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What is going on with the market?

Discussion in 'BBS Hangout: Debate & Discussion' started by glynch, Jan 15, 2008.

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  1. DonkeyMagic

    DonkeyMagic Contributing Member
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    i just hope i dont start hearing "stimulus" package being tossed around in the up and coming elections. There is certainly no need to panic...downturns happen, but it would just makes things worse for the govt to start and feel the need to throw more money out there that it doesnt have. I don't like what the leading dems, hill and obama, have very saying with regard to the economy.
     
  2. rhadamanthus

    rhadamanthus Contributing Member

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    Even I know better than that. :rolleyes:
     
  3. Supermac34

    Supermac34 President, Von Wafer Fan Club

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    They just had some analyst the other day on CNBC saying that the "analysts" and media were going to drive the economy lower just by talking about it.

    His theory is that since the US economy is based 2/3 on consumers, that if you create a negative media environment and scare everyone by throwing around buzzwords like "crisis" and "recession" that it will become a self fulfilling prophecy. Especially when other things in the economy (still low unemployment, still decent corporate profits, etc) point to things not being so bad until you take away all the consumer confidence by telling them how terrible things can be.
     
  4. DonkeyMagic

    DonkeyMagic Contributing Member
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    makes sense supermac...there will be some overreaction from fear.

    i just hope the govt and fed doesnt overreact as well. Let a natural down turn take its course. Rushing to try to "fix" the problem, i think, would just make matters worse
     
  5. robbie380

    robbie380 ლ(▀̿Ĺ̯▀̿ ̿ლ)
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    that is my sentiment as well.
     
  6. pgabriel

    pgabriel Educated Negro

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    sub prime and american express commenting on slow pays aren't media driven. I won't claim to be an economist but it would seem to me that inflation and the weakening dollar is the problem. so people may have jobs, but if their dollar is weakened, its still negative.
     
  7. DonkeyMagic

    DonkeyMagic Contributing Member
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    but the extent that the media made sub-prime a HUGE issue was media driven. It was a "big deal" but hardly the crisis they made it out to be.

    credit, on the other hand, has been an ongoing problem in this country. people just love to spend what they dont have... :confused:
     
  8. robbie380

    robbie380 ლ(▀̿Ĺ̯▀̿ ̿ლ)
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    just saw this posted from briefing.com quoting a WSJ blog...i don't have the link to the actual blog. it's a different take on the housing market that i haven't really seen talked about yet.

     
  9. DonkeyMagic

    DonkeyMagic Contributing Member
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    ^ thats an interesting take.

    I hope it does go belly up in a couple years. just in time for me to get a nice house for cheap :)
     
  10. F.D. Khan

    F.D. Khan Contributing Member

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    Listen Up People as You're about to get some advice about valuations
    within the various asset classes and where to be and not be.

    The emerging markets stocks are in a bubble. The markets mimic the rhetoric regarding tech companies from 1999, as .50 of every dollar in 2007 was invested in these funds. The region, though it truly is the future as technology was in 1999, is COMPLETELY overvalued by at least 25% and up to 40%.

    Commodities and energy follows the same pattern and don't give me the 5-year return nonsense as all I see are 5 star managers that are used to build 2-star portfolios. If you're jumping into emerging markets, commodities or energy, you are buying those 5-year returns that you'll never see.

    The most undervalued area in the marketplace is the large US market (excluding energy) and focusing on financials. The last time these companies were this close to price/book ratio the two year returns were significant (1991). But when looking at mutual funds, hedge funds or institutionally managed accounts, be weary of the 'best' performing one the last few years as that undoubtedly means it had an emerging markets slant or an energy focus. Therefore if those areas give up appreciation you'll be recieving 2 star returns from your 5-star fund.

    The UK market may do well as well as some larger European companies as they've been adversely affected by a irrationally high euro/pound to dollar ratio and it adversely affects their international sales. As these prices converge, it may help these companies to compete on a global level.

    US large multinationals recieve a bulk of their sales from abroad, so by investing in these companies, one is recieving international and emerging markets exposure while benefitting from the lower risk to value figures from US companies.

    Cheers!
     
  11. pirc1

    pirc1 Contributing Member

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    We will have all these illegal immigrants who will want to buy homes! :D
     
  12. Dubious

    Dubious Contributing Member

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    Listening to Jim Blake's broadcast from last night on on http://www.streettalklive.com/

    As I understand it, he thinks the odds are the Dow could drop to 12,000 over the next few days but since we are in an deeply oversold position , we could rally back to somewhere around 13,200. Then if the recession becomes more apparent the market could drop 30% of it's value followed by a relief bounce where all the pundits will say "see you need to stay invested, stocks always recover". But if we really are in a recession, the market could roll over for some extended period.

    He also thinks gold has about peaked.

    These are the guys that I trust with my money, and although they were a bit too consevative during the market rally of the past couple of years they try to stay poisitioned to reduce your losses.

    The two hour broadcasts don't take that long to listen to on line if you FF over the commercials.
     
  13. pirc1

    pirc1 Contributing Member

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    Buying financial companies is a good idea, but have they bottomed out yet?
     
  14. F.D. Khan

    F.D. Khan Contributing Member

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    It should be an overweight in a portfolio that has an overweight in
    US large equity positions. Just as emerging markets should be an
    underweighted position and not eliminated as markets can remain
    irrational for very long periods of time.

    Its never prudent to commit most of one's capital to any one area
    as managing downward risk is the most important aspect of a portfolio.
    Its about being strategic and creating a low correllated portfolio
    that has a focus on the more opportunistic areas of the market and
    a defensive stance against overvalued (usually the most popular)
    asset classes.

    A true portfolio should not have all pieces going up at the same time.
    As the head of Yale's Endowment, David Swenson, always says the fact
    that all parts of their portfolio is not going up is by design.
     
  15. OldManBernie

    OldManBernie Old Fogey

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    Here's an article quoting an economic professor from Harvard saying that we need up $150B tax cuts and government spending to boost our sagging economy. I don't necessarily agree with Bush's target on where to cut taxes, but at least the reasons behind the tax cuts are legit.

    http://news.yahoo.com/s/ap/20080116/ap_on_go_co/economy_stimulus
     
  16. pirc1

    pirc1 Contributing Member

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    Tax cut as a general idea is great! Just don't cut tax and then start a war! Government waste way too much money, I want to cut tax and I want government to reduce spending!
     
  17. OldManBernie

    OldManBernie Old Fogey

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    I agree with you except that government spending is not necessarily bad if it increases our business opportunities and the welfare of the nation. The war does neither.
     
  18. DonkeyMagic

    DonkeyMagic Contributing Member
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    tax cuts AND govt spending doesnt seem like a good idea to me. there is plenty of money already out there, the govt printing some more, just seems like it would make things even worse
     
  19. OldManBernie

    OldManBernie Old Fogey

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    Deficit spending is not bad if the money is spent responsibly. If our net GDP outgrows our extra spending, then we would actually have a net gain from the spending because of the expanded tax base.
     
  20. DonkeyMagic

    DonkeyMagic Contributing Member
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    not, its not necessarily a bad thing. But in our current situation, I dont think its wise either. Im going mostly from an monetary standpoint. there is already plenty of money out there (inflation is already upon us)...the govt doesnt need to be adding more and making things worse.

    I believe FDR tried govt spending himself out of a pinch and got nothing buta a decade of depression (of course, there were many other variable, but more govt spending didnt help)
     

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