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Old 27-08-2010, 05:21   #16
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Seeing 7500 on the Dow (a 30% dip) is not very likely in the next year. Considering the assembly of stock types on the Dow, it's very probable it'll be at or over 11,000 possibly nudging 12k and have shown growth for the previous 12 months.

What most people don't understand is the Dow and the rest of the markets are not very good indications of an economies health. Each market (Dow, S & P, etc.) are targeted to specific industries or economic sectors. One market may be heavy industries, another electronics and .com's, etc. In and of themselves, they mean little to the health of an economy, though they can be harboring a peak at the future, most of the time they are little more then predictors of the latest news cycle.

What do you think happens when Toyota mentioned it's latest recall? The automotive and related industries took a dump and the markets they were in got a zap. Anyone that actually watches what's going on, can make very accurate predictions as to what the any specific market will do in the next few days. The markets that where electronic heavy (for example) didn't feel a thing. It's not tea leaves, but just keeping up with current events.

Now, if you really want to get a taste of the health of an economy, then have a good look at the bond markets. This is one of the best ways to get a handle on where things are going and what the near future might bring, barring an event that disrupts market trends or scares politicians.


As far as offering investment advise, pleeease, there are plenty of brokers more then happy to help you with what remains of your personal day trading adventures. It's all about education and absorbsion of current events as they relate to specific companies, industries, municipalities and governmental offerings.
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Old 27-08-2010, 06:31   #17
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since we all want to be world travelers, it isn't the US stock market, it's the world stock market you should be concerned with

as far as sailing goes, the market has made me redo my spreadsheet for the cruising kitty calulation over and over and rethinking of the "how much does it cost..." question
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Old 27-08-2010, 06:44   #18
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Having spent the better part of the last decade and a half working for one of the largest mutual fund companies in America I can tell you this...

No one knows. Even the so-called "experts", who are managing billions of dollars of other people's money, are doing little more than guessing. You want to know where the Dow will be in 12 months? Throw a dart at a board and then firmly believe that divine providence guided it to the one, true answer. That is a just as reliable and accurate way of finding out as any other.
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Old 27-08-2010, 06:45   #19
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I wouldn't be surprised to see 7,500 on the DJ in 12 months. But the people I feel sorry for are the real estate owners/investors. Can you believe that "0", yes ZERO, new homes over $750K sold last month! There are some really scary numbers in here:

Mish's Global Economic Trend Analysis: Burning Down the House; New Home Sales Consensus 330K, Actual 276K, a Record Low; Nationwide, Zero New Homes Sold Above 750K
You should have ZERO faith in that article. That one "fact" is totally wrong, unless perhaps it was referring to the numbers for one rural town or county. The "haves" still have, they just have a little less.
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Old 27-08-2010, 08:14   #20
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The markets are not a discounting mechanism and have little to do with the economy. They are a liquidity measure of the ongoing ponzi scheme that has a crumbling foundation of debt. That's why bad news sparks a rally often, because the "players" believe that enhances the chance that big brother Ben will print more money and continue to flood the markets.

On a more basic level, buying a house today is exactly like buying a car, in that it begins to depreciate immediately. From my study, I'd guess there is another 30-40% decline in prices coming down the road in the next two years (as liar loans, interest only and other loan exotica reset doubling and tripling payment costs) and I doubt that there will be any real appreciation from the bottom for a long while. As it turns out, the highly touted "financial innovation" of fraud street was not a good trade off for sending the bulk of our manufacturing base offshore to make an extra buck.

As all this raging debt is slowing extinguished through paydowns and defaults, the dollar should be in demand for a while, until the US creditors get panicky anyway. I just noticed that HSBC and a number of other banks are now promoting with incentives (cut-rate fees) the use of the renminbi to settle trade with China rather than the buck, which change, if implemented, could speed things up considerably, crashing bonds, jacking rates and devaluing the dollar.
FT.com / Currencies - Banks back switch to renminbi for trade

But as denver said above, they (finaglers and brokers) don't know and neither do we.
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Old 27-08-2010, 08:14   #21
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Originally Posted by SailFastTri View Post
You should have ZERO faith in that article. That one "fact" is totally wrong, unless perhaps it was referring to the numbers for one rural town or county. The "haves" still have, they just have a little less.
If you have some information to the contrary I'd be interested in hearing it.

I do trust the source, but it may be an aberration of sorts. Remember its just "new" home sales and just for one month. Actually, I think some of the other figures in the article are scarier ... like 1 in 4 homes with mortgages is now under water!

Not worried about the "haves", just the world economy in general.
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Old 27-08-2010, 08:22   #22
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Originally Posted by denverd0n View Post
Having spent the better part of the last decade and a half working for one of the largest mutual fund companies in America I can tell you this...

No one knows. Even the so-called "experts", who are managing billions of dollars of other people's money, are doing little more than guessing. You want to know where the Dow will be in 12 months? Throw a dart at a board and then firmly believe that divine providence guided it to the one, true answer. That is a just as reliable and accurate way of finding out as any other.
I couldn't agree more ... we're in uncharted territory. The "experts" may be a little better at short-term management, but long-term I think no one knows.
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Old 27-08-2010, 08:49   #23
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On a more basic level, buying a house today is exactly like buying a car, in that it begins to depreciate immediately. From my study, I'd guess there is another 30-40% decline in prices coming down the road in the next two years (as liar loans, interest only and other loan exotica reset doubling and tripling payment costs) and I doubt that there will be any real appreciation from the bottom for a long while.
So, if I get this right, you are saying that a townhouse currently selling for $200,000 in Maryland will still drop to $120,000 to $140,000? They've already lost close to $80,000. I'm just not buying that... I can see it in the huge McMansion market, but not the overall field.
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Old 27-08-2010, 08:57   #24
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So, if I get this right, you are saying that a townhouse currently selling for $200,000 in Maryland will still drop to $120,000 to $140,000? They've already lost close to $80,000. I'm just not buying that... I can see it in the huge McMansion market, but not the overall field.
I think it will be worse in the bubbliest markets like Kali, Florida, Vegas, et al. but bad everywhere. I've read estimates of 3-4 million more foreclosures in the pipeline being held off the market by banks trying to clear the huge current inventory of homes. That supply is gonna keep depressing prices as will the current deflationary enviro where buyers of anything tend to wait for the expected lower prices ahead. Add to that a real unemployment rate approaching 20% and one wonders who is gonna be buying all that inventory?

Here one chart of resets ahead, which will force more foreclosures.

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Old 27-08-2010, 09:39   #25
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More important, how long will the depressed stock market, and depressed real estat market keep the yacht market a buyers market?

I'm not ready to buy a boat just yet. Well, not a cruising boat. I've got another couple of years before the stars will line up more or less correct.

I'd sure hate to see all the prices of boats start going back up to where I can't afford them again.
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Old 27-08-2010, 11:10   #26
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Denverd0n and Speakeasy know the truth of it. We are heading down a toilet at the speed of light, with a global crash just around the corner. Just about every first world country is in debt up to its eyeballs, and its time to pay the piper.

I believe the market will continue to limp along, slowly getting lower and lower as waves of people try to suck in fools to buy so they can get out with at least some "wealth". For myself, I got out of the market in 2008 just before it did another crash n burn. However, after 8 years of silliness in the market, I had watched my initial investment climb from $40k to over $100K and finally baled out when it ended up at $20k. Even then I got burned for $15 a share when I trusted my own companys' fairy tale that it was being sold at $42.50 to a consortium of private investors. Yeh, sure it was. The guys at the top sold out just before they announce the deal was dead. Our out going CEO made some $22million on that deal. The employees got the shaft. Stocks are a suckers game.

The US Dollar is being devalued slowly through massive printing, just as the German mark was totally destroyed in the 1920s. Just as the Zimbabwean currency is being destroyed today. Its nice to say cash is king but cash is just so much toilet paper and its not even good toilet paper, as its about as comfortable as a corncob. Too crinkley. Cash is only useful as long as the suckers believe it has value. That value is rapidly being eroded.

Right now I'm sitting on cash. And I intend to get out of cash and buy silver. Gold is too expensive, and I believe its being set up for a crash using pump n dump techniques. Gold is also too difficult to use in barter. How would you pay for a can of beans if all you had was a gold wafer? You'd end up overpaying for that tin o beans pretty badly. Silver on the other hand is more affordable, and easier to subdivide with some sense of reality.

I would say liquidate as fast as you can and buy silver. Diamonds are nice but who among us is expert at gemstones? Pearls? Same thing. Given the scams being pulled, even gold is suspect sometimes. How about gold bars that are gold on the outside and titanium inside? Some bank got nailed that way about 6 months ago.


Get out of stocks. Stay out of stocks. Buy silver.


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Old 27-08-2010, 11:22   #27
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The stock market depends on 'confidence'. I think that what we really see from this post is just how little confidence the majority of people have in the markets .... and the world economy in general. Stock prices are determined by supply and demand and if fear rules then the demand is minimal. I don't see that turning around soon.
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Old 27-08-2010, 11:29   #28
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Ok bottom line question. Here goes.

Should I take all my cash savings and buy a boat this or next year, or should I hold onto my cash because the world is going down the toilet?
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Old 27-08-2010, 11:31   #29
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Yeah, me too -- I haven't bought any of those $750,000 houses in the last month, either. But how are sales holding up for the $750,000 yachts?
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Old 27-08-2010, 11:33   #30
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Or even a 40k yacht. The market is saturated in boats!
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