Healthcare is relevant to the discussion, since many health care related stocks are part of the DOW, one way or the other.
PDid, Sorry for the tangent. Will get back on topic. Anybody here know what the financial pundits are saying about where the DOW might end this year? The most recent prognostication of some pundits was that the DOW will begin to show improvement in the first quarter of next year. I say "NOT!" c.i.
PDId:
Relative to your PM to me:
As I mentioned to you previously, I don't read PMs. I delete them.
New Haven wrote:PDId:
Relative to your PM to me:
As I mentioned to you previously, I don't read PMs. I delete them.
Why not? I've had some valuable additions to the discussion by PM, sometimes on side issues not of interest to most.
On Monday, April 7, the DJIA closed at 8300 (approx.)
Today, three weeks later, it closes at 8582, or up 3.4% over that period.
This in spite of unemployment numbers edging up to 6% (the highest since 1994) among other soft economic data.
Is this rational? Or perhaps the start of a bull market?
WDYT?
So it has not quite been two weeks since my last post to this thread, and it appears as if a rally has legs:
DOW JONES 8712 and opening up
S&P 945 and rising
NASDAQ 1544 and gaining
I'd sure like some fresh opinions on this....
Somewhere, in another thread, PDiddie, I noted a commentary in which a little tech rally is predicted along with a drop in oil prices (well, that's already happening), some of which is being engineered on the assumption that a rise in the Dow will be taken for strengthening of the economy (and also, as noted yesterday, the admin is "letting" the dollar fall, contrary to policy, to give a boost to our markets overseas). However (said the commentator), the underlying economy is no less fragile and this will not change before the election -- just the surface numbers will change.
(This was one of the weekend wrap-up shows on the economy I heard over the weekend while doing something else. Can't give you a link -- sorry! But it was likely on NPR.)
We're essentially in the late lag phase that preceeds exponential growth of our investments. Easily analyzed by ploting net investment worth vs time, which I have been doing over the past several months.
Would you like to elaborate, NH ( for those who might not know what you're talking about)?
Net value of investments plotted versus time, yields an exponential curve. Prior to the rise in the curve, there will be a lag phase, indicated by constant value for the sum of the investments. Near late lag, the net values start to increase exponentially.
My results with my investments, suggest that we're starting to come out of the lag phase and into the exponential ( log ) phase.
When we're in the exponential phase, if you plot the log of the net investment value vs time, you'll get a straight line.
With the potential of deflation around the corner, the stock market is showing some exuberance without much foundation in the fundamentals of our economy. The over-pricing of real estate caused by low mortgage rates are going to back-fire with a big bang when the economy slows even more later this year. Many people seem to have forgotten what happened in Japan in the late eighties. Japan's interest rate sat a zero for many years, and look where their economy is twelve years later. Not a good sign in anybody's book. Treasuries are your best bet for the next ten years. Earning three percent is better than the potential losses of the stock market for the next several years. It's a good time to rebalance your portfolio - leaning heavier on bonds. c.i.
cicerone imposter wrote:With the potential of deflation around the corner, the stock market is showing some exuberance without much foundation in the fundamentals of our economy. The over-pricing of real estate caused by low mortgage rates are going to back-fire with a big bang when the economy slows even more later this year. Many people seem to have forgotten what happened in Japan in the late eighties. Japan's interest rate sat a zero for many years, and look where their economy is twelve years later. Not a good sign in anybody's book. Treasuries are your best bet for the next ten years. Earning three percent is better than the potential losses of the stock market for the next several years. It's a good time to rebalance your portfolio - leaning heavier on bonds. c.i.
I'm 75% bonds now and forever.
Tartarin wrote:Isn't that special!
0% interest rate on a loan of $200,000 is
special.
A concurring view on deflation and Treasuries, c.i. and NH:
Quote:If you're sincerely worried about deflation, then it makes sense to own some Treasury securities. But, warns Pimco Bond guru Bill Gross, you won't get much. A two-year T-note now yields 1.44%.
A better bet: Treasury Inflation-Protected Securities, or TIPS. They also pay a fixed interest rate. For example, the 10-year TIPS maturing in January of 2012 has a fixed rate of 3.38%, although traders have pushed its yield to 1.68%.
If inflation rises, you'll be happy with TIPS, too. The Treasury increases TIPS principal by the amount of inflation, based on the consumer price index. At current prices, you'll beat a 10-year Treasury note if inflation averages more than 1.9% a year. Treasury guarantees that you'll get the bond's face value if you hold it to maturity.
Inflation? Deflation?
It really gives me pause about the stock market's recent run-up.
So, it looks like a rally. Dow 9041, S&P 990, NASDAQ 1646.
You in, or you out?
(I'm still out, with only slight remorse...)
Here's USAToday's take on why it will be sustained:
Quote:1: Triple threat is behind us. For the first time since the Sept. 11 attacks, investors are not confronted with a major, paralyzing uncertainty. Terrorists have not attacked the USA inside its borders in almost two years. Despite a probe of IBM's accounting and criminal charges leveled against Martha Stewart that made headlines this week, scandals are basically old news. War with Iraq, another big anxiety, ended swiftly.
2: Higher highs. For the first time since its March 2000 peak, the S&P 500, a proxy for the broad market, has climbed above its previous high, while avoiding a relapse to new lows. In March, it dipped sharply but did not break its Oct. 9 bear market low of 776.76. After closing Wednesday at 986, a 2003 high, it is well above 935.63, the high it reached in its last rally, which ended Nov. 27. That "technical" breakthrough might signal that the market downtrend has been broken.
3: Tax cut is official. The final bill, while not eliminating taxes on dividends entirely, was investor friendly. Lawmakers not only lowered the maximum tax on dividends to 15% from 38.6%, they also cut the maximum tax on capital gains to 15% from 20%. The cuts, in essence, boost the returns of all stocks, giving investors a new reason to buy.
4: Interest rates remain low. Wall Street has interpreted recent comments by the Federal Reserve on the still-sluggish economy and the slim risk of deflation as a signal that short-term interest rates, now at 45-year lows, are unlikely to be raised anytime soon. Many experts expect the Fed to lower rates again. Yields on long-term Treasury bonds have also plummeted. A 10-year T-bond now yields 3.30%, a record low and a level not seen since 1958, the Fed says.
5: Bad news is ignored. The market has been resilient in the face of negative news. Accounting probes, warnings of a pending terror attack or reports of U.S. casualties in Iraq used to be a reason to sell stocks. No more. In recent weeks, investors have shrugged off a terror blast that killed American civilians in Saudi Arabia, the IBM and Stewart news and U.S. troops killed in ambushes in Iraq.
6: Prior bear market rallies fizzled faster.The presidential election is nearing. Historically, the stock market has fared extremely well in the year heading into an election year, and that trend is continuing in 2003. With the 2004 election 17 months away, the Bush administration is doing everything it can to improve the president's chances of being re-elected.
8: Big institutional investors are buying again. For some time, mutual funds and pension funds were reluctant to commit huge sums to stocks for fear of losing money. Now, they're rushing back into stocks for fear of missing gains. "There is a bit of a buyers' panic going on," says Legg Mason's Cripps. A sign of the frenzy: The number of shares traded on the Nasdaq has topped 2 billion the past six sessions, the best streak since 12 days of 2 billion-plus volume days in 2001. "It's not just the fast money anymore," adds Koesterich.
Two hedge fund managers interviewed by USA TODAY admitted that they have too little money invested in stocks right now and are posting lagging returns as a result. In an attempt to ramp up returns, they say, they're putting more money to work in stocks. That infusion of cash, some experts say, could keep the rally going.
9: The rally is broad.The small investor is getting back in the game. Investors put $16 billion more into stock funds than they took out in April, the most since March 2002, the Investment Company Institute says. And ShareBuilder, a company that lets investors buy small amounts of stock each month, says its regular brokerage orders have shot up 200% since the end of the Iraq war.
10 signs this rally may be for real
We decided to hang tight, and I am glad we did. Even the few "dogs" that we dumped have jumped back. We still have a couple of stinkers though, but over all, I have no complaints!
Quote:It's still a foolish way to throw your money away
Booze and broads, of course, being a smart way to throw your money away!!
Take every profit where you find it, and if your investment time frame is less than ten years, cut back substantially on the equities.
max is the only one that's reading this uptick of the market correctly. There's nothing in the form of PROFITS to support this uptick. The unemployment is still above 6 percent; 6.8 percent in California. Most consumers are still up to their eyeballs in debt; how are they going to keep spending to keep our fragile economy in the positive territory? If the market goes up this fast, it's bound to drop like a 10 pound sinker in just a short a time. Most pundits have been saying that the future growth in the market will be "slow." Is this slow? I don't think so. People have short memories of the tech balloon. c.i.
It depends as much on the news as on economic realities, Cic. Some surprise -- whether a terrorist alert, a continuing and deepening questioning of the administration, whatever -- could send the stock market reeling again. The market has changed enormously in the past fifteen years. The increase in numbers of individual investors is bound to turn the market into a kind of poll on current realities. Now -- here's a question for you. Should a Dem win in 2004, what do you think the market would do?
