Where is the US economy headed?

@hawkeye10,

You are arguing that the economy is doing bad because we don't have the artificial wealth of a bubble.

Most people I know are doing just fine. Just like they have always done. They get by on what they have.

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@parados,

I thought it a bit odd that Janet Yellen singled out a particular sector for a
warning about (in the words of a former Fed chair) "irrational exuberance."
Bubbles burst, from tulips to dot.coms. The effects can affect us all.

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@realjohnboy,

John, "Irrational exuberance" suggests that the stock market is over-valued, but how does one measure that? Not even price/earnings ratios are dependable forecasters of how the stock market will react.

If one bothers to watch and listen to the financial pundits, they all react to one day's movement as if it has some meaning to them; it doesn't. A few days hence, and it's all forgotten. None of them are able to tell us how the economy will react in the short-term or long-term; they provide guesses. That should be the clue that no one is capable of predicting future stock market movements.

I use 'gut feeling' based on many readings of the financial news and a little understanding of micro and macro economics. It's been pretty accurate; I've sold 37% of my investments when the market hit 14,000 and repurchased them when it was down to 8,500. That was the period from 2006 to 2009 when the average loss for investors was 40%, and I lost 17%. Last year, my funds increased by 22%, and felt this year will be a struggle year - and so far, I've been correct. I sold some of my gains last year to provide some cushion on my cash position. The DOW is up 2.32% YTD, and my funds are up 5.82%. I don't follow the advise of professional investment counselors who recently said we should be holding 50% bonds and 50% equity. I think that is very foolish, and I believe my performance over the average for last year and this year proves my point.

The important principles of investing are 1) buy low and sell high, 2) purchase stock at regular intervals to average cost your purchse, 3) sell your stocks at regular intervals to average price for your sales, 4) don't react to the daily ups and downs of the market, 5) if you believe the trend is moving in one direction, it's okay to rebalance your portfolio, and 6) it's okay to 'gamble' with about 10% of your holdings on individual stocks, but know when to buy and sell. Set a price to sell when it losses say 10% of your purchase price. Say you purchase a stock for $100, and it losses $10. If you sell, and purchase another stock, all you need to recover is $11 to make up the $10 loss. As the loss gets bigger, it become more difficult to make up the loss.

Stay on top of your investments, and rebalance them as necessary to make sure none will become a drag on your total investments.

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I wrote this in July of this year.

Quote:

I use 'gut feeling' based on many readings of the financial news and a little understanding of micro and macro economics. It's been pretty accurate; I've sold 37% of my investments when the market hit 14,000 and repurchased them when it was down to 8,500. That was the period from 2006 to 2009 when the average loss for investors was 40%, and I lost 17%. Last year, my funds increased by 22%, and felt this year will be a struggle year - and so far, I've been correct. I sold some of my gains last year to provide some cushion on my cash position. The DOW is up 2.32% YTD, and my funds are up 5.82%. I don't follow the advise of professional investment counselors who recently said we should be holding 50% bonds and 50% equity. I think that is very foolish, and I believe my performance over the average for last year and this year proves my point.

The bears have taken over the stock marets from the Euro countries and China's GDP's dropping , and the ebola virus fears. I didn't base my prognostications on these events, but it seems my choice to sell high last year to provide a cash cushion for 2-3 years are paying off.

The reason I'm post today is to provide some head's up on the market. 1. The DOW was lower than what it is today. Don't panic. 2. Wait until the market losses 10% before you react. By react, I don't mean sell off your investments. A good option is to balance your portfolio between the bad performing funds into good ones - maybe doing it in steps. That way, you don't lose big or earn big, but averages out your decisions.

Generally speaking, the US economy is doing just fine compared to all other economies. Don't let the current bear market spook you into doing anything foolish.

Good luck.

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The U.S. economy had been living on borrowed money for a long time, even before the financial crisis. The economy is experiencing the unwinding of that excess, and probably will be for some time

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Brent Crude Oil fell 6% today (Thanksgiving in the US).

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@AthenaBrown,

How did you arrive at that conclusion? What do you mean by "unwinding?"

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@realjohnboy,

RJB, I read in this morning's newspaper that even with gas prices down and employment up, this holiday shopping season is not going to be that spectacular because most people are still struggling from not keeping up with inflation. Although gas prices are down, food prices have increased.

It was my 'gut' feeling that with gas prices down, employment up, and many states and cities increasing the minimum wage, that this was going to be a banner year for christmas shoppers.

We'll have to wait and see.

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@cicerone imposter,

Quote:

this holiday shopping season is not going to be that spectacular because most people are still struggling from not keeping up with inflation

That is what I am sensing too....which is going to suck for the retailers because that would mean that for two years in a row they stocked for a good holiday but then had to discount to unload the stock. Restaurant traffic was flat Q3, and if anything it got worse in OCT rather than better as gas prices plunged which is very abnormal. People are acting like they are tapped out and have no optimism that things are going to get better. I think we are going to see again consumers strategically buying, only what they need and only at good prices. This should do away with RadioShack and JCP, but it will take another couple of years to do in Kmart/Sears because the main profits in the past came from impulse buying and must have buying where the retailer can get massive profit margins, and this kind of buying has disappeared. Retailing is never again be the business that it was, and profits have been slashed, this industry needs a massive shrink.

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going down till everyon is poor, it is that easy!

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@hawkeye10,

I'm 'seeing' a lot of contradictions in our economy. I travel frequently, and many of the trips this year and next are almost full to capacity. Even the ship I was on last September that holds over 3,500 passengers were almost full to capacity. Also, the latest travel brochures I'm receiving show many of the trips are already sold out!

From Vantage Travel.

http://i1369.photobucket.com/albums/ag215/Tak_Nomura/P1170453_zps3f105730.jpg

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@cicerone imposter,

Quote:

I'm 'seeing' a lot of contradictions in our economy.

Which means it is unstable. This is to be expected because the politicians made little/no effort to apply fixes after the crash of 07. Contrary to your opinion the American people are not completely stupid, they know that this economy is unsound, they know that it does not represent our values of fairness and equality, and they know that no one is seriously even attempting to make things better.

Another sign that nothing has changed: I talk to several remodelers, they say that we are still exactly where we were in 08, people who had planned to buy a better house have decided not to, they are instead fixing what they have so that it is what they want for the long haul. People are not willing to pull the trigger on big buys that they dont have to do, just like the corporations. They dont have confidence in the future.

I dont see travel as an exception....airlines massively shrunk capacity over the last decade and are not even considering adding it back, and cruise lines are increasingly needing to resort to discounting to fill the ships.

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@hawkeye10,

"fairness and equality?" The government can do some things about those '2' issues, but they can't control it through government fiat. There's greed on Wall Street, and this country is still suffering from racial discrimination.

What kind of "fixes" are you talking about?

There is no way today is the same as in 08; that's impossible. All economies and governments are in flux; nothing stays the same. Where you get your ideas needs to be crucified; they don't know what they're talking about.

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@cicerone imposter,

Quote:

What kind of "fixes" are you talking about?

something that will create living wage jobs, will start to shrink societal debt, will begin to shrink the distance between the classes, will stop the "need" to spend our kids and grandkids money.

Quote:

There is no way today is the same as in 08; that's impossible.

Keep telling yourself that... I talk to a lot of people, and they are almost all exactly where they were then psychologically, and they view the economy and nation as a whole just as damaged as they did then. The situation is if anything worse now because more so now than then the people can not escape the fact that Washington is completely broken, and that they have been repeatedly lied to by the elite. I think that the last straw was the stimulus, we spent a ton of our kids money because we were told by the elite that we had to do it and yet this is the worse recovery since the great depression. What did all of this debt buy? If the economy is so fundamentally bad that we spent the most on pump priming ever and this is all we got out of it then this economy must really suck. All of the chatter about better days are just around the corner coming out of Washington we of course dont believe, those jokers are useless, and constantly lie to us. Washington throws a lot of numbers at us claiming that everything is great just like they did the summer of 08, but we knew better then and we know better now.

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@parados,

Quote:

You are arguing that the economy is doing bad because we don't have the artificial wealth of a bubble.

way to pay attention. I am arguing that things are bad because we are a nation in decline and our economy is unsound. The bubble making is a sign of a bad economy, and we have lots of bubbles right now.

Quote:

Most people I know are doing just fine.

UNiversities are one of our biggest bubbles so I dont doubt it.

Quote:

Just like they have always done. They get by on what they have.

well, it is either that or kill yourself, so you are probably right.

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@hawkeye10,

Those are generalities without any basis in reality. How is the 64 thousand dollar question. It's easy to identify problems; how do we fix them?

You're not smart enough to understand the underlying problems to come up with any solution.

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@cicerone imposter,

cicerone imposter wrote:

Those are generities without any basis in reality. How is the 64 thousand dollar question. It's easy to identify problems; how do we fix them?

You're not smart enough to understand the underlying problems to come up with any solution.

Just how drunk are you? first you say that i am not talking real problems then you complain that I am only talking problems.

But just to clear your addled brain the first step in devising solutions is to correctly understand the problem. If we only got to understanding the problem right now that would represent fantastic progress.

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@hawkeye10,

No; what you're doing is making statements that tries to imply that there are solutions to current problems. I'm telling you it can't be done. You're too dumb to notice.

You wrote,

Quote:

way to pay attention. I am arguing that things are bad because we are a nation in decline and our economy is unsound. The bubble making is a sign of a bad economy, and we have lots of bubbles right now.

So, explain those bubbles, and show us how they can be fixed. Also, tell us about the 'bad economy' you claim we are suffering from.

FYI, the US economy is the only one that's healthy in a world of recessions.

Quote:

By Lori Montgomery and Griff Witte November 17
A sharp slowdown in Asia and stagnation in Europe are putting the global economy at risk of a prolonged slump, economists say, marked in places by sky-high unemployment, sluggish wage growth and some of the worst economic conditions in decades.

On Monday, Japan said it had entered its fourth recession in six years — this one despite aggressive efforts by Prime Minister Shinzo Abe to boost growth. Meanwhile, British Prime Minister David Cameron warned that the world’s economy could be headed toward another disaster.

“Six years on from the financial crash that brought the world to its knees, red warning lights are once again flashing on the dashboard of the global economy,” Cameron wrote Monday in Britain’s Guardian newspaper.

You don't know shyt!

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@cicerone imposter,

Quote:

FYI, the US economy is the only one that's healthy in a world of recessions.

an economy that providing not enough wages, is not distributing those wages remotely fairly, and is being juiced up by the government which is itself borrowing 1/3 of what it spends from the kids and grandkids is not by any stretch of the imagination "healthy".

I beleive that you believe that it is healthy, which just goes to show how out of touch you are with reality.

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@hawkeye10,

You complain, but don't offer any solutions. You're really not saying anything new or what most people know.

Provide us with some insight or STFU.

1 Reply

Where is the US economy headed?

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