Ten Reasons For An Imminent Stock Market Crash.
The halting climb of the last several months, seemingly disconnected from broader economic realities, has had the feeling of a game of musical chairs: Nobody wants to get caught with a bunch of worthless paper when the music stops.
(H/T to SurvivalBlog.)
Words and abbreviations to the wise-inverse ETFs. Proshares.com and others for example.
ReplyDeleteIIRC, C.S. Lewis condemned the stock market for essentially just being high-class gambling. I think it comes down to the "Buy Low, Sell High" mindset. It's a good way to make money in the short-term and, if you're smart, in the long-term, but it's also fundamentally destabilizing, even if it does promote efficiency. Shareholders have very little reason to be loyal to companies, and therefore the boards and managers of the companies have ample reason to act like pirates (or at least to look out for Number One).
ReplyDeleteMass selling of stocks is seen as evidence that the system is in bad shape and thus a problem in Thailand can ripple and thus cripple systems worldwide. If "Buy Low, Sell High" were replaced by "Through thick and thin, so long as you're doing a reasonable job" then I wonder how things would look.
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I am not an economist. This is not economic advice. I pre-emptively state that I may have unintentionally mis-used terms and thus appreciate any necessary corrections.
Sometimes having little-to-nothing to lose can be a freeing thing. If everything went tango uniform tomorrow, I'd be in largely the same place I am right now. Maybe sans a job, but the company's Canadian so it might do okay. Besides, I couldn't make much less money digging ditches.
ReplyDeleteThe insider sell to buy ratio is a huge red flag. The guys who know are selling out of the market.
ReplyDeleteAnother thing not mentioned at that link is that the S&P 500 is more expensive to buy into now than it's ever been, based on price to earning ratios. The historical average is 14.7. It's now north of 120.
Ritchie: You probably know this, but for anyone who doesn't: inverse ETFs and leveraged ETFs will make you poor very quickly if you hold them any longer than a day. MorningStar warning here.
There are companies out there making good profits. They are making big money by cutting capital investments and payroll - while productivity is great, this is a very short-term strategy. 2010 might be a great year because everyone knows taht the party is over when taxes skyrocket in 2011.
ReplyDeleteLong-term - why invest in American companies when we have the highest corporate tax rates in the world and they are soon going higher? More regulations , unionism, maybe cap & tax, and high inflation are also on the way.
The U.S. consumer is done pulling the world economy. We will be too busy trying to keep the taxman from taking what we already have.
Dang. I've been watching the stocks rebound to November '08 levels, and wondering what was going on.
ReplyDeleteYou said it so concisely: a game of musical chairs.
It's worse than you know. (It usually is.)
ReplyDeleteThe "rebound" only exists if you ignore the crashing dollar. Try S&P denominated in euro. Worse, many people are only holding stocks as a hedge against the dollar since bonds aren't keeping up.
The only investment I have that is actually going up is my .380 ammo can.
Jeez, .380 ammo is like... well, I'd've said "money in the bank" except that's a pejorative these days...
ReplyDeleteAn email pen-pal firmly believes that the Big O has guided us successfully through a time of economic peril. (Yeah, he really does!) All these negative reports of bad economic data are merely right-wing fear-mongering. Hey, the stock market's doing great, and it's good that AIG et al are doing so well.
ReplyDeleteYes, well...
Art
Hah. Just checked, DJIA is down 200 this afternoon. Lost 2.1% at EOD.
ReplyDeleteThis train has left the station and is accelerating toward the derail butt.
Regards,
Rabbit.