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

Originally posted by johnny2127
This reasoning is very off base and overly simplistic. The declining dollar will help some companies, while devastating others. Additionally, there is a correlating relationship between stocks and the dollar. The dollar's rise or decline is reflected in the profit or loss of the business. However, most business that are exposed to dollar price fluctuations, by dollar price hedges. So their exposure is numerated exactly. Additionally, companies take corresponding actions in business to offset movements such as these. Example would be: moving some manufacturing from a country whose currency is relatively strong towards the dollar, to a country with weakness or less strength versus the dollar.

Point is, this theory is incorrect, flawed, and overly simplistic.

My post referenced the relationship between currency devaluation , and rising stock prices in the face of dismal fundamentals.....completely unrelated to corporate profits , and the protection thereof

reply to post by OBE1


Honestly, I might come off bad here, but I prob. wont read it lol. (trying to watch hawks game here, but actually I will read it later bc that wouldnt be fair of me).

I am actually speaking about when the dollar peaked when equity markets tanked earlier this year. As interest rates have remained at 0 as well during this whole period I am not sure where that comes from as well.

Following this framework you have set it makes me think that you think an overvauled dollar was the main cause for this "crash" in equity markets? Am I way off?

Ill be abck on later - go hawks

Originally posted by johnny2127
But here is simple proof you are wrong. Over the past 80 years the dollar has devalued 95%+. But the stock market is up multiple hundreds of %.

Well , a tad more complicated johnnny....but I'll give you a BINGO!

Thanks for unconsciously supporting my premise , but with all due respect , if your position is that of the adversary , you might want to go back a few posts and begin reading anew.

reply to post by GreenBicMan


Ok, big hawks win, good night for GBM.. now need a dolphins win tomorrow haha

So ok, I read through that page - I am assuming you were referring to the Zim. link?

Let me quote this part

Our Zimbabwe example, though extreme, demonstrates how changes in stock prices can be driven by monetary conditions, and not changes in GDP. New money gets spent or invested. In Zimbabwe's case, because there are no alternatives, it is stocks that are benefiting.

-----


Now, I am certainly no economic mastermind. In fact many times I have stated I would really, or I should say I really do care less because to me it doesnt matter when you analyze markets techincally.

So with that in mind..

1) Since their $ is basically worthless in Z - doesnt that mean even if their market is at 40,000 or whatever it was, its still basically worthless? Our dollar still holds purchasing power, maybe not in Bermuda, but goods in the USA are still the same IMO dating back to the strong dollar of earlier this year as opposed to now.

2) Our markets are so heavily traded with so many different conglomerations of viewpoints it would be hard to make our markets turn like that, or realistically more like impossible.

3) What would happen to our Bond Markets?

4) What difference does it make to you if you do not travel outside of this country?

5) The market does A MUCH BETTER JOB OF MAKING US MONEY than a falling dollar ever could to devalue us in the first place.

- I believe this is what Johnny was referring to in his previous post, but I cannot speak for him.

For example, for people worried about the strong/weak dollar..

1) What has the weaker dollar done to you in the past 6 months?

2) What has the market advances done to your 401k recently?

Those two questions alone should be enough for my point to be valid, but I am honestly interested in someone that could sway my opinion, bc not once has anyone ever been able to on this board when I have posed this question. Im not being a jerk or anything, seriously, I just want an honest answer that does not revert back to how the FED is jerking us off etc.

Originally posted by OBE1

Originally posted by johnny2127
But here is simple proof you are wrong. Over the past 80 years the dollar has devalued 95%+. But the stock market is up multiple hundreds of %.

Well , a tad more complicated johnnny....but I'll give you a BINGO!

Thanks for unconsciously supporting my premise , but with all due respect , if your position is that of the adversary , you might want to go back a few posts and begin reading anew.

You aren't understanding what I am saying buddy. They aren't related. The dollar has been crushed the last 80 years compared to other currencies, and yet those markets are up multiple hundreds of percent also.

If there is any correlation, it is more between exceedingly low interest rates, tremendous money supply, and equity market rallies. Nearly all of which turn out to be bubbles.

Originally posted by johnny2127
You aren't understanding what I am saying buddy. They aren't related. The dollar has been crushed the last 80 years compared to other currencies, and yet those markets are up multiple hundreds of percent also.

I think you're attempting mix apples with oranges Johnny. All fiat currencies are depreciating , so of course global markets are up nominally , but foreign securities are priced in their native currencies...not $USD.

Prior to 1971 currencies were fixed.

Here's the post Bretton Woods score-card - January 1971 thru December 2008.....

purchasing power:currency in circulation

[atsimg]http://files.abovetopsecret.com/images/member/bba682d46aab.jpg[/atsimg]

If there is any correlation, it is more between exceedingly low interest rates, tremendous money supply, and equity market rallies. Nearly all of which turn out to be bubbles.

You're making my point. Inflated money supply (devalued currency) fuels market rallies...including the current rally. To believe otherwise , is to buy the myth that this rally is somehow fundamentally strong as opposed to fundamentally weak , led by a distressed financial sector that was able to jury-rig artificial earnings based upon favorable , last minute changes in FASB accounting rules.

Real wealth is measured in purchasing power. Current stock gains , when weighed against the amount of new currency it took to create them , may not look so sweet.

UGLY: Inflation-Corrected Dow

Originally posted by marg6043
reply to post by grover

 

But guess what everything have a limit even government spending have to stop one day.

I think a lot of ppl missed it, the death knell happened just a few
days ago when the Federal Reserve had to buy 50% of the T-bills
put on the market.

China and Japan would not buy the majority of it, so basically
it was monetized.

That is direct inflation.

Both sides, left and right, have engaged in crony capitalism.

After the DOT COM crash the senate voted 98-1 to increase the
number of H1-B visa workers coming into the US.

The senate do not represent us anymore.

Period.

They are total puppets for the Corporate Whoring of America.

If you want to know who the great whore is, it is the US based on
what is being done to it and in its name.

All that is needed for evil to win is for good men to do nothing.

We have done nothing exceedingly well.

Good Luck to you all !

[edit on 28-9-2009 by Ex_MislTech]

The older I get the more I believe that if the economic structure of the country collapsed and the nation declared bankruptcy nothing would change...nothing.

Nations are the real instituition too big to fail...note that in the middle ages several nations defaulted on their debts and nothing happened...we could walk away I argue from our debts to China and all would happen is that China would write them off and business would continue as usual...the ones who get screwed would be you and I.

reply to post by grover


I agree with some of that grove - but we the citizens would not be the one geting screwed - we would benefit from not sinking into the greatest great depression instead of a heavy short term correction

reply to post by OBE1


So it is your view OBE that an overvalued dollar caused this recent market plunge?