart is anything close to correct.. no way is the avg pe ratio for a sp 500 company over 150.. this seems like disinformation.. ill back this up with some research

The SP500 PE Ratio is 18.65

Check it out here my friend

I dont like that seeking alpha site, akin to ZH, although much less bias

Although if you look here that is not pretty at all

[edit on 25-9-2009 by GreenBicMan]

[edit on 25-9-2009 by GreenBicMan]

reply to post by grover


I don't know if this is capitalism, more like Corporate Socialism. As for conservatives screaming socialism: I very bright conservative guy I knew was ignorant as hell. About 3 years ago he was touting capitalism as the greatest thing ever and somewhere down the line said something about how the government has never bailed out or subsidized big business. IGNORANT - "how about the airlines, for one," I said.
It's not capitalism, socialism, communism - it is Corporatism. That's it. That's who counts.

reply to post by grover


So when the govt. comes in and buys into the market there fore owning a part of it?

That sounds like a facist policy to me. It may not be fully facist but well on it's way.

reply to post by GreenBicMan


Thanks for the correction, I'll need to dig up more data. Looks like there's way too much variance between sites.

reply to post by Dbriefed


Yeah, I dont know who made that chart, but it is wrong

If we had PE Ratio's at 150, well.. anyways lol its not

Just do this

Take the SPX100

Get the average of those PE's and see what you have.. it wont be too far off most likely if you wanna spend the time.. but 18.xx sounds WAAY more correct than 150

PE RATIO = (Mkt Price)/(EPS)


So the lower the earnings and higher the stock price the higher the PE.. but you prob. knew that.. so as earnings rise (which they are) and stock prices rise we should still stay in roughly this same area, and historically it looks like we are at the mean PE historically for the SP 500

Originally posted by grover
reply to post by Rockpuck

 

Did you not read my op...I did not indulge in political baiting.

I am not thrilled with all of this either. Let the big guys fail if they are that incompetent or corrupt...it is the little guy who needs help...not someone making 100 million in bonuses...much less corrupt banks.

[edit on 25-9-2009 by grover]

Being probably the most nonpartisan forum, its easy to spot political baiting.

Anyways..

The Gov spending, aside from massive increases in debt, is bad for the economy in the form of inflation.. when time comes for the economy to actually recover, the economy will be pre-bloated with Gov funds. Basically meaning if the plan works and the Gov spends its way out of the recession, we could have something just as bad: run away inflation.

The fed admits it now needs to take money AWAY ffrom the economy, but is unsure how, when and from where.. the inflation cannot hit until it reaches consumers, hypothetically this will be possible if we have a 1990's style recovery, only with 1980's style inflation ..... which ironically could lead to another 2001 style crash.

All in all the massive bailouts and stimulus did save us, however it cannot heal us.. the markets indicate a flood of free flowing capital and money on the sidelines, which could spill into the broader economy and wreck havoc.. when you screw with fundementals of a system there is great you will permenantly ruin it..


When it comes down to it Grover, its not the parties that seperate us, or even our ideas...

Its Globalist Vs Us. They want to sell our country to the lowest bidder, destroy our institutions and make fools of her people.. doesn't matter what side of the aisle these monsters call home, they all answer to the same higher authority. Michael Moore cracked me up yesterday.. his new movie coming out, which I will def see and def agree with.. and he lambast everyone and everything except Obama, which he claims "has a good heart" .. he's a politician and no politician has a heart, especially a President. Imo, it shows how much we yearned for some saving grace only to get hoodwinked.

reply to post by Miraj


The FED actually comes in and "supposedly" purchases securities aka "Plunge Protection Team" if you have ever heard that term thrown around

Tiny Tim is just pretty much Uncle Ben's Bi-otch

reply to post by GreenBicMan


Just checked the CSV download of the charts you referenced, the EPS chart data stops at 5/09 with a value of 7.33. The CSV download for Price has a value of 907.28 for 5/09. Price/Earnings = 123.7763.

The PE chart shows a PE ratio of 15.99 for 5/09, and should be 123.78.

Those charts are broken.

[edit on 25-9-2009 by Dbriefed]

reply to post by GreenBicMan


The only leading indicator I follow is Corporate earnings!

You can't hire if you're not turning a profit naturally unemployment will be a lagging indicator, assuming the depression runs its course... could always be a WW2 scenario in which case unemployment was a leading indicator.

But anyways, the markets only indicate inflation that is to come. If the markets are this high and the economy this bad... imagine when it all turns around and we get positive news not just better than expected? Why, we could see DOW 20k

reply to post by Dbriefed


It says as of 9/25/2009

Seems correct as it went down today (down market)

125 cannot be correct, ill do my own research then and present it in this thread

reply to post by GreenBicMan


125 is way obscene.. 18 is a little low imo, I expected it to be around 24ish maybe even higher

Inflating a balloon with holes still in it works for a while, until you run out of air to pump in.

Throwing billions and billions at the problem has created a false bump.

It wont last.

Everything said from this moment until then will not change that fact because the problems that caused this economic collapse have not been addressed.

Investors are living high now on massive government spending and bailouts.

Hope it holds out for a good while longer, the Obama administration needs all the good news our money can buy!

[edit on 25-9-2009 by Walkswithfish]

I see now where these discretions are coming from

The people that want to throw the slant are using

1. AS REPORTED EARNINGS

instead of

2. OPERATING EARNINGS


This link right here is FROM STANDARD AND POORS ITSELF

Its pretty interesting.. scroll down to the middle to see the two lists

Btw, you will see the outlooks as well into 2010 etc..

You can email this guy [email protected]

He is the SP500 analyst if you want to rough him up if you feel you have a case lol

Linkage

OPERATING = Income from product (goods and services), excludes corporate (M&A, financing, layoffs ), and unusual items


AS REPORTED = Income from continuing operations, also known GAAP (Generally Accepted Accounting Principles) and As Reported



This should clear 99% of this up

reply to post by Rockpuck


in my link the analyst listed it as 18.67 as of 9/16/2009

but yeah anything over 100 either way is suspicious hahaha

[edit on 25-9-2009 by GreenBicMan]