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

reply to post by grover


So here's something to ponder ...

Let's say for the sake of argument that whatever the Obama admin. is doing ends up working.

Does that mean that socialism works?

Egads.

See that's the problem with red baiting, sometimes things actually work out and one's credibility disappears within a logic implosion.

Doesn't the problem with American economy boil down to we don't produce anything anymore. Until that changes everything in the OP is correct. But it is like plugging a hole in a dike with gum. It is only temporary.

reply to post by venividivici


but we do produce my friend

ill use this comparison again

look at the publically traded NYSE stocks compared to intl exchanges

where is the money flowing?

we just really dont produce cars anymore, and thats (for some reason) what people focus on when they refer to "producing"

reply to post by GreenBicMan


money flow produces profits for the elite and corporations but doesn't benefit the regular Joe. I don't have the answers but I know this is the problem with the American economy.

Actually, look what happened to the Grand Caymans when the money flow dried up - mass lay offs. HMMM maybe you were being facetious?

reply to post by GreenBicMan


Looks like Standard and Poor spreadsheets reference As Reported ratios, the December PE ratio was 60.7 in this xls:
www2.standardandpoors.com...

reply to post by Dbriefed


yes, lol

we are back to the

AS REPORTED

VS

OPERATING


Did you see my post on the previous page?

reply to post by venividivici


no. we are not grand caymans mon'

and money flow will not dry up in the most actively traded market in the world..

averages joe's do benefit cuz' you know mon' most average joe's have a 401(k) - or the trad. "family unit" I should say

reply to post by GreenBicMan


dude its not a 401 anymore its a 201
where ya been

reply to post by venividivici


It will be a 601 in 10 years barring your impending 2012 world catastrophe of course haha

You should look up the historical gains when the market does not gain "x" percentage every 10 years.

You just missed (well you still have a chance) the best buying opportunity of your life. It sucks, because I have no margin. You will never see anything like that again. I dont know how old you are, but if you are my age, at an older age you will be playing too and lose because you got in when the average "retail" player would - at the wrong time.

[edit on 25-9-2009 by GreenBicMan]

Originally posted by GreenBicMan
reply to post by Dbriefed

 

yes, lol

we are back to the

AS REPORTED

VS

OPERATING


Did you see my post on the previous page?

Yup. Looks like companies started playing financial games in the '90s by not including write-offs in Operating earnings. As Reported Earnings is the honest figure that should be used.

So, the SP500 PE ratio is currently in the 123-150 range. Normal SP500 PE ratio is what, 20? Let's say PE is 140 (easy to calculate), then SP500 is 7x what it should be. It's 1044 today, and if reality were in place it would be 149. DOW of 9665 today should be 1380, if stocks were priced correctly. Someone made the price of stock artificially high. And it certainly was not from employee 401k contributions.

Every time the truth comes out about the real financial situation of a company (Lehman, AIG, GM, etc), true value of the company is made public and stock crashes. When the truth comes out on the valuation of the stock market, it has to crash as well.

They can't keep up inflated stock values. Reality will hit.

[edit on 25-9-2009 by Dbriefed]

[edit on 25-9-2009 by Dbriefed]

reply to post by Dbriefed


hold on bro, its 18.xx not 1xx

no one uses GAAP-As Reported for PE RATIO (except for that guy that made your chart), which has to due with the EPS

But get this, because this argument is bunk anyways, let me tell you why

1. No one gives 2 $#s about PE Ratio's much anymore, especially if you are a growth company etc.

2. So if the PE RATIO on IBM is even 10000 and IBM I think is a buy at 130.00 a share, do you think that matters to me?

So in reality, we are arguing over stupid stuff here, but fyi - no one uses AS REPORTED EARNINGS for PE RATIO, so I mean im just telling you, but we did find some interesting stuff on our journey, like that spreadsheet.

Hell man, email that SP500 analyst - see what he says and post it on here if you are not satisfied? I would like to see it as well.

[edit on 25-9-2009 by GreenBicMan]

[edit on 25-9-2009 by GreenBicMan]

the reason why this government intervention is simple:

lets start with the facts. As presented on the first post, business is doing well because the government is intervening. Because profits are being made, businesses will hire more people to meet the government demand. That boosts employment and private demand. As private demand goes up, the government slowly withdraws the increased spending until the economy is up and running.

Now you might wonder if this is the case, why is unemployment still going up? The reason is that the important statistic to look at to see if the economy is improving is not the unemployment rate, but the rate at which the unemployment rate is increasing or decreasing. For those of you who know basic calculus, this is called the second derivitive.

If you look at that rate, then you see that slowly the rate at which the unemployment rate is going up is going down, until the economy starts creating jobs. An important fact to bear in mind is that even if jobs are being created due to population growth unemployment will still go up for a little longer, but will begin to go down. What is in question here is not whether we are going to recover and not whether unemployment will go down, but how fast the economy is going to recover and whether the unemployment rate will go down slowly or quickly.

You know what the most amazing part is? Despite tons of people on this website declaring that Obama is going to sink the economy, the economy is actually coming back to life.

reply to post by schrodingers dog


Socialism, Democracy and Capitalism are not necessarily at odds...most of Europe for example combines them in one form or the other.

Originally posted by Rockpuck
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.

We don't usually agree but I will second you on this with one caveat...it is corporate globalists...there are those and I consider myself ideologically one of them who feel a globalism built on mutual respect and interdependence will work but corporate globalism is built only on the quest for a profit and no regard for the consequences.

I had no illusions about Obama though I do like him and I think Moore is right for the most part...but he is still a politico...and as such in the pockets of them that bought him.

Still I think we are better off with him than we would have been with McCain and the shrew.

reply to post by GreenBicMan


Good catch on the PE ratios mate.. stats are manipulated by everyone to achieve an objective eh lol...

Anyways, one slight correction..

The EU is the largest economy in the World, and the most traded.. and not all companies traded in America are in fact American. For instance, you can purchase Toyota, Shell, yes I am being a smartass for the sake of being a smartass.

SDOG

It ain't Socialism, its Fascism.. Socialism implies giving to the people, no? ... merging banks, auto's etc under the Gov to bailout stock and bond holders while pillaging the treasury is indeed Fascism, it serves the Oligarchy..

reply to post by Rockpuck


I am strictly speaking exchanges, I suppose if you added up all EU the volume would be bigger?

I dont know C trades like a billion by itself sometimes.. u should dig that up

[edit on 25-9-2009 by GreenBicMan]

The thread was why the DOW was hitting 10,000. It's because stocks are over-valued.

1. Banks dumped Trillions of Treasury liquidity into investments instead of loaning it out.

2. Stocks are artificially inflated at record PE ratios, either by using the wrong index or where companies exclude losses (write-offs) from earnings.

3. Companies are drumming up profits by cutting expenses like labor and hard investments (Check out GDP figures, business investments dropped from 2.1T in Q208 to 1.6T in Q209, a 24% drop). Actual revenue is way down.

The DOW does not reflect true value of companies listed. Companies have record low revenue, and price of stock is excessively high. Companies have cut back to bare bones to show profit to make it through a traditionally profitable Christmas season, and Christmas isn't looking good.

reply to post by Rockpuck


btw in your example it got me thinking

toyota would prob not be apart of the sp500, that has to be right then? I prob would have said otherwise before you just mentioned that

reply to post by Dbriefed


But here is what you are missing

I just showed you 18.xx is about the mean PE RATIO

But get this my friend

You or I cannot decide what is OVERVALUED, the market is a conglomeration of many different interests.

The INDEX price is WEIGHTED, not everyone contributes the same.

You are misunderstanding something about the market as well being it is forward looking, and not looking at 9/2009, but 9/2010-2011

Thats why you will see that anayst projecting those times in that spreadsheet



[edit on 25-9-2009 by GreenBicMan]

Originally posted by GreenBicMan
reply to post by Rockpuck

 

I am strictly speaking exchanges, I suppose if you added up all EU the volume would be bigger?

I dont know C trades like a billion by itself sometimes.. u should dig that up

[edit on 25-9-2009 by GreenBicMan]

I realized I got myself into a quandry here bc we are not counting forex, so nevermind


But I wonder how much money is pumped through the CME each day? I bet that rivals FOREX, could be way off though