Where is the US economy headed?

I don't have much money in the market right now, Tak. But I do follow stories on forbes.com and I see a bunch of cautionary articles about the market perhaps getting ahead of itself. I can see a correction coming from where we are now (Dow: 9500).
But do you want to play the market, trying to predict the daily, weekly or monthly moves?

No, I'm not a day trader, but I look at the long term effects of our economy on the markets. I read the financial pages and the WSJ (for now), and keep tabs on our investments on a weekly basis. In the past, I have subscribed to Money magazine, and I try to keep abreast of economic news from around the world.

In mid-June I sold off the remainder of my money market account (that I bought when the DOW was over 14,000 by selling some of my equities), and purchased three funds. They're showing a +12% increase in less than two months, so I feel like a genius for the moment. Our over-all funds are also doing quite well, but feel the increase in the P/E ratio has been too high too fast.

My mix of funds are more conservative than most financial pundits recommend, but felt more secure during this volatile market since last year.
The average investor lost 40% last year, but I lost only 17%, and my wife lost only 11%.

Although I plan to sell off some of my equity funds to transfer them to my bond funds on Monday, I'll do it in steps as I keep abreast of the economy, and how the stock market continues to trend.

I don't think we're in a bull market so much as a bear rally. Look to see the S&P500 get to 1050 (perhaps 1100) by the end of September and then watch very, very carefully as the next round of earnings reports start coming out in late Sept/Oct. The July rally was based on news that was "less worse" than expected. It was less worse because companies took an exact-o-knife to costs. Earnings didn't go up - consumers aren't spending and consumer spending makes up 70% of our current (recent past) economy. Companies can't pare costs down any further and we're already starting to see deflationary pricing. The next round of earnings reports is going to reflect static cost-cutting from the previous quarter and be based on actual earnings through sales, which I think are going to be dismal.

My crystal ball says that we're headed into a Japan-type depression (Japan took 20 years to recover) of start-and-stop recoveries while we figure out how the future is going to look. Some of the folks I read think we're already a couple years into a 20-year depression cycle but haven't admitted it to ourselves yet. I don't think the label of depression/recession matters all that much. I'm just keeping a Very Close Eye on the next round of earnings reports.

All this trolling and self approval ought to remember the rapid growth of many economic sectors in Europe leading up to the devastation of the mid 40s.

The thread is concerned with where the US economy is headed. My quote from Gibbon was in the way of suggesting that there might be a connection between effete luxury and general appeasement of the natural vanity of the ladies and running off a cliff.

JPB, I called it a "bull" market based on our gains for this year; it's quite hefty, and almost makes up what we spent to renovate our house last year.

I'm feeling very uneasy about all this gain, and try to analyze the pros and cons of whether our economy has really hit bottom as many pundits are claiming. I'm not so sure.

I believe the best strategy is to transfer some of this gain into our bond funds to "protect" it from any unforeseen mega-drop in the market, and I'll do this in increments.

Don't worry; a super slow Christmas season should bring the market back down.

Plus, now that Cash for Clunkers is over, auto sales will drop down to nothing again (coupled with increased layoffs) and consumer spending will drop for the rest of the year.

I'd predict the DOW will drop near 8500 before the year is over.

You shouldn't tell anyone map.

"Never smarten up a chump" ol' Mr Fields advised.

If you think the market is going down you should talk it up and thus increase your winnings.

I don't think so. It appears that we are heading into a stimulus generated bubble. It will crash, as we have no intention of fixing the financial sector problems, unemployment will not get fixed, and the rest of the world has lost its faith in American leadership and the American economy. The rest of the world will increasingly not buy our debt at low rates, and the Dollar is on its way out as the global currency.

I am not sure when the crash will hit, but a good bet is it will be when OPEC stops writing contracts in dollar denominations.

I think you have every intention of fixing the financial sector problems. The road to Hell is paved with good intentions somebody once said.

St Bernard around 1100, I think. I could be way off.

That's what I read. There's others.

Crap! I read it as a put down of trickle down economics.

They had trickle down economics in ye days of olde.

An example of one aspect of it was the subject of the first Gibbon quote I posted.

In trickle down, there is at least something to trickle.

Trickle down has never worked under any republican administration. Show us under which president it has worked?

Bush's promised jobs with his tax cuts never materialized; it brought on this recession instead, and rather than trickle down, people lost their jobs and homes.

Well, trickle up has never worked. How many people with no money have ever given you a job, ci?

What do you know about "trickle up?" Nobody gave me money for me to go into consulting.

Well, how does the money or wealth flow in this country, up or down? Is it the people with money that provide innovation, invention, capital, and jobs, or is it the people with no money that make the country prosper and give other people jobs by buying junk at Walmart with a credit card that they can't pay for? Which is it?

By the way, I think Obamanomics is trickle up, give the no money people more money that they can spend at Walmart, so that more junk can be manufactured in China and sent over here. Has it worked so far? You be the judge.

Is that all that matters - people providing jobs?

Someone has to purchase all the durable goods manufactured by people who already HAVE jobs... a rising tide lifts all ships, and if poor folks have more to spend on stuff, it leads to higher sales, bigger profits, more jobs...

Cycloptichorn

Think water cycle, okie.