Stock Market, 2010

Off Topic Politics & World Issues
41

[quote]yorik wrote:
By Elliot wave theory, we haven’t completed a three-wave (A-B-C) correction yet. Expect a lot lower level later this year; maybe as low as March '09 or lower.[/quote]

This is true, but we still have to complete wave two of C. That may be happening right now (I think it likely) or it could linger on for some time.
Three should get ugly, and yes ultimately below last March’s lows. One thing I would warn an Elliot Waver about is time. I cannot tell the the number of times I have been right about direction and magnitude, but did not give it enough time. Time is the X factor.

42

[quote]JEATON wrote:

[quote]yorik wrote:
By Elliot wave theory, we haven’t completed a three-wave (A-B-C) correction yet. Expect a lot lower level later this year; maybe as low as March '09 or lower.[/quote]
This is true, but we still have to complete wave two of C.
[/quote]

I think you mean wave B. We seem to be in the very end of wave B, an upward correction within the higher level of downward correction. Wave C will take us to the bottom.

Yes, Elliot wave can be pretty tricky, partly due to it’s fractal nature. You always have to combine it with other forms of analysis.

43

[quote]yorik wrote:

[quote]JEATON wrote:

[quote]yorik wrote:
By Elliot wave theory, we haven’t completed a three-wave (A-B-C) correction yet. Expect a lot lower level later this year; maybe as low as March '09 or lower.[/quote]
This is true, but we still have to complete wave two of C.
[/quote]

I think you mean wave B. We seem to be in the very end of wave B, an upward correction within the higher level of downward correction. Wave C will take us to the bottom.

Yes, Elliot wave can be pretty tricky, partly due to it’s fractal nature. You always have to combine it with other forms of analysis.[/quote]

No, I mean 2. Remember, the supercycle scale was playing out a flat. (A) bottomed out in late '02. (B) topped with the market in late '07. (C) began at this time and should play itself out in a five wave impulse structure. Wave (1) ended in March '09. When wave (2) ends (maybe now) we will kick off wave three.

44

At least its cheap for you US guys to get involved and speculate in the stock market.

Its hardly worth speculating in Ireland, the brokers charge between 1% and 2% fees on notional value along with fixed rate charges on a per transaction basis for the private investors.

45

[quote]wushu_1984 wrote:
At least its cheap for you US guys to get involved and speculate in the stock market.

Its hardly worth speculating in Ireland, the brokers charge between 1% and 2% fees on notional value along with fixed rate charges on a per transaction basis for the private investors.[/quote]
All the more reason to pick conservative stocks that pay dividends in a stable currency. No need for day-trading.

I did open an online trading acount strictly for “gambling” a few years back. Played around with a couple grand. Made some money and had a little fun but got bored after a while. Quit paying attention, lost a little money, pulled out what was left. You have to be on top of your shit if you are going to play the short term gain game.

46

[quote]dhickey wrote:

The only way we hit deflation is if money is permanently taken our circulation. Temporary hording of currency may temporarily induce deflationary effects, but it not deflation. It won’t last long either.

Banks must lend to make money. At least that used to be the case. With the fed fixing interest rates at zero nobody in there right mind would put anything into savings and banks can’t make much lending it anyway. Instead they are forced to make speculative investments, riding from bubble to bubble.
[/quote]

I let this alone for a bit to think it over (the deflation part). I would call it an ignorant statement if not for the fact that I do not consider you an ignorant man. Can you develop this a little more? I cannot reason the connection.

I am not saying I’m right. I have been in the markets long enough to know that when I feel 100% right is the only time I am sure to be wrong. The '08 to March '09 was certainly a deflationary period. Fear crept into the general psyche and people started holding their dollars. Houses fell precipitously, along with stocks, oil and other commodities. The word for this is deflation. Yes, we have partially recovered, but there is no guarantee that if things start to stall again that we will not see this again. Maybe even on a greater scale.

Part of my thinking is due to my belief that the Fed is not all powerful. The great unwashed masses are a difficult beast to control. If we did experience a hiccup and unemployment began to creep up again, it is reasonable to think that people would respond in kind. You can’t make people borrow money (even at 0%).

47

[quote]JEATON wrote:

[quote]dhickey wrote:

The only way we hit deflation is if money is permanently taken our circulation. Temporary hording of currency may temporarily induce deflationary effects, but it not deflation. It won’t last long either.

Banks must lend to make money. At least that used to be the case. With the fed fixing interest rates at zero nobody in there right mind would put anything into savings and banks can’t make much lending it anyway. Instead they are forced to make speculative investments, riding from bubble to bubble.
[/quote]

I let this alone for a bit to think it over (the deflation part). I would call it an ignorant statement if not for the fact that I do not consider you an ignorant man. Can you develop this a little more? I cannot reason the connection.

I am not saying I’m right. I have been in the markets long enough to know that when I feel 100% right is the only time I am sure to be wrong. The '08 to March '09 was certainly a deflationary period. Fear crept into the general psyche and people started holding their dollars. Houses fell precipitously, along with stocks, oil and other commodities. The word for this is deflation. Yes, we have partially recovered, but there is no guarantee that if things start to stall again that we will not see this again. Maybe even on a greater scale.

Part of my thinking is due to my belief that the Fed is not all powerful. The great unwashed masses are a difficult beast to control. If we did experience a hiccup and unemployment began to creep up again, it is reasonable to think that people would respond in kind. You can’t make people borrow money (even at 0%). [/quote]

It may be quibbling over semantics, but there is a differense between inflation and inflationary effects. The same holds true for deflation. Inflation has been happening consistantly for years, regardless of inflationary effects.

When they print money, they inflate the money supply. People holding or hording dollars does not change the fact that the fed inflated the money supply.

I could give a shit about inflationary or deflationary effects. I don’t trust the measurements and I don’t trust that there aren’t other factors influencing the effect. Falling or raising prices (including prices for dollars) could indicate many things, not just inflation or deflation. When they arbitrarily inflate the money supply, while simulataneously fucking with supply and demand, how can one claim to be able to accurately calculate inflation with prices? Impossible.

Is the fed expanding the money supply? If so there is inflation. Is the fed decreasing the money supply? If not, there is no deflation. Speculators holding or not holding dollars does not constitute inflation or deflation to me. It is a temporary arrangment that the fed has little control over.

48

I’m following your thought process, but I still think a piece or two are missing. As I think I mentioned earlier (or maybe linked), there are two ways to create fiat money inflation.

  1. Create credit out of nothing. This is the way the Fed has always done it. You simply need to have third parties to borrow and lend. Manipulate rates in order to make it more or less appealing to borrow and you stimulate demand. But remember, Credit is only potential demand. It must be borrowed to become money and then it must make a demand. It must sustain the prices of goods or services to inflate or cause inflation.

  2. They can call the Bureau of Engraving to crank up the printing press. This is almost never done, yet this is what most people think of when they think of inflation or listen to the news and hear about all the stimulus. I bet a majority of those on this board think of this. It is where you get the phrase Helicopter Ben. Ben cranks up the presses and starts dumping money out of helicopters. It doesn’t happen.

If the second did happen it would be much like Zimbabwe, where the actual denominations printed kept going up and up. Ten thousand or hundred thousand dollar bills anyone?

The Fed knows if they did take this rare action that next effect would be China and the rest of the world bailing out of everything denominated in dollars and going somewhere, anywhere, else. The Wizard behind the Curtain would be exposed and the whole ponzi like scheme would crumble.

So really, the only real thing they can do is continue to facilitate credit and hop that more people start borrowing, preferably on houses that the Fed is holding the mortgages on as collateral they got from bailing the big banks out.

49

[quote]archiewhittaker wrote:
How do I protect myself against a dollar run amok vs the swedish krona?
I get a fixed amount from Sweden every quarter, and I use it for daily life (groceries, gas, insurance)
Should I withdraw now, when the Sw.krona is relatively strong, or do you guys expect the dollar to fall more, before it rebounds?

Funny question, I know, just thought I would throw it out there![/quote]

There will be no real re-bound.

Long term there is only one way for the dollar.

50

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Here’s a chart of % cash levels in mutual funds. When the funds have spent most of their cash, they don’t have the funds to fuel a general rally. They’re more or less fully invested.

Think I’ll ‘pull in my horns’ a bit.

51

[quote]orion wrote:

[quote]archiewhittaker wrote:
How do I protect myself against a dollar run amok vs the swedish krona?
I get a fixed amount from Sweden every quarter, and I use it for daily life (groceries, gas, insurance)
Should I withdraw now, when the Sw.krona is relatively strong, or do you guys expect the dollar to fall more, before it rebounds?

Funny question, I know, just thought I would throw it out there![/quote]

There will be no real re-bound.

Long term there is only one way for the dollar.

[/quote]

That’s exactly what everybody thinks, and also, what logically SHOULD happen! But, this is the U.S., where unexplainable phenomena have been occurring since 1776.

the dollar might sink to the Summer 2008 levels where it took $1.75 to buy a Euro, but I think that is the invisible limit, by then the FED would have raised the interest rates, which increases the demand for dollars and thus strengthen the dollar against other currencies.

So I’m watching the Sw. krona very closely, my dear hobby economists. :slight_smile:

52

How do you guys feel about J and J? I recently opened up my first brokerage account and the street recommends them as a strong buy. With healthcare and an aging population I could see this being a long position, just a matter of if this current price is worth paying.

53

[quote]JEATON wrote:
I’m following your thought process, but I still think a piece or two are missing. As I think I mentioned earlier (or maybe linked), there are two ways to create fiat money inflation.

  1. Create credit out of nothing. This is the way the Fed has always done it. You simply need to have third parties to borrow and lend. Manipulate rates in order to make it more or less appealing to borrow and you stimulate demand. But remember, Credit is only potential demand. It must be borrowed to become money and then it must make a demand. It must sustain the prices of goods or services to inflate or cause inflation.

  2. They can call the Bureau of Engraving to crank up the printing press. This is almost never done, yet this is what most people think of when they think of inflation or listen to the news and hear about all the stimulus. I bet a majority of those on this board think of this. It is where you get the phrase Helicopter Ben. Ben cranks up the presses and starts dumping money out of helicopters. It doesn’t happen.

If the second did happen it would be much like Zimbabwe, where the actual denominations printed kept going up and up. Ten thousand or hundred thousand dollar bills anyone?

The Fed knows if they did take this rare action that next effect would be China and the rest of the world bailing out of everything denominated in dollars and going somewhere, anywhere, else. The Wizard behind the Curtain would be exposed and the whole ponzi like scheme would crumble.

So really, the only real thing they can do is continue to facilitate credit and hop that more people start borrowing, preferably on houses that the Fed is holding the mortgages on as collateral they got from bailing the big banks out.[/quote]

Not really. The mechanism is not one of directly printing wads of cash, but of the Fed buying (out of nothing) Treasury bills.

The Federal Government then has this money, in excess of taxes collected, to pay salaries, “entitlements,” make purchases, etc, thus putting the dollars into the economy, whether electronic or not, inflating the money supply.

It is not rare any more: http://financialsense.com/fsu/editorials/2009/0804.html

And with the Obama supersized deficits combined with growing foreign reluctance to buy Treasury bills with dollars that already exist, I think it would be unreasonable to imagine it won’t continue.

54

[quote]archiewhittaker wrote:

[quote]orion wrote:

[quote]archiewhittaker wrote:
How do I protect myself against a dollar run amok vs the swedish krona?
I get a fixed amount from Sweden every quarter, and I use it for daily life (groceries, gas, insurance)
Should I withdraw now, when the Sw.krona is relatively strong, or do you guys expect the dollar to fall more, before it rebounds?

Funny question, I know, just thought I would throw it out there![/quote]

There will be no real re-bound.

Long term there is only one way for the dollar.

[/quote]

That’s exactly what everybody thinks, and also, what logically SHOULD happen! But, this is the U.S., where unexplainable phenomena have been occurring since 1776.

the dollar might sink to the Summer 2008 levels where it took $1.75 to buy a Euro, but I think that is the invisible limit, by then the FED would have raised the interest rates, which increases the demand for dollars and thus strengthen the dollar against other currencies.

So I’m watching the Sw. krona very closely, my dear hobby economists. :)[/quote]

Do you have any idea how deep in the hole the US really is financially?

If the raise interest rates by a mere 3-4% the US is not only broke, but also unable to operate the Federal Government at the current level.

It is simply over.

Should they raise interest rated to where they should really be, probably around 15%, US troopsa all around the world would be begging in the streets for a bus ticket home.

55

[quote]Bill Roberts wrote:

[quote]JEATON wrote:
I’m following your thought process, but I still think a piece or two are missing. As I think I mentioned earlier (or maybe linked), there are two ways to create fiat money inflation.

  1. Create credit out of nothing. This is the way the Fed has always done it. You simply need to have third parties to borrow and lend. Manipulate rates in order to make it more or less appealing to borrow and you stimulate demand. But remember, Credit is only potential demand. It must be borrowed to become money and then it must make a demand. It must sustain the prices of goods or services to inflate or cause inflation.

  2. They can call the Bureau of Engraving to crank up the printing press. This is almost never done, yet this is what most people think of when they think of inflation or listen to the news and hear about all the stimulus. I bet a majority of those on this board think of this. It is where you get the phrase Helicopter Ben. Ben cranks up the presses and starts dumping money out of helicopters. It doesn’t happen.

If the second did happen it would be much like Zimbabwe, where the actual denominations printed kept going up and up. Ten thousand or hundred thousand dollar bills anyone?

The Fed knows if they did take this rare action that next effect would be China and the rest of the world bailing out of everything denominated in dollars and going somewhere, anywhere, else. The Wizard behind the Curtain would be exposed and the whole ponzi like scheme would crumble.

So really, the only real thing they can do is continue to facilitate credit and hop that more people start borrowing, preferably on houses that the Fed is holding the mortgages on as collateral they got from bailing the big banks out.[/quote]

Not really. The mechanism is not one of directly printing wads of cash, but of the Fed buying (out of nothing) Treasury bills.

The Federal Government then has this money, in excess of taxes collected, to pay salaries, “entitlements,” make purchases, etc, thus putting the dollars into the economy, whether electronic or not, inflating the money supply.

It is not rare any more: http://financialsense.com/fsu/editorials/2009/0804.html

And with the Obama supersized deficits combined with growing foreign reluctance to buy Treasury bills with dollars that already exist, I think it would be unreasonable to imagine it won’t continue.[/quote]

Its like a case study in Austrian economics.

I wonder how capitalism will have failed after the Fed has monetarized the debt.

56

By the way, the government is about to be borrowing about $150 billion in a single week, in the form of offering Treasury bills.

My bet is that the Fed is going to be buying much of this, out of nothing.

You libs didn’t like Reaganomics? Just hated that? Boo-hoo, the “rich” weren’t getting soaked the way that sends tingles up your thigh? Well then you’re about to be re-introduced to Carternomics, aka stagflation, it seems to me.

Though I can’t figure out how it won’t be even worse this time.

57

Well, I could suggest a corrective path and I’m sure others could, but I meant I have never seen a corrective path suggested by persons actually in government or receiving any real airing as serious ideas.

My proposal would be this:

The President of the United States would announce, "You have been told, Americans have been told for generations, that your Social Security payments were going into a trust fund to pay for your retirement. This was not true. I’m ashamed that your government has to tell this to you, but you were lied to. The government treated your Social Security payments as tax revenue and spent it, and gambled that when your time came, future generations could be taxed to pay your benefits.

"All the while, actuarial experts told them that it was not so, that the system would collapse.

"The same is true of your Medicare payments.

"And furthermore, it’s not only the government that has, frankly, conned the American people. Very many corporations and many unions established deals where for your work today and in your working years, they’d pay generously in your retirement years. But for a large part they didn’t invest their earnings made during your working years to be able to pay you in your old age: they gambled that future profits could cover these enormous obligations.

"I have to tell you today that estimates are that the Federal Government’s unfunded liabilities – monies owed in the future which we do not now have invested – total 99 trillion dollars. I know this amount is practically inconceivable. But for comparison, although our taxes are high and raising rates even higher might not collect anything more because of resulting damage to the economy, our tax revenues are ‘only’ $2 trillion per year.

"In other words, it would take 50 years of tax revenue, with every penny going towards these unfunded liabilities and none towards ongoing services and needs, to meet the obligations that the government has promised to pay.

"Or in still other words: It is not that I do not want for the government to pay its obligations. And it is not that I do not think the government should pay its obligations. It is that the government CANNOT pay its obligations.

"It simply is utterly impossible for it to be done and the time has come to recognize this fact.

"What we need to do, now, is essentially a bankrupty reorganization. We need to determine who can be paid, and how much, in the most equitable manner possible, although fundamentally it is extremely inequitable that the American people have been promised these future benefits from their taxes but for the greatest part cannot receive them.

"As an initial proposal and an example of what might be decided to solve this problem, we can establish an age where, as many working years are left, it will be an individual’s own responsibility to provide for his retirement, and unfortunately, all his tax payments were simply that, taxes that were spent and are gone. This might for example be age 45. And then we could establish a sliding scale where individuals older than this limit receive a percentage of what was expected according to how many working years they have left, with those presently near retirement receiving as close to what was expected as possible and those further away, having more time to earn and save in the meantime, a smaller percentage.

"This alone will not be sufficient: we will also have to extend the retirement age.

"We will also need solutions for the bankruptcy of Medicare, and in the private sector, solutions will be needed for unfunded pension plans.

“Americans were led to believe that they were receiving for their work not only the benefits immediately received, but great benefits for the future that were being held in a trust fund for them by the government. I am here to tell you tonight that the ‘trust fund’ quite literally consists of a drawer full of IOU’s and a hope of being able to get the money from taxing future generations, but the amount of debt is now far more than can ever be raised. We have to swallow the bitter truth that the money is spent; it is gone; and what we will have in the future is what we earn in the future or can now save, for ourselves as individuals responsible for ourselves, for the future.”

58

Briefer than John Galt anyway.

59

I agree. Kill the baby-boomers to secure my own social security payments.

I got your message boss.

60

Actually, being 47, I would be one of the ones receiving nearly nothing in the above-described plan.

(If let’s say the plan was worked out for those just reaching 65 to receive say 90% of what was promised, and those at 45 to receive nothing but to just have to face up to the truth of having been robbed all these years, then for each year past 45 a person would, on eventually getting the benefits, receive 4.5% of what was promised. In other words, a person with many working years left would need to rely on those to provide for his or her own retirement.)

I don’t know that the promised payout would necessarily need to be cut that severely to be actually fully funded while maintaining the present, already-onerous approximate 15% taxation rate: what ought to be done is a valid actuarial analysis to see what actually is payable.

The promised amounts are not payable.

Carrying on with the present policy of treating $99 trillion in already-existing unfunded liabilities as something to think a little bit about later, but not too much, and certainly not reason to slow down new increases to the deficit and new assumptions of huge further liabilities is ALSO going to result in my receiving nothing or next to nothing from Social Security.

Actually, I think most intelligent people still well off from retirement are well aware that they may never receive a dime from SS, or at best will receive considerably less than promised. If not, they ought to be, because it’s an actuarial and economic fact.

Do you have a differing approach that can actually meet the obligations?