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AllezAllez510
Trad climber
Santa Cruz, CA
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Topic Author's Original Post - Mar 2, 2009 - 02:30pm PT
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Just read that the Dow went below 7000...with the S&P 500 plummeting further as well. I was nervous about this thing before...now I'm downright scared.
Is anyone else feeling like this...or should I shut up and look at this as an opportunity to climb more?
This is my "first" recession, so it's bit weird for me. Since I started working in '96 there has been nothing but economic growth; keep in mind people my age have never seen a REAL recession.
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BooYah
Social climber
Ruby Range
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Scared, huh?
Fool....fear is it's own punishment.
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Ricky D
Trad climber
Sierra Westside
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Self fulfilling or not - but some of the pundits are talking the Dow at 5000 by summer!!!
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Porkchop_express
Trad climber
thats what she said...
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I dont know how helpful it is but my mindset has always been to plan for the worst and hope for the best. Keep my cost of living low and be ready for the bottom to fall out. Eventually the effects will reach down the economic ladder to those like me, but the lower you are the less distance you have to fall. Ultimately, if the situation is beyond your control then you should focus on being happy and not fret about the markets. Be fluid and ready to adapt.
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AllezAllez510
Trad climber
Santa Cruz, CA
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Topic Author's Reply - Mar 2, 2009 - 02:47pm PT
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Having just gotten my lay off notice it feels pretty real to me. I do agree on the media frenzy...
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Norton
Social climber
the Wastelands
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I was a stock and commodity futures broker in the 70's, and hence have lived through literally hundreds if not thousands of both bull and bear markets. The stock market is, obviously, in a huge protracted bear market. I would never, ever, consider buying in a bear market. I have had the best two years of my 37 year trading history the past two years, by selling short stocks.
Billions of dollars are being made on the short side of the stock market by professionals. They recognise that just like in a bull market you don't try to play Jesus and pick the top, so as in a bear market you don't try to pick a bottom, you just stay short until your trailing stop is hit.
The public is always the bag holder, always taking more time to educate themselves about a furnace energy rating than what can and is happening to their entire stock "portfolio".
The public is always "long" stocks, or buy and hold forever.
The pros realise stocks trade and trend both up, down, and sideways, and adjust their positions constantly, long or selling short, to take advantage of that.
CW, or Conventional Wisdom, has succesfully programmed the public to always be bullish, to never really accept the fact that bear markets do indeed happen, and are devastating. People are told by the pundants to just "hang in there", maybe buy some more because prices are cheaper today than yesterday, never ever educate yourself on the concept of "market timing" because, "it can't be done". BS, many many professional traders make enormous profits by timing the markets. No, you can't do it, you are not a full time market trading professional. Accept this fact.
Bottom line, stay away from what you do not really, honestly,understand. Yes, you may get lucky from time to time, but that kind of buy, hope,and pray it goes your way, is a prescription for ruin.
Not meaning to anger anyone here, just my experiece talking.
Tip, if you cannot right now say you understand the concept of selling short, and intend to use that concept as easily as just buying, than you have no business speculating with your hard earned money in any market. And make no mistake about it, you are not investing, you are speculating, when you have no clue, education, or history, of studying constantly, the effects of both bull, and bear markets, have on your account balance with your broker.
The dow lost 89% of its value in the 1930's, a move that significant would put this dow under 2000. Like a deer in the headlights of a hunter, the public is programmed to do nothing, never get out, never place protective stops, always be bullishly hopeful, always take tips. And this time is no different from the sequence of events and human psychology of any other bear market in history.
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Norton
Social climber
the Wastelands
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I am not gloomy Fattrad, my post had no "fundamental" posturing in it. New lows continue as I type, I trade momentum, not opinion. Opinions are a dime a dozen, they are worthless.
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Norton
Social climber
the Wastelands
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No, t, not wallow in them, but profit by being short.
Only fools wallow in misery.
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couchmaster
climber
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I am promising to minimize my traditional knee jerk reactions. This came about when last night, as my wife and I were driving along, the car radio announces that AIG was in trouble, despite the earlier purported US Government interventions.
"F*ck em", I (knee-jerked) said: "let em fail." Wife, looking ahead, quietly says "I have both the kids college funds invested in AIG Money Market funds".
Hah hah! Ouch:-). I flashed on the millions of other folks perhaps in similar (or worse) situations who believed that insurance companies were so financially strong and stable. Widows with their life's work and savings, perhaps, or others like us who had been scrimping and saving for their children.....We generally keep our money separate, and she handles the co-mingled stuff. Guess I should have been paying attention better.
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dougalclimber
climber
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Norton,
Well put, valuable advice. In the past few days I've looked at short interest outstanding on IYF, the exchange-traded fund for the DJ financials. ShortSqueeze.com. reports short interest amounts to 75% of the total shares. When I first saw this, I thought there must be some mistake as the ratio is much, much lower for individual bank stocks. But I've checked several times and the ratio has always been >60% short in the IYF. Got some ideas about this, but I'm interested in your take. I can personally vouch for a lot of what you're saying. I've traded my own account full-time for four years. As I rarely shorted for the first three years I didn't develop the "head" for that side of the game and have regretted it this past year.
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jstan
climber
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Couchmaster:
Recently got a notice from Fidelity that its money market funds, presently backed by the Fed's recent emergency actions will no longer have this assurance after April 30. After that day broken dollars may become more frequent.
You might want to query AIG right away and find out if the same is happening on your funds.
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Norton
Social climber
the Wastelands
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Doug, I have no opinion regarding the short interest in the dow etf. To me, it, like a million other factoids, is irrelevant.
The ONLY thing that matters is positioning youself in the direction of the dominant trend. I trade futures on the DOW, the S&P, and the Nazdaq. Others trade ETF's, etc, doesn't matter. What matters is identifying the trend and staying with it.
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couchmaster
climber
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Thanks Jstan, I wonder what kind of mega-destructive flight for safety that's going to cause with all the large institutional investors jumping and running full tilt towards safety? For Moi: I have that Yuan in an FDIC insured account. Not that inflation might not eat that up right fast, however, I have some I-bonds, real estate and gold for that eventuality.
Stuffed some guns in a safe in the house, bought a bunch of Mountain house #10 freeze dried foods, spread a bunch of the savings and investments around.... keeping the head down and praying for the best.
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Norton
Social climber
the Wastelands
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Fattrad, what is the matter with you?
Somehow you conclude that "everyone is an expert" on short selling simply because I identified my own style of trading as identifying momentum and going with it?
Who are these "everyone" on this forum you now see as experts?
Name them please. You can't name any. You distort everything.
Why would anyone care what you claimed to say in the past?
Are you looking for a pat on the back? Grow up.
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dougalclimber
climber
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Maybe Fattrad was referring to me, Norton. But in either case, your response is right on.
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pip the dog
Mountain climber
planet dogboy
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i was once in the middle of all the weird nonlinear math of this crap. (i eventually ran away, screaming – as i didn’t understand the math and found most of the slick suits unbearable).
this said, my best read is this: if you are like 30 or 40 something – and hence have at least a 10 year time frame on your 401k, dollar cost average your way back ito the market. slowly. like over the next 18 months. did I mention “slowly”? me, i'd wait a month or three before i did anything. but, all that said, if history and statistics are any guide, you’ll win, well, eventually.
OTOH, if the time frame for any given cash wad you have is less than 10 years – stuff it in your mattress and sleep on the hump.
but then, you must remember to never forget rule one: never, ever, take advice from any clown who hasn’t spent many hours just listening to what your specific time frame and investment goals are.
and definitely never listen to anyone who works on commissions off of your dollars. think of the risk/return line, and how it works. think of what warren buffet and peter lynch keep saying. yeah, like that.
sheesh...
^,,^
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dogtown
climber
Cheyenne,Wyoming
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The Dow will go below 3500 this year some say,no matter how much money they throw at it.
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klk
Trad climber
cali
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ok-- this thread was worth it for the brendapuff pic.
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TGT
Social climber
So Cal
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We've got a lot more down to go.
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TomT
Trad climber
Aptos.
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Norton
Can this follow the momentum thing help all of us make it through this recession?
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hobo_dan
Social climber
Minnesota
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Whats a Hobo to do?
I was mostly cash and as things dropped I shrewdly bought in- just in time to have things drop some more
and so I bought more and it dropped more.........I saw a trend and realized I was the cause of all this mess so I have stopped buying- so far so good.
There are things that have value- maybe all things have value at some point but being an out of the closet peak oil guy I am in mostly Energy stocks- which have been absolutley gutted! Very low P/E's and still no real bottom-
Norton I don't know enough to short but I think that people will continue to use fuel for heating and transport.
the present situation is not really encouraging people to invest in new wells and new exploration- my understanding was that the new stuff would compensate for the older wells becoming depleted.
Demand destruction has taken the horn off of that idea.
The race is on to see when demand and supply get close again. If they cross then energy prices should go up until then I will sit on my thumbs and watch the world go by
murf
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Dr.Sprock
Boulder climber
Sprocketville
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Frickin T Bills are making me more now than in the last 5 years of SP 50.
The Internet makes it easy to team up on the market.
You think those 800 point swings were natural?
Twitter on GE, 3-5-9 at the bell.
Next day, sell GE.
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Ricky D
Trad climber
Sierra Westside
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Jstan - would you mind expounding on that notice from Fidelity re: money market?
Wifey moved her 401(k) funds into Fidlity's MM last year as a "safe haven" - are you saying it may not be so?
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andanother
climber
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This is the part of the thread where I blame it all on the Republicans.
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TGT
Social climber
So Cal
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dogtown
climber
Cheyenne,Wyoming
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It's his economy now! He doesn't care how long the recession lasts or how much money they spend as long as they get their laundry lists passed.
I'm so sick of our leaders on both sides.
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dogtown
climber
Cheyenne,Wyoming
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Thanks Wonder;
I need that have been pretty down lately.
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AllezAllez510
Trad climber
Santa Cruz, CA
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Topic Author's Reply - Mar 3, 2009 - 09:52am PT
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I have not heard a SINGLE constructive thing come from the Republican side. All they do is BITCH about paying higher taxes. I think it's been made pretty clear that unless you make over $200k a year, you're not paying higher taxes. Maybe I'm still a bit of a dirtbag, but if you can't live on 200k a year, then you're the f'in problem. And "small business owners" won't be paying higher taxes...at least 95% of them won't.
What do the Republicans want? TAX CUTS? again? Seriously? Is that your solution to everything? Mom's got cancer? she needs a tax cut!
Where were you "fiscal conservatives" while Bu$h was spending the dough? You didn't say sh!t then and your words are hollow now.
Everyone calling Obama a communist because he wants to recreate the middle class is clueless. Ever been to a communist country (try China)? No one's "punishing" you for being rich. Taxes are not punishment, you selfish pricks.
"I love paying taxes, with them I buy civilization." _Olliver Wendell Holmes
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dirtineye
Trad climber
the south
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save your breath. the rethuglicans are a pack of fools, liars, shysters and outright con men. Fvck em, they don;t give a shyte about the country. hell they did a pretty fair job of desttoyinh ours.
Anyone still beleviening that stupid rethuglcian crap is just a moron, damn you ought to be able to see that thier ideas just plain suck-- look what they did. HAHAHA and some of you want it still. fvcking stupid shytes, too bad yo u can't get what ou deserve, cause we're all screwd if you do.
HEy rethugs, go eat some peanut butter from Georgia! that guy who sold the bad stuff is a republican business man, hell you KNOW he'd never do anything to harm you!
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AP
Trad climber
Calgary
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Dmitri Orlov would say this is the beginning of the collapse of the US. He saw the USSR collapse and sees many parallels and important distinctions between the US and the USSR.
For all of you people who say it couldn't happen:
Would you have predicted in Mar 08 that the US GDP would drop 6% in the last quarter of 08 or the biggest banks would be insolvent or the DOW could drop by this much? What do you predict about a year from now?
check out cluborlov.com
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TGT
Social climber
So Cal
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Herbert Hoover thought a tax increase was a good idea too.
The majority of those over 200k taxpayers are S Corps and sole proprietors. They represent over half the economy and hire about 2/3's of the work force.
Would you rather have a job and a growing economy, or give it to BHO?
Small buisinesses are already laying people off in anticipation of the tax hit they are in for.
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dirtineye
Trad climber
the south
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Fatty, ou are such a dolt.
I hjope we can doas well a france, wehre the peole expect the governmet toserve THEM, and not the intesrest of business.
In fact, it is actually treason for the government to serve the intersts of business above the interests of the people.
Here'sa clue: business ahs always paid taxes, they just don;t like it. they don;t like doing one thing for anyone but themselves. the7y will take it all if you let them, that is the history of the world, and anyone with half a brain can see that, you wannabe robber baron.
fatty, you love the republican ideal so much, why not move to saipan, where your fellow rethugs have hadn their way?
LOL check it out if you dare, what a freaking mess.
One day, but no time soon, the rethugs MAY realize that you need a porosperous MIDDLE CLASS to ahve a good healthy robust country/economy.
YOU fvcking morons who love the rethugilcans ahd hate Obama are just unbeleiveable. Goe eat the peant butter from Georgia, it's waht your policies brought us. be happy with that.
and whlie we are at it, please explain how hte party of smaller government and fiscla responsibility alwayas manages to raise the nationa debt through hte roof and grow goverment when they are in power.
Then they blame hte democrats for ruingin everythijng? in two months? oh god, a democrat is running things, we are all gonna die!!
Bunhc of whining rethug twofaced bastards. Wat some yellow snow for me please.
And jsut once more, for old time sake, lemme hear yo usay, " we need more deregulation."\
HAHAHAHAHAHAHHAHA IDIOTS.
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TradIsGood
Chalkless climber
the Gunks end of the country
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Interesting that AIG was mentioned with no mention of the size of its loss.
It was a RECORD LOSS - over $99 Billion in one year. To put that in perspective, it was twice the size (absolute value of ExxonMobil's record profit of last year).
They managed to lose $300 for every man, woman and child in the country. Nobody was even looking at them, or if they were did nothing. Did the NY State Insurance commissioner say anything ever, before the crisis?
In 1984 Continental Illinois failed, the seventh largest bank and the largest ever taken over by FDIC. It cost them between 1 and 2 billion - just for another comparison of catastrophic failures.
BTW:
Hoover did not have much choice. America was on the gold standard then. A loose monetary policy would have caused an international run on the dollar.
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jstan
climber
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Ricky D:
Hello again. Just saw your query.
Until recently the Fidelity cash reserves were paying between 4% and 5% but they had a substantial portion of their 120 billion in repurchase agreements. Much of that has been removed and the last yield was 1.6%. They still show exposure to Citigroup plus many securities for which one can only guess the risk. On the positive side they are obviously in short term securities and they are reacting in real time. Fidelity has done poorly in their stock mutual funds and are laying off people. While Fidelity may be too big to fail, being big also means the pain can be big.
Shortly after October 30, as I remember, the Fed acted to back money markets so that Net Asset Value (NAV) accounts like this would not have to "break the dollar" and report losses to account holders. For Fidelity's MM that backing will be removed on April 30, if I read Fidelity's report correctly.
Today or tomorrow I think I will move my balance to an NCUA insured account in a credit union paying 3.6%. I do need to research and find out what the NCUA's cash reserves look like. Hard to imagine the fed would allow NCUA or FDIC to go belly up though. So many voters would be hit directly.
As to actual securities you also have to worry about the limitations of SIPC. SIPC is not like FDIC and if there is a failure your securities may be frozen for up to three years before you can get access to them. Not good. These days, very ungood.
EDIT:
Jeff:
NCUA Insurance is much like FDIC as regards the amount insured. The only lost interest apparently is the interest not yet posted at the time of liquidation. If interest is posted quarterly then it can be substantial.
CLF funds available currently to meet liquidity needs is 41.5Billion.
http://www.ncua.gov/ShareInsurance/NCUAInsuranceFundFAQs.htm
What happens if a federally insured credit union is liquidated?
• The NCUA would either transfer the insured member's account to another NCUA insured credit union or give the federally insured member depositor a check equal to their insured account balance. This includes the principal and posted dividends through the date of the credit union’s liquidation, up to the insurance limit.
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Norton
Social climber
the Wastelands
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Fattrad, Candlesticks as a form of Technical Analysis have no proven validity, but then you just knew that already didn't you?
By the way, you should know, since you clearly do not, that it is JAPANESE, not Chinese, Candlesticks.
Stick with what you know, taxcuts for the wealthy.
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happiegrrrl
Trad climber
New York, NY
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Not that it may not have been a spin, but I saw a local news article a few weeks back where reporters interviewed a few people of the Over 200K group, and only one of them would see any tax change under the new structure.
A lot of people who feared for the increased tax were quite pleasantly surprised to find out it had been a false alarm.
Now - what to do about those boys crying "wolf?"
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jstan
climber
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"A lot of people who feared for the increased tax were quite pleasantly surprised to find out it had been a false alarm.
Now - what to do about those boys crying "wolf?""
I dunno. Maybe we just have yet another healthy forest.
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Elcapinyoazz
Social climber
Redlands
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US Historical TOP MARGINAL RATE
Goddamm I say, Obama is almost as much of a socialist scourge as:
Wilson, Harding, Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Regan, and Clinton who all had top margnial rates equal to or higher than the current Obama budget.
I always figured Eisenhower for a pinko fag, but even Ronnie Raygun was a closet Stalinist...who knew?
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andanother
climber
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TGT, that poster is hilarious. It's funny how conveniently forgetful the right wingers are.
It was OK for GWB to be the biggest communistic leader our country has ever seen. Why? Because he was white.
But when a black man suggests something even SLIGHTLY socialistic, suddenly he's evil!
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Norton
Social climber
the Wastelands
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The real socialists are Bush and the Republican House and Senate from 2000 through 2006.
They pushed through the largest tax cut, almost all for the already rich, in US History. That is class warfare and socialism.
Their naive and simplistic conservative philosophy of less government oversight and regulation over the housing market and derivative trading is the direct cause of the present economic collapse.
Their one trillion dollar diaster in the Iraq desert was more socialism for the defense industry.
We are now left to clean up the mess the children made.
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AllezAllez510
Trad climber
Santa Cruz, CA
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Topic Author's Reply - Mar 3, 2009 - 03:14pm PT
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Really though, tax cuts are spending increases unless they come with a concurrent cut in expenditures.
If the Republicans want to cut taxes so bad, maybe they should be forced to give up some services from "thier" states?
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Jingy
Social climber
Flatland, Ca
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depends... how much self worth do you gain from your stock holdings?
If:
= None, then disregard any and all news events about the Dow...
= Little, then keep an eye on it, but know deep down there is nothing you can do about it...
= More than life itself, then find the nearest tall building, scale it... then jump.
Really though, if your stock holdings are long term then leave them in long term parking and forget about them until they mature.
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dougalclimber
climber
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ElCap, a picture worth a thousand words. Good work posting that.
Norton, all your comments have been spot on. It's heartening for me to hear someone who's made their living in the market who has such a good perspective on the big picture. I started lurking on the Taco as a way to get my mind off the market and politics. I thought I'd just look at photos of buff women a climbers, listen to yarns by all the climbing heroes here and watch vids of Chris jumping off stuff. Quickly found something way different going on here and have been sucked into the economic / political debate. It's been interesting to see the mix of views and many posters have spurred me to continue my own reading and questioning about the financial system.
Jstan, it appears that you've gotten some answers re insurance on the MM fund. I use Fidelity as my broker and have questioned them a couple of times re my core account. Can share what I learned via email if desired, but it looks like you're already up to speed.
And for those wanting more understanding of current crisis I'll put in my 2 cents for a book that someone else recommended a couple months ago; Kevin Phillips' Bad Money. Its lack of a bibliography is frustrating, but I think he gets the picture right.
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jstan
climber
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After listening to the econtalk podcast asking whether economics is a science I have concluded it is a "dismal science." To explain more I have to go back to infrared detector manufacture, about which I know marginally more. We all spend years in school learning all the laws of physics with a few retards amongst us also picking up some chemistry on the quiet. Some of us come to work at photolithographic processes while others work in material growth. Now here is the mind blower. What happens when the detectors stop working?
Those who feel most comfortable with the laws of physics as applied to crystalline solids feel that those laws are what are making the detectors fail.
Those who feel most comfortable with the laws governing surface properties decide it is those laws which are making the detectors fail.
No one is willing to say, I know all the laws but I don't know which of them are active here. We each just pick the laws we enjoy the most.
Every law ever imagined by an economist may actually be a law. But with possibly thousands of factors being important in any actual case
our chances of ever finding which law is active - is dismal in the extreme.
And since people do different things when their perception of the problem changes, the problem can change completely all by itself even while we are trying to figure it out.
Even if TARP was the right thing to do in October, there is no assurance it is the right thing to do in March.
I don't believe it was and to explain why I go back to detectors again. When a product began to fail I did not take part in all the theoretical arguments. I dragged myself through gigabytes of production and test data and tried to correlate it all with known process changes.
To solve complex problems you first have to accept they are complex, you have to go to the data and let that point to possible causes. In one case I found an extra 15 seconds in an etch step was a probable cause. On the day I retired some two million dollars later the manager who had authorized the change casually commented that I had usually been right. But not listened to.
Finally to my point. Among financial companies almost all the data we need is held as being proprietary. It is all kept highly secret. It is literally impossible even to get a look at the data. So we shuffle away muttering at how complex it is and how we need to act immediately.
Another failure. When a problem is huge and complex you cannot solve it as an undivided whole. You do have a chance if you separate it into its constituent parts, discover each part's dynamics and then look at the interactions between the parts. You almost never can do it in one fell swoop. And that's what we are trying to do. As I posted yesterday, the folks in Sweden are having some success by going in to an individual bank saying, "OK buddy. We are going to straighten you out now. When we are done you may or you may not have a way to make a living." This is much like the process the FDIC has long used.
Bottom line?
We aren't using our smarts. Great arguments between Keynesians and Friedmansians, assuredly. But that is all irrelevant. We don't have a clue as to which laws are operative.
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tolman_paul
Trad climber
Anchorage, AK
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Unless you work in the stock market or are looking at retiring soon and had too much of your portfolio in stock then I don't see a reason for fear. The stock market doesn't run the world, and folks shouldn't let it run them. Folks have survived for thousands of years without stock markets, folks have suffered despite bullish runs in the stock markets. I've seen my 401k drop, though not nearly as far as it did during the .com bust. But I did realocate most of my funds to lower yield "safer" funds about a year ago when I saw the writing on the wall on the market. I figure I'll just have to let it ride now, and don't expect a real turnaround for a few years, and a slow recovery.
For a long time I've percieved the market as not creating any wealth, but many people making money off of it. Just numbers on paper, no new industries or technologies that generate real jobs and real wealth. And when that goes too far, it crashes. It's like a cow, if you regularly milk it and take care of it, it'll make you a profit. If you blead it, you'll kill it.
I will say I am concerned about loosing my job, as our industry has slowed down and it shows no sign of picking up anytime soon. I'm not in the best financial situation, but will be able to shuffle some stuff around should worse come to worse.
On the up side, there are always opportunities, and several things I've wanted to persue but haven't had the time should my situation change.
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Mighty Hiker
Social climber
Vancouver, B.C.
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The US by definition is a liberal democracy, in both political and economic terms. Strictly speaking, the economy is mixed - about 35% of the economy is government-related. As this illustrates:
 No, tax cuts aren't the answer to all problems.
Redistribution to the wealthy, as over the last 40 years, is still redistribution.
Yes, economic stability and equity probably lead to social stability.
Yes, what the Republicans say and what they do are two very different things.
Yes, economics is not a science, although it uses some scientific techniques.
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dougalclimber
climber
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Mighty Hiker,
I've been spending quite a bit of time on your side of the border recently, visiting a friend who's moving to an ecovillage near Chilliwack. Such a refreshing and hopeful contrast to the craziness here. You Canadians are keeping me sane.
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Binks
Social climber
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Except for some 401k balances that I can't withdraw, I'm out. I'm not getting back in anytime soon, if ever. All confidence blown. Let others play this fool's game (without my money).
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jstan
climber
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Jeff:
Most assuredly that is true. Then if this is true and cannot be corrected
perhaps we have found a fatal flaw in capitalism.
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jstan
climber
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Jeff:
I trust you are not still claiming your property there as your primary residence.
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tolman_paul
Trad climber
Anchorage, AK
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Capitalism only works if it isn't over-run with theeves. Same for communism, or any other ism. A certain percentage of the state actually has to produce goods and wealth, otherwise the whole system fails.
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jstan
climber
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Here there is a real difference of opinion.
It is pretty clear many believe capitalism works only if everyone is a thief.
It is called externalization of cost.
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Mighty Hiker
Social climber
Vancouver, B.C.
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"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Adam Smith, The Wealth of Nations
http://thinkexist.com/quotes/adam_smith/3.html
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Darnell
Big Wall climber
Chicago
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GDP growth seems to be the only thing that matters to some of you.
We count as desirable growth both the beneficial activity that causes pollution and the costly activity of cleaning up the pollution, for example. And when cutting down trees and selling the lumber boosts GDP, we subtract nothing for the loss of forests.
How do we square Earth's finite resources with the fact that as the economy grows, the amount of natural resources needed to sustain that activity must grow too.
Economists have not grasped a simple fact that to scientists is obvious: th size of the Earth as a whole is fixed. Neither the surface nor the mass of the planet is growing or shrinking. The same is true for energy budgets, the amount absorbed by the Earth is equal to the amount it radiates. The overall size of the system - the amount of water, land, air, minerals and other resources present on the planet we live on - is fixed.
The scale of the global economy is approaching the limits of what our planet can cope with. As the oceans are emptied of fish, forests shrink from logging and levels of pollutants and greenhouse gases in the atmosphere rise, the environmental and social costs of further growth are likely to intensify until we reach a point at which the price we pay for each unit of extra growth becomes greater than the benefits we gain.
Economic growth may already be making us poorer rather than richer., a macro-economy that is structurally required to grow in scale beyond the biophysical limits of the Earth, is an absurdity.
How big can the economy can get before it overwhellms the total system.
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TradIsGood
Chalkless climber
the Gunks end of the country
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Or jstan, the other way to look at it...
All depositary financial institutions MUST be leveraged. They must earn more on what they lend than on what they borrow. But they must have some capital on hand against the possible demand for return of their liabilities (deposits).
Now the minute it became obvious that one was nearly insolvent, if published, it would become instantly insolvent. It is called a "run on the bank".
That is why bank regulators, OCC, Fed, and FDIC, never announce that a bank is not healthy!
For fun, just look up the story of Continental Illinois on FDIC's web site.
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tooth
Mountain climber
Guam
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Nice quote Anders. Maybe it will make you happy to know that every month my colleagues and I get together and try to work around the buracracy of the US and get free dental care to those who need it. It works in our own practices, but the US has a law that says all kids here on island get free dental care. Then they build a public clinic, and don't fund it. We are willing to volunteer our time/supplies - but the governemnt won't allow it because we aren't covered with insurance/liability etc. etc. We told them we will give em a free day a week as soon as they get their act together and allow us in. Months have gone by.
Sorry to vent, I'm just so frustrated with pencil-pushers. Spent all morning with Catholic Social Services bringing in their people for exams/cleanings and work. If the goverment can't get it together I'll use a church.
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TGT
Social climber
So Cal
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If the goverment can't get it together I'll use a church.
Careful now!
BHO wants to outlaw that!
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dougalclimber
climber
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TGT, Thanks very much for the link to Wired Magazine's article on David Li's risk pricing model. Nearly two years ago, when problems with sub-prime CDO market began to emerge, I began trying to educate myself on this whole business. Six or seven books and many, many articles and discussions later, I still hadn't come across a suitable description of some of the specifics roots of the problem. This article is excellent in that sense and I'm copying the link to a variety of friends and colleagues.
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gumbyclimber
climber
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jstan, you're right; economics as an empirical science is indeed dismal. If you haven't been there, you might find a study of praxeology to be both thought-provoking and eye-opening. Human nature never changes.
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Karl Baba
Trad climber
Yosemite, Ca
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I still like the aphorism
"Economics is the business version of Religion"
We're gunna Die!
Peace
Karl
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couchmaster
climber
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Mar 27, 2015 - 12:36pm PT
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What did we decide?
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Fritz
Trad climber
Choss Creek, ID
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Mar 27, 2015 - 03:50pm PT
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Interesting to go back and read all the negative posts about the stock market when it was close to the lows of the last big panic. It bottomed in Feb. 2009 and I actually bought some stock in early March. I must have ignored the advice of my financial betters.
Sooooooo-----Obama & the economy have been harder on me. I couldn't retire until age 65. Strangely, the years of Obama's reign have been the best earning years of my life.
For those of you that don't follow the stock market, here's what the Standard & Poors 500 Index has done since March of 2005 (Follow the upward trending blue line). Yes it will go bust again, but the ride in between the busts has been a happy one for me.
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Reilly
Mountain climber
The Other Monrovia- CA
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Mar 27, 2015 - 05:01pm PT
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Well, it had nothing to do with Obama and I'm glad to see he's smart enough
not to try and take credit for it. The market is its own beast. If we do
have a major 'correction', and that is far from a certainty, it won't be his
fault, either. IMHO the market is oversold and over-priced - the Shiller P/E
and Tobin Q ratios both indicate that and they have been highly accurate in
the past. Of course, this may be the exception that proves the rule although
some correction would be good and there has been a substantial outflow of
funds from equities in the last week or two which makes me feel better about
staying long. I think the correction will not be much above 5% which isn't
worth getting out over but then I'm only about 50% in equities anyway so I'm
lettin' les bon temps roulez, baby! I did well in bonds last year so I'm
gonna keep my positions there only because it is close to putting that money
into cash and they won't lose much, if any. Let them eat cake!
BTW, I told you 'tards 6 months ago to short the Euro. If you'd followed my
advice you would have made a tidy sum. But, no, you were all more concerned
with explosive diarrhea and the like.
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Reilly
Mountain climber
The Other Monrovia- CA
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Hey, Moose, you still long Tesla? BwaHaHaHaHa! That's OK, you can make up some of yer
losses by performing table dances at COR. Just don't expect me to tuck a fiver into yer waistband.
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Reilly
Mountain climber
The Other Monrovia- CA
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$17, really? Then my hat's off to you, good sir! At this point you've
nothing to lose by holding it although I really don't see it going up within
the next few years, or until they can prove they can make money.
At this point you've earned the last laugh! ;-)
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JEleazarian
Trad climber
Fresno CA
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Now I'm glad I ignored this thread, because reading it with hindsight makes it far more interesting.
Anders' (Mighty Hiker's) Adam Smith quote, above, is one of my favorites, but when it comes to the stock market, my favorite quote about what the market will do comes from J. P. Morgan: "The market will fluctuate."
John
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Studly
Trad climber
WA
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The Stock Market is a Ponzi scheme. To base our country's economy and well being around it is.... insanity.
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Reilly
Mountain climber
The Other Monrovia- CA
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The Stock Market is a Ponzi scheme
I'm laughing, all the way to the bank. Sound investing isn't rocket science.*
It just takes self-discipline and a good grip on yer emotions.
*Even though US equities were down yesterday I still made gud money because
I am diversified with international equities and bonds.
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Studly
Trad climber
WA
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I'm laughing, all the way to the bank. Sound investing isn't rocket science.*
It just takes self-discipline and a good grip on yer emotions.
*Even though US equities were down yesterday I still made gud money because
I am diversified with international equities and bonds.
Said the gambler to the whores..
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Bruce Morris
Social climber
Belmont, California
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Stick with the hoes: At least you get what you pay for with them (sometimes but not often enough!) Better odds than with a family investment counselor.
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Reilly
Mountain climber
The Other Monrovia- CA
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You're fairly well justified to be suspicious of "family investment counselors".
You're much better off doing your own research which is easily done these
days on the intardnet. And you really don't need to look too deeply if you
confine your research to no-load/low management fee index funds. As I said,
it ain't rocket science. Or you can wallow in bitterness and cynicism and
look forward to retirement in a trailer park in Stockton.
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zBrown
Ice climber
Brujò de la Playa
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My real estate 'investment' attained about a 4% average compounded growth rate over the last 27 years.
In my opinion this is a no risk investment.
Didn't calculate tax savings and expenses nor did I consider the fact that I lived in it.
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Roger Brown
climber
Oceano, California
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We only have 18% or so left in the stock market. Not making any money, but won't lose very much either. Living good on fixed income. We are a little too old to start over and healthy enough to work when the money is right. Timing is everything.
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Fritz
Trad climber
Choss Creek, ID
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I would advise someone who is not ok with investment risk to avoid the stock market. If you can't afford a loss every now and then, you shouldn't be in the market.
If you are in the market, but not an expert, I would also council you to invest in mutual funds with low annual fees.
In my humble opinion, Vanguard is the biggest, safest, & best of the low fee mutual fund companies.
Their mutual funds that track the S&P 500 are likly the safer stock funds, but I especially like their somewhat higher risk Health Care Fund. With an average annual return of 17.63% over the last 29 years & low annual fees, it has been a smile-maker for me.
https://personal.vanguard.com/us/funds/snapshot?FundId=0052&FundIntExt=INT#tab=0
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Reilly
Mountain climber
The Other Monrovia- CA
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Fritzi speaks verily although risk is a function of yer investment timeline.
If you are under 50 you probably don't want anything to do with bonds, especially now.
Even if you are 60 it is highly probable that you will make it to at least 75
which means buying the Vanguard S&P 500 Index fund is actually a good move
as it is highly likely that the upside outweighs the downside. If you
are closer to 70 than you are to 60 then putting half your money in the S&P 500
and half in a bond fund (or two - one domestic + one international) would be
more prudent. You would be well advised to only put 1/4 to 1/3 in the S&P 500
fund and the remainder of that 'half' in an international fund for diversity.
You can never be too diversified. Think of diversification as extra pieces
on a long pitch. While Fritzi's Healthcare fund has done well by him it should
be noted that it merits a '5' for risk and goes against the Rule of Diversification.
One last observation: index funds outperform the vast majority of 'managed' funds
and they have the big added advantage of having much lower management fees.
Note to zBrown - if I only made 4% on my investments I'd be tempted to slit my throat, if I
wasn't such a coward. Yer primary residence is yer worst investment. It is only made bearable
by the tax benefits and the fact that it mostly beats being homeless.
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Fritz
Trad climber
Choss Creek, ID
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Yea verily! Reilly speaks more truth:
Think of diversification as extra pieces on a long pitch. While Fritzi's Healthcare fund has done well by him it should be noted that it merits a '5' for risk and goes against the Rule of Diversification.
One last observation: index funds outperform the vast majority of 'managed' funds and they have the big added advantage of having much lower management fees.
Heidi & I are invested in 4 Vanguard bond funds (all short term or muni at the moment) & 7 Vanguard stock funds. Unfortunately, every time I've owned an international stock fund, I lost my ass. It's ok though, since most of the Vanguard stock funds I own also have international stocks in them.
The least risky Vanguard Index fund we own, with stocks in it, is the Star Fund which is 60% stocks & 40% bonds. Not a bad return either & of course very low annual fees.
Of course Risk = Reward, unless it's a "sucker-bet."
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zBrown
Ice climber
Brujò de la Playa
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So Reilly, are you homeless or do you rent?
I believe from what I've seen elsewhere there may be a few readers who do not have the option of deciding whether to purchase stocks or bonds.
4% compound translates to 10.9% average annual increase, the one stocks/bonds folks like to quote
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JEleazarian
Trad climber
Fresno CA
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In my opinion this is a no risk investment.
In my opinion, colored by 42 years as a professional economist and 36 as a bankruptcy lawyer, a no risk investment does not exist. Finding a no-risk investment is like trying to predict precisely where lightning will strike on Half Dome this year. It's a pretty good bet that it has and it will, but I have no idea where or when.
That said, disciplined, diversified investing has historically grown in value -- in the aggregate -- reliably over the years.
John
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Reilly
Mountain climber
The Other Monrovia- CA
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zBrown, don't we all rent from the bank or the mortgage company? That said,
I'll be beholden to nobody in two years whereupon a 28' Airstream might be
looking gud. But then we're also talking about putting everything in storage
and just traveling full time. We could rent apartments for a month or two
at a time and still save money. The only trouble is that I haven't been able
to find any apartments in Angmagssalik, Greenland. :-(
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zBrown
Ice climber
Brujò de la Playa
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I suppose someone's house could be hit by lightning or there could have been a fraud and forgery involved,
but that's why folks have escrows and insurance.
There could be an act of God
or a war.
Shitt!! happens even to the best of us.
“The lawyer was bad enough
But this is ten times worse”
Just then a bolt of lightning
Struck the courthouse out of shape
And while ev’rybody knelt to pray
The drifter did escape
$$$
Married folks can exclude $500,000 of gain from taxes, repeatedly to infinity (if you live that long) as long as you comply with the rules.
$$$
Shit!! and peepee does happen. If you weren't born here, don't bring your camper here and poop here.
[Click to View YouTube Video]
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Roger Brown
climber
Oceano, California
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ZBrown,
Investing in our home worked for us. Paid off long ago, and doubled in size. It is worth 3 times what we paid including the 2 story addition. We have no regrets having most of our funds in savings. We sleep good at night.
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pyro
Big Wall climber
Calabasas
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Aug 24, 2015 - 11:36am PT
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..........Your gonna die.....
damn that was a drop!
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Roots
Mountain climber
Tustin, CA
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Aug 24, 2015 - 02:51pm PT
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..us youngsters have time....ok I'm not young anymore but I don't panic.
Silver anyone? Been selling below what they can extract it for, so it seems like a bargain to me.
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Ricky D
Trad climber
Sierra Westside
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Aug 24, 2015 - 03:05pm PT
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You can never go wrong by going long on canned goods and bullets.
I also suggest a few cases of can openers - helps you corner the market after the crash.
The bullets you can use to threaten the Mormons in your neighborhood if they balk at turning over their food hoard.
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paul roehl
Boulder climber
california
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Aug 24, 2015 - 03:10pm PT
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A crash is but a buying opportunity.
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Reilly
Mountain climber
The Other Monrovia- CA
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Aug 24, 2015 - 03:36pm PT
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A crash is but a buying opportunity.
OK, Warren. ;-)
I will be buying in a major way after the dust settles so I can see the
openings in the battle line. Oil stocks will be very attractive shortly.
Quite interesting that the Chinese gubmint did nothing to staunch the
blood flow in Shanghai today. I aver that the commissars reworded a previous
phrase of "Let them eat cake." Me? I'm putting it down to
"Karma's a bitch muthafukkas. Hope you can eat your poached elephant tusk art!"
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John Duffield
Mountain climber
New York
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Aug 24, 2015 - 03:57pm PT
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I can't remember our stock market getting this bent out of shape over China.
Has to be a ruse.
I think the Brokers are stampeding the vacationing herd to make a nice lil Summer bonus.
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zBrown
Ice climber
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Aug 24, 2015 - 04:04pm PT
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Didn't The Dow develop napalm and agent orange, among other good for the Earth products.
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StahlBro
Trad climber
San Diego, CA
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Aug 24, 2015 - 04:07pm PT
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Better to put your faith in the Tao
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