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View Full Version : Stock Market At New Highs or Is It




Liberty
07-13-2007, 03:09 PM
http://www.gocurrency.com/international-investing/2007/01/26/chart-of-the-day-dow-priced-in-gold/
And MSM is telling us how great everything is because the Dow is at new highs. Unfortunately, Dr. Paul is one of the only people in congress that would understand this chart.

ChrisM
07-13-2007, 03:12 PM
I understand that the scale is purposefully skewed.

I would have gotten the point just fine if they hadn't skewed the graph to make it look even worse. It's too bad that these people are stooping to those tactics to make a point.

torchbearer
07-13-2007, 03:28 PM
Inflation is at new highs.
The value of the markets isn't going up, the value of the money is going down.

Liberty
07-13-2007, 03:33 PM
I understand that the scale is purposefully skewed.

I would have gotten the point just fine if they hadn't skewed the graph to make it look even worse. It's too bad that these people are stooping to those tactics to make a point.

Hi Chris, Please take another look and imagine the markers were equally spaced. The graph would look much worse than it does now. I'm sure the scaling was done to reduce the size of the graph and not to deceive.

Gee
07-13-2007, 03:37 PM
Don't underestimate the market. Astute investors are starting to realizing the effect of monetary policy in markets. This, combined with warnings from people like Dr. Paul, can make the market react and correct itself before a drastic drop occurs. I think what is happening to the dollar in the currency market is some evidence of this.

What I'd like to know is, how does cheap credit inflate the stock market? Its obvious how real estate purchases are done with credit, but I don't see how new money would enter the stock market unless its based off of real estate gains. I don't know anyone who borrows money to invest in stocks, most people don't even sell short. Or is this something big financial firms (who should understand monetary effects) do?

Johnnybags
07-13-2007, 03:38 PM
The hardest thing to explain to people is the loss of buying power vs the supposed stock market rising in the 401k deal. I try to tell everyone that any foreign investor in the us is losing money with dollar devaluation and you are as well thru domestic price hikes. Gas,food,healthcare etc. MS is growing over 13%, Bernanke states inflation tends to the ms growth over time. Its about 10 now in reality. So unless you make at least 10 percent more every year, you are losing, when you cash out that 401k at 65 those supposed taxed gains will buy squat. The US market is up in dollar terms, not purchasing power terms. If Ron could find a simple way to explain this to soccer moms and minorities he would draw em in fast but most people quizically look at you if its too hard to explain. Congress understands so they need a 6k raise.

Blowback
07-13-2007, 03:51 PM
I really really wish I could get my parents to understand this. My relatively young open-minded wisdom falls on happy and deaf semi-retired ears. Arrgghh.

remaxjon
07-13-2007, 03:52 PM
People want to invest there money becasue that is what they have been told all there life to do. I made a shit load of money the last couple of years becasue people wanted to invest in real estate. The market was very hot now its not but that doesn't change the fact that people still want to invest. Now the stock market is hot. It will continue for a while and then people will find something else to invest in.

emilysdad
07-13-2007, 03:58 PM
Don't underestimate the market. Astute investors are starting to realizing the effect of monetary policy in markets. This, combined with warnings from people like Dr. Paul, can make the market react and correct itself before a drastic drop occurs. I think what is happening to the dollar in the currency market is some evidence of this.

What I'd like to know is, how does cheap credit inflate the stock market? Its obvious how real estate purchases are done with credit, but I don't see how new money would enter the stock market unless its based off of real estate gains. I don't know anyone who borrows money to invest in stocks, most people don't even sell short. Or is this something big financial firms (who should understand monetary effects) do?

It's called margin. Borrow money from your brokerage house based on the value of your portfolio to buy more stocks.

Gee
07-13-2007, 04:01 PM
It's called margin. Borrow money from your brokerage house based on the value of your portfolio to buy more stocks.
I know, but thats a pretty rare thing to do, isn't it? I thought buying on margin was not commonly done.

emilysdad
07-13-2007, 04:11 PM
I know, but thats a pretty rare thing to do, isn't it? I thought buying on margin was not commonly done.

My guess is 95% of retail traders use margin. I have a margin account with 27K cash. My broker gives me close to 100k to trade with. I do not use margin because it burned me in 2000. Very, very dangerous.

Johnnybags
07-13-2007, 04:13 PM
There is record or near record margin outstanding on stocks today. Also record or near record short interest. This week the SEC lifted a rule thats been around forever, shorting on downticks is now legal? Record stock buybacks from company treasuries as well. All to inflate the market, keep people feeling wealthy to spend and putting in that new short rule for the day something goes wrong, when and where who knows but its inflation for now until an event.

MsDoodahs
07-13-2007, 04:34 PM
Because of fiat currency, the stock market is a RIGGED game.

Because it's a rigged game, it's better to be IN THE GAME than out of the game. Global house of cards notwithstanding.

If you were to look at 10 or 15 or 20 year investment windows for all major asset classes, you would find that in the era of Central Banking, ONLY the stock market has consistently outpaced both CPI increase and inflation (ie, money supply increase). The reason why? The Cantillon effect.

The large corporations that make up the stock market indices, and the large financial players that move the stock market, are among the first users of newly created money. The BENEFIT they get from this practically insures that their profits will grow FASTER than inflation. Not every year, but most years - and over practically any multi year time frame.

Because of this, they will fight tooth and nail to prevent commodity backed money. They UNDERSTAND the Cantillon effect and they UNDERSTAND how they benefit from it.

The big dogs like it rigged.

michaelwise
07-13-2007, 04:37 PM
Word on the street is that the traders do not want to be in hard dollars, as the value of the dollar is dropping fast. My question is, what currency do they think they are going to get when they sell their stock?

MsDoodahs
07-13-2007, 04:42 PM
They could have bought foreign currency instead of buying stocks if the traders were all that concerned about the dollar.

Gee
07-13-2007, 04:46 PM
Word on the street is that the traders do not want to be in hard dollars, as the value of the dollar is dropping fast. My question is, what currency do they think they are going to get when they sell their stock?
US dollars, but they don't keep them long enough to take any losses for inflation. Most people with significantly sized accounts don't have much in the way of dollar savings (if they have any sense, at least). Almost all investment calculations take inflation and fed interest rates into account.

Falseflagop
07-13-2007, 04:50 PM
The Stock Market is the Biggest casino on Earth, its NOT an investment vehicle anymore its a casino.


When these Hedge funds are borrowing/lending on 11-15x the CDO Mortgages they have it is a house of cards ready to fall. Have you heard anymore talk about the BEAR STEARNS FUNDS blowup? I have not (outta sight outta mind).


This IRAN accepting YEN will probably blow the "CARRY TRADE" outta the water so becareful imho

thomaspaine23
07-13-2007, 04:54 PM
There is record or near record margin outstanding on stocks today. Also record or near record short interest. This week the SEC lifted a rule thats been around forever, shorting on downticks is now legal? Record stock buybacks from company treasuries as well. All to inflate the market, keep people feeling wealthy to spend and putting in that new short rule for the day something goes wrong, when and where who knows but its inflation for now until an event.

They removed the downticks rule? Wow. Been out of the market for awhile,
but it might be time to buy some long term puts ;-)

Bob Cochran
07-13-2007, 04:56 PM
Word on the street is that the traders do not want to be in hard dollars, as the value of the dollar is dropping fast. My question is, what currency do they think they are going to get when they sell their stock?
Well exactly. US stocks are rising, yeah, but US stocks are priced in US dollars, and the US dollar is in full-blown crash mode (really, it is).

This whole fiat system is a house of cards.

Some of like to play the fluctuations and strong trends in currency pair exchange rates. It can be very lucrative.

What's possible (http://autoforex.biz/GBPUSDDemoAutofx.htm)

Bob Cochran
07-13-2007, 05:00 PM
They removed the downticks rule?
That always was an idiotic rule.