Quick Question from an ignorant man

[RugbyMuffin]

Hello all.

I have always been fascinated with investing, and finance. Yet, I have no money to invest, and all fancial books I have written are pretty crappy. No details, no explanations, no guides. Just quasi-fictional situations, and personal advice.

Thus my ignorance on the situation.

As for my question:

How can the Dow: be at 12,400, and we are still in a "recession" in regards to lack of jobs, opportunities, and costumer spending ?

And then there is this "interest rate" that needs to be raised or whatever.

The highest the blasted thing has ever gotten to is 14,000, and that was riding the housing bubble. If I remember when the whole market tanked, the DOW was at 6,000.

So, what is the deal ? Why the lack of progress while business seems to be "picking up" ?

Feel free to discuss amongst yourselves, but if someone would throw me a bone, and put it in simple terms that would be great.

Oh, and a personal request to keep the tone it "it is what it is" cause I am pretty numb to doom and gloom at this point anyway, but obviously you can ignore that. Information is what I am after.

 

[MigratingOsprey]

Wall Street =/= the economy and the dow is just an index of cetain public companies and stock valuation is uber complex

on a very, very basic level there is some play between interest rates & the markets .... when interest rates are low it's meant to stimulate the economy by discouraging bond investing, prompting people to sell higher rate bonds that they hold (as interest rates go down, held bonds with higher rates go up in value - bonds do not have a fixed value really until maturity) and overall put money into an economy

the hope is that people find a different way to invest those bond dollars - either in captial projects or some other way that provides an investement into the economy and keeps the money moving

it can also tie into foreign markets (for example, if american bond holders search overseas for lower priced/higher interest bonds the net effect could lead to some devaluation of the american dollar which will make imported goods more expensive and domestic goods more attractive - hopefully prompting more domestic production)

there is a lot of hope in all of this as well ..... another side effect is that someone may be tempted to invest more in stocks as bonds are not attractive

another factor is that many companies are running at a cash surplus - however, there are limited investment options for them ... M&A activity is down, the overall economy isn't strong enough to open new facilities, etc ... the bond markets aren't attractive .... so they may buy back some of their capital stock, etc

 

[conraddobler]

A simple question first.

What would you expect an entity with control over the money supply to do with that control?

We think of money as something hard to come by and it is for most of us but what if you could create it out of thin air?

Do you think if you had this power you could make the stock market hit any level in money you wanted it to hit?

Do you think if you had friends and they needed some money you'd give it to them and if you had people you didn't like you'd take it from them?

Would this be a fair world or simply a world of your chosing?

In modern society the power to create money is the ultimate power, you hold everyone's fate in your hands and with that you can buy and sell the world many times over or simply control it however you want right? You'd think it'd be fancy weapons and such but you can BUY THOSE RIGHT?

You can pick winners and losers all day and what you say goes, if you say a bank lives it lives, if you say a bank dies it dies.

The one thing you need to avoid is the people getting wise to what you're doing and using their instrument goverment, the thing with all the fancy guns on you. You want that pointed at those you are stealing from, those people who do the work, create real things that you buy with your funny money.

They are forced to use your money by the one with all the guns, no pay taxes, go to jail, to pay taxes you need what?

Money.

Nice circle of life there.

Now how do the people get elected.....

With money....

Who controls the money?

See where this is going?

So if you need to placate some people and keep them off your butt and the Dow going up does this, then that's easy to do.

The only way you lose is if the people gain back control over their government, the one with the big guns and stop you.

That's the simplest explanation you're ever going to get on how our modern world works.

If you want to profit from this obscenity personally more power to you but I won't help you or anyone else ever again.

You support the above, I will never give you the time of day.

What you can't do with your money machine is actually create things, real things, for that you need people and it's simple enough to get them to do this for you then once in a while like an old Roman tax collector show up and simply take it.

It's not that obvious you just print more money or regulate them or shower their competitor with money so that the productive die and then are consumed if they don't play ball by the connected.

If I add more funny money into the system the stock market goes up that dosen't mean anything really happened other than I printed more money.

For the stock market going up to mean anything more real stuff has to be going on but that's all secondary to who gets what cut of what's really going on.

This is why you see jobs curiously not comming back, none of this is real, the real destruction and then rebirth that should of happened was aborted, frozen in place by a shower of fake money that stopped free markets from doing what they do that is bringing buyers and sellers together, if you want a widget I'll make it for you, that's the real economy and they can't recreate that they can only feed off it.

If I can create money and control it I can get whatever cut of what's really going on anytime I want, I just have to keep the great mass of people from ever figuring out what I'm doing.

They are betting most of us will never see what's going on and even if we do we won't stop them.

Time will tell on that bet.

Time will tell.

 

[82CardsGrad]

I think Conrad, in his typically obscure manner , perhaps made the most appropriate point. I mean, the rest of the world is raising interest rates, but not us... In fact, on Aprl 27th the Fed will be debating the potential of QE 3!!! That's not a joke... can you imagine, MORE printing of the funny money?? God save us...

Anyway, in a pure sense, stock valuations should be a measure/indication of the financial strength of a company measured by traditional means (Balance Sheet, Income Statements, Cash-Flow Statements), as well as an analysis of the trending and health of the company's industry and the company's own position in that industry... is the company expanding or shrinking its' market share? What are the short-term prospects for growth? Is the company well-capitalized to exploit the growth opportunities?

Broadly speaking, most U.S.-based companies are very well capitalized and are sitting on record levels of cash. However, like you and me, they are very leery of the economy as they know - better than we - why the economy is where it is today... why they themselves are sitting on so much cash... and why the Dow has climbed so consistently. They all can thank Uncle Ben and the fabulous funny money printing machine he runs.

I'll say this - should oil and gas prices continue to rise, and should higher "input costs" continue to rise (the cost to produce goods and transport them, as well as food), there won't be enough printing of the funny money Uncle Ben can produce. Housing continues to tumble. Unemployment continues to remain at nagging levels. Add to this sustained $4-$5 gas at the pumps, with dramatically increased food prices, and the consumer will once again go into hybernation. We will see a dramatic fall in the Dow at that point... I just don't see how that won't happen.

Also, take a look and track "Capacity Utlilization"... it's a very important, but not often discussed on the front pages, statistic that essentially measure the amount of slack in the system. In other words, the higher the capacity utlization rate, the more chances of companies bringing on new employees. A related measurement is productivity. And through this Great Recession, companies have made HUGE strides in productivity. What is now being produced by a worker once took many, many more workers. Companies will ride that puppy as long as humanely possible...

 

[conraddobler]

We're on the anti Ford road.

When Ford famously said he wanted to make sure all his workers could afford his product he was on the opposite end of the bell curve from where we are now, we were headed up then, now no one gives a rats ass about anyone but themselves, so no one cares where something is made, who got the job, nothing.

I had a guy basically downplay a Maytag compared to an LG washer, he went on and on about the thing even though the sticker on the Maytag mentioned like 20k jobs going to American's. Never mentioned it where it was made, just this is the best washer and to an extent I understand why he did this.

Honestly the LG is better from what I can tell, costs a little more but it's better, according to the reviews I saw, both were reviewed well but LG is just very good customer score wise, never saw a mention in any of them anyone agonized over where it was made, not a peep.

To me I see kids playing soccer, I see a prom, maybe a car someone can help a kid buy, hell maybe just a steak and beer and a family freaking dinner someone can have because a few people gave enough of a crap to consider their fellow citizens a little. Granted if it was a complete piece of crap sure I wouldn't consider it, but that model was well reviewed, although new seems to be well liked, so I didn't take a huge chance, and I paid less for it to, maybe I'll get lucky, maybe I'll get screwed, but in the end screw it.

The point really is this, on a close call and it was from all the research I did considering everything including value and price I added one more factor that's it. A factor that isn't IMO added in proportion to it's importance to life HERE.

So we smiled and left and I went home and bought the Maytag online from his competitor apparently he didn't care about the American jobs as much as I did, and so I don't care about his, fair enough?

When you see people starting to become aware of this then I think America might be back.

I remain hopeful this will happen over time.

 

[Rivercard]

Do you think if you had this power you could make the stock market hit any level in money you wanted it to hit?

Like commodities trading?

Look at oil, it's trading at what.... $117 a barrel right now. Gas at the pump this week is about $4.20 to $4.30 a gallon where I live. If I recall, that's not too much lower than where pump prices were In 2008 when gas was trading at $145 a barrel.

 

[conraddobler]

Like commodities trading?

Look at oil, it's trading at what.... $117 a barrel right now. Gas at the pump this week is about $4.20 to $4.30 a gallon where I live. If I recall, that's not too much lower than where pump prices were In 2008 when gas was trading at $145 a barrel.

Yeah and if you happen to be a well connected investment bank and exactly call turns in the market, "because you just are so good, not because you have any inside information" so much the better.

http://www.telegraph.co.uk/finance/...rices-fall-as-Goldman-Sachs-closes-trade.html

Now surely they are not short crude?

They wouldn't make money comming and going?