Did anybody notice yesterday’s awesome news?
“The Dow’s highest closing record is 21,796.55 set on July 27, 2017….
Sure, it’s just a statistic. Obviously, stocks vacillate up, down, and unpredictably. Yet breaking records 28 times this year probably isn’t bad news. If the President had a D after his name the media would be orgasmic. Of course, the current guy has an R so success generates radio silence. I can’t say I blame them. If the press actually noticed good news the Orange Menace would say something sarcastic like “are you tired of winning yet” and then the press would cry and be sad. Who wants sad journalists?
Luckily I’m here to point out good news when nobody else will. Don’t let caterwauling about impending doom get you down; 2017 had the highest steepest increase in the last 18 years. It’s nice to hear regardless of your political affiliation. Enjoy good news whenever you hear it.
Also, it’s Friday!
A.C.
P.S. I suspect my readers are more mathematically inclined than the average bear. Some are surely thinking rising stock indices are indicative of unreported inflation. Economics allows one to look at a silver lining and postulate a cloud. You never know if good news is bad or vice versa. No wonder it’s called the dismal science.
In a properly functioning market there is a correlation between a stock shares price, and the company’s earnings. Back when the market really functioned, it was highly correlated with the dividend you would get paid.
The news is good only so long as these correlations are high. But maybe its all sour grapes because I got out of the market at 14000 before the Lehman crash and didn’t re-enter the casino.
But yes, if you are still in, this would be an excellent time to sell before the next crash. After Lehman, the market is propped up by loans directly from the Federal reserve, so you have till that falls apart.. Markets kept going up in Weimar too. Just like they are in Housing. Just like they are in College tuition. Cheap Borrowed money inflates bubbles. If you insist on leaving the money in as “more records are set” and if you really believe real inflation is 2%, or that your real returns are higher than real inflation , then have fun. But I have no idea how you will time it so you get out before the bubble pops.
If this had been a real stock market rise , you would have seen real increases in earnings -especially dividends –
http://politicalcalculations.blogspot.com/2017/07/2017-q3-starts-with-faster-pace-for.html
I mean things are better economically than they were under Obummer, but that is simply the operation of hope I suspect. The underlying fundamental problems of the Lehman Crash have not been and are unlikely to be addressed. The so called conservative party can’t bring themselves to actually to what they were elected to do and repeal the economy dragging Obamacare mess.
We have gotten by so far because most of our inflation is exported via one means or another – mostly Chinese trade ( made possible by the Chinese buying US Debt)
That which can’t continue, won’t. Plan accordingly.
I agree with much of what you said.
I’d also add that the casino is nearly impossible to avoid. (Unlike 30 years ago when it was easy to avoid.)
The modern configuration of 401(k) and indices is such that most people with a 401(k) are in the market whether they want it or not. Usually the 401(k) managed with mutual funds and indices such that they can’t make decisions within the market. So unfortunately, “divest from the casino” is great advice that’s effectively impossible for people who want savings to fund retirement living (beyond whatever Federal entitlement funds (SSN) may still exist).
For that matter if I wanted to force stock prices to soar I could create a system exactly like the one we have;
1. Everyone must save for retirement.
2. They can only invest in securities (i.e. stocks).
3. They must invest in broad swaths (i.e. index funds) rather than individual stocks.
4. They cannot remove from the stock market without massive penalties.
Ta dah! Instant MEGA-DOW!
For our next trick we’ll give everyone huge loans for any college degree the could possibly want… then see what happens to the cost of tuition. 🙂
Well, I stopped having a 401K and that did the trick. Everyone looks at you funny when you decline, but I declined.
Saving for retirement means thinking you will be able to have one, which really is probably pretty unlikely at this point. What can’t continue , won’t, and I am thinking we will reach that point pretty soon – almost definitely within the next two decades.. ( but never under-estimate the power of belief in the status quo and the stupidity of the American people. If it weren’t for those factors, the dollar would have collapsed already)
Depending on a 401K for retirement at this point is a lot like depending on Social Security – its not gonna happen if you are 50 or under.
Once you quit your job you can roll that 401K over into a self-directed IRA, which invests how YOU want it to. ( and yes that can be physical bullion, real estate and so on ) So really that 401K only matters for your current job, and only if you think money that is currently stored in banks or in stocks will actually be worth something when you are ready (able?) to retire instead of “bailed in” to keep the bank solvent. ( Congress already made bail-ins legal in preparation..) But who knows? Zimbabwe money is still worth something right?
Speaking of Zimbabwe:
I used to have a few $100,000,000,000,000.00 Zimbabwe notes. I gave them all away to Obama supporters, for fun. I also traded one $100,000,000,000,000.00 Zimbabwe note for a $0.10 American dime from when US money was backed by real assets. The number of decimals in that trade amused me. I wish I’d kept one Zimbabwe note for myself.
Lately I’ve been trying to buy a shoebox of used Venezuelan Bolivars. I can’t find a contact. Anyone who’s really in Zimbabwe please contact me at this blog. I’m sure I can work something out that will benefit me AND YOU.
Here is Jayne Cobb explaining how the 10% penalty for early withdrawal will work in 20 years.
https://youtu.be/NdUD-jcr104
That’s why I like having retirement savings but assume some politician will steal it before my time comes. If they don’t I’ll be happily surprised.