Show-me Account Talk

[Show-me]

Originally Posted by WorkFE

I've heard rumor that starting in 2011 you give them your entire paycheck every payday and they do everything for you. (Mortgage, groceries, car, insurance etc.)

Didn't they try that in the former Soviet Union?

[Nordic]

Originally Posted by Show-me

So what is the risk now?

GMAC, GM, Chrysler, AIG, Freddie, Fannie, FHA, FDIC, Pension Benefit Guaranty Corporation (or PBGC). Who else needs a bail out. All this Government intervention from birth, to health, to education, to lending, to saving, to retirement. BRILLIANT!

I'm just going to stop thinking and let the good times roll.

I've been having similar thoughts Show-me, the fundamentals of the US economy suck right now. The amount of govt. debt and unemployment this country is racking up is alarming and it's hard to see an end to it. The word "trillion" is thrown around these days almost in a casual manner. Investing possibilities aside, the economic direction this country is heading is murky at best. Our kids may be staying home well into their twenties at this rate.

[Show-me]

Morning Nordic,

Yes, I see a bubble in equities that I can not participate in fully.

We are not really growing or recovering economical but yet the equities continue higher. Why?

I say the declining dollar argument makes the most sense. A weak dollar is allowing foreign investors to buy American companies on the cheap due to dollar exchange. That in turn drive share prices artificially higher because the more you buy the higher the market goes.

Problem is that the P/E ratios are horrible. Price is to high for earning.

The market is higher on the fact all that money wants some place to go to make money.

In normal times it would go into banks for interest so that banks could lend the money out. Now the Central Banks have all lowered interest rates to near zero eliminating that market for investors. Our own Fed is buying Treasuries to keep the yields down. To much manipulation on paper!

Foreign investors are long shot betting on the U.S. because we are like a penny stock due to the weak dollar. They will cherry pick our best companies out of American ownership and cut them up and move them away. It will ruin the US.

The bubble is forming, but the question is when will it pop?

[Show-me]

Be careful and ask yourself what is the risk to reward ratio right now?

[Gumby]

Originally Posted by Show-me

Morning Nordic,

Yes, I see a bubble in equities that I can not participate in fully.

We are not really growing or recovering economical but yet the equities continue higher. Why?

I say the declining dollar argument makes the most sense. A weak dollar is allowing foreign investors to buy American companies on the cheap due to dollar exchange. That in turn drive share prices artificially higher because the more you buy the higher the market goes.

Problem is that the P/E ratios are horrible. Price is to high for earning.

The market is higher on the fact all that money wants some place to go to make money.

In normal times it would go into banks for interest so that banks could lend the money out. Now the Central Banks have all lowered interest rates to near zero eliminating that market for investors. Our own Fed is buying Treasuries to keep the yields down. To much manipulation on paper!

Foreign investors are long shot betting on the U.S. because we are like a penny stock due to the weak dollar. They will cherry pick our best companies out of American ownership and cut them up and move them away. It will ruin the US.

The bubble is forming, but the question is when will it pop?

Show-me,

You are spot on in your assessment of the situation. The bubble is indeed growing at an exponential rate.

[grandma]

Originally Posted by WorkFE

I've heard rumor that starting in 2011 you give them your entire paycheck every payday and they do everything for you. (Mortgage, groceries, car, insurance etc.)

My question was going to be: Who will identify the `them' and the `they' for us?

Originally Posted by Show-me

Didn't they try that in the former Soviet Union?

...but mentioning the Soviet Union pretty much clarifies who are in the position to do so....

[Birchtree]

What bubble - I don't see any bubble. This recession has been an anomaly because productivity actually rose (9.5%) - that implies companies cut costs dramatically, and if demand picks up it would suggest corporate profits could explode and P/Es will drop, maybe that's what the rally has been all about.

[Gumby]

Originally Posted by Birchtree

What bubble - I don't see any bubble. This recession has been an anomaly because productivity actually rose (9.5%) - that implies companies cut costs dramatically, and if demand picks up it would suggest corporate profits could explode and P/Es will drop, maybe that's what the rally has been all about.

Where is the demand going to come from with official unemployment at 10.2% and the consumer extending to the max? The household "value" cannot currently be used like an ATM anymore.
This rally has been all about government manipulation.

[Birchtree]

The demand will come from those 90% that remain employed - that's why the preliminary GDP will be revised upward. Watch the initial jobless claims numbers drop on Thursday.

[WorkFE]

Actually this Rally has been about companies values returning to some type of normalcy with no doubt some assistance from government. 2 years ago alot of stock was extremely overvalued but 8 months ago they were just as much undervalued. JMO

[Mcqlives]

Originally Posted by Show-me

Morning Nordic,

Yes, I see a bubble in equities that I can not participate in fully.

We are not really growing or recovering economical but yet the equities continue higher. Why?

I say the declining dollar argument makes the most sense. A weak dollar is allowing foreign investors to buy American companies on the cheap due to dollar exchange. That in turn drive share prices artificially higher because the more you buy the higher the market goes.

Problem is that the P/E ratios are horrible. Price is to high for earning.

The market is higher on the fact all that money wants some place to go to make money.

In normal times it would go into banks for interest so that banks could lend the money out. Now the Central Banks have all lowered interest rates to near zero eliminating that market for investors. Our own Fed is buying Treasuries to keep the yields down. To much manipulation on paper!

Foreign investors are long shot betting on the U.S. because we are like a penny stock due to the weak dollar. They will cherry pick our best companies out of American ownership and cut them up and move them away. It will ruin the US.

The bubble is forming, but the question is when will it pop?

Show-me ,

I agree that there is a bubble being formed but I am not certain that the source is our economy/government/investors. The bubble is coming on a much larger scale than our dollar alone can support. So investors have to look at the IMF for starters and then look at how much of the S&P (and the next 4500 for example) are partially owned by foreign companies. The bubble can't pop with-out hurting the global economy...so who is going to pull the proverbial pin out to start popping?

This is why I have been following the VIX as much as I have. When the VIX dropped to under 23 I should have followed my own advice and bailed...I would have saved 5%. Now that the VIX is back up, and probably heading higher, it means the money is moving. With the majority of the global money on the side lines it is a fair bet, for short to intermediate term, to be all in when the volatility is up.

I know most people dont look to the VIX as a reliable indicator on market direction, and I agree. But something has to push the market out of any stagnation that we may face and I look for increased volatility to be a sign of this. It is a roll of the dice that the direction will be up.

Finally, my thanks and full respect to all of those who are vets, and those who are the loving support (like my wife and family) of vets. Happy Armistice Day!!!

-mcq

[Show-me]

Great video!!