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\"historical comparisons are meaningless.\" HA!
History means a lot more today than it did 10 years ago.
\"historical comparisons are meaningless.\" HA!
History means a lot more today than it did 10 years ago.
![\"user-pic\"](\"/css/images/default.gif\")
Hey, break out the whip any time you'd like for self-flagellation. Journalists are recriminating Wall Street for their own addiction to purposeless stories like \"Dow 10,000.\" After all, you wrote this Monday and stuck it in the can, right? The DJI is completely apocryphal on both sides of the fake divide between Wall and Main. Stating it has no connection between those worlds is more of a function of the fact that it's a completely obvious comment and that the supposed divide between markets and Joe Six Pack is a media fabrication.
After all, did Wall Street write the WSJ on 1999?
@ Pmp Nmd DvR:
LL Hw bt th glbl cllps f th wrld cntrlzd bnkng systm nd nd cmplt dfltn f th .S. hsng mrkt. rnd 15% nmplymnt, 15% nfltn, nd dllr wrth 2 cnts n th whl. LLLL. Y wr jkng rght?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-63807-100x100.png\")
Online trading is turning personal computers into slot machines.
I think a slot machine's odds are a bit better.
@catastrophegirl: Ah, but you're forgetting the newer, better, networked, credit card accepting slot machines.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-389492-100x100.png\")
@subsider34: i haven't seen those [or a slot machine in real life, ever, so far] but i bet they have skimmers
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-95687-100x100.png\")
@catastrophegirl: I don't think someone's going to successfully plant a skimmer on a casino slot. The casinos have a veritable army of security watching the monitors 24/7 and they look for ANYTHING that might look like a machine is being tampered with.
We are in the eye of the financial hurricane. When we hit the other side it will be much worse than what happened before.
But it probably won't happen until the last sucker is sucked back into the market
@ricosoma: +1 (I would have gone for the obligatory +10,000, but that would be too easy :) )
We've grown about 40% across the board from the lows of March. In good times, this would be phenomenal and cause for celebration, as it would signal we've come out of our doldrums.
But as in every hurricane, the eye is the calmest part of the storm before the heavier, more destructive winds return. What will be those winds? When Ben Bernanke forces prime interest rates into the high single digits to avoid inflation? When someone so disgruntled with their bosses in Wall Street sings to the FBI about misappropriation and wholesale redistribution of money? When the credit card companies, who can no longer manipulate their profits, crash because no one is using their cards?
I say all of the above, and sooner than you think.
@laffmakr: I raise you the NY Times from 1910. Granted, the economy wasn't invented yet, so this will have to do for its awkward headline phrasing.
I'm sure you could find similar articles from just about any other daily from that time period. Any reason you decided to single out the WSJ?
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-321187-100x100.png\")
@Shivver: Yeah, how unfair to single out the Wall Street Journal, which at least sees itself as America's premier newspaper reporting on the financial markets.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-658088-100x100.png\")
@mythago: You're being factious by default, right? WSJ singled out? Come on folks. I doubt he/she deliberatly singled out the WSJ. LOL. Makes no diffence what paper it is.
@mythago: I'm not saying it's unfair. I'm just saying that by singling them out it makes them appear to be the only newspaper running those kinds of stories. I would imagine that most if not all other papers were running similar stories.
Maybe I'm just reading too much into the political bent of this site lately.
@Shivver: \"
Maybe I'm just reading too much into the political bent of this site lately. \"
I puzzled what you mean? I'll withhold my comments until you get a chance to answer.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-98911-100x100.png\")
@Shivver: Um, perhaps you should do a quick search on who created the Dow Industrial Average. That will answer your question.
@Shivver: I'm just saying that by singling them out it makes them appear to be the only newspaper running those kinds of stories.
Yes, if you live in bizarro world. Here in reality, we recognize that an post recognizing one instance of irrationally exuberant reporting in no way excludes the existence of other examples.
@Michael Belisle: it's ok. I work with people like this also. It's that \"everything is a conspiracy\" mindset. Nothing is ever real, it's always \"what you said means something different and you're just trying to manipulate me\" and \"I'll find out\". LOL.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-1161-100x100.png\")
@Shivver: That was the image I happened to find while looking for Dow 10,000 pictures for a previous post.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-3938-100x100.png\")
Allow me to quote from the \"nonsense\" in the article:
\"What would have to happen for the Dow to make sense at 10000, and for stocks to keep climbing from here?
The short answer: everything has to go right.
The US economy has to keep cruising along without hitting a recessionary pothole or overheating in a burst of inflation that prompts the Fed to slam on the interest rate brakes. Long-term interest rates have to stay down. And global investors -- from mega-money managers to ordinary folks salting away $20 a week in mutual funds -- have to maintain their affection for U.S. stocks.\"
That's hardly Richie Rich throwing $100s in the air while screaming \"PROSPERITY FOREVER WITH NO COST!!!!\"
The point of the article is to note that many had bailed out in the previous 10 years, thinking that the market was a \"bubble\" that had peaked. In each case, those people were proven to be spectacularly wrong, as the DJIA at that point had increased 500% since its 1990 low (and would go on to increase another 10% prior to 9/11 and the 2002-3 recession). The question that the article poses is given this -- otherwise succesful managers being so wrong about the \"bubble\" aspect of the Dow -- what metrics were applicable? How would we REALLY know when the bubble was going to burst?
And the analysis above -- WAS EXACTLY RIGHT. When the mega-managers lost faith in US stocks post-9/11 -- and dragged the average Joes down with them -- the bubble burst. The same basic thing that happened with the mortgage crisis after the Dow hit 14,000.
I fail to see anything wrong with the WSJ's reporting, contemporaneously or in hindsight.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-18124-100x100.png\")
@A Pimp Named DaveR: Stop with your common sense and \"reading\" - it's interrupting our smug embitterment.
@A Pimp Named DaveR: Saying that you find nothing wrong with the reporting is a bit like saying you find nothing wrong with any of the following statements:
- \"Although Obama was almost certainly born in the US, it's possible he wasn't.\"
- \"All evidence suggests that Lee Harvey Oswald acted alone. Even so, he may have been part of a larger conspiracy.\"
- \"While the chance of the Large Hadron Collider is lower than the chance of the Earth spontaneously collapsing in on itself, we cannot rule out the possibility that the LHC may destroy the Earth.
- \"We report. You decide.\"
They covered their ass by making accurate statements, while spouting out bullshit like \"maybe historical comparisons are meaningless\" and questioning whether or not highly-inflated market values are indicative of a bubble.
@Michael Belisle: Again, read the article. The theme is \"why were rational money managers wrong about the market peaking at all those points in the past decade\".
And questioning whether the THEN CURRENT valuations were indicitive of a bubble isn't \"bullshit\". In fact, THEY WEREN'T. The market has more or less maintained the basic P/E ratios that underlie the run-up to 10000 in the 1990s -- which were multiples higher than the \"traditional\" P/Es under which the market had priced stocks since WW2 -- ever since. Because there was a structural change in the US economy (a transition away from manufacturing and towards a service-based economy), there was a structural AND HISTORIC change in the underlying valuations used to price stock.
@A Pimp Named DaveR: WSJ is pretty even-handed when it comes to reporting. It's not light reading, but you certainly get the gist of things better.
And I think in future analyses, WSJ will still be right.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-55601-100x100.png\")
Those headlines are kind of funny -
I've seen similar intoxicating exuberance only matched by the propaganda laced 'news' when in China.
It was 1972 when the Dow Jones Industrial Average finally broke the 1,000 mark. And the spectators went wild.
I like how people were bidding on DOW 10000 hats on eBay for around $150.00 when you could buy them from the exchange for about $15.00
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-68654-100x100.png\")
@Blueskylaw: that, imo, is a better example of what got us into this mess. at some point, we went from \"$150 for a hat? you're f-ing crazy!\" to \"$150 for a hat? ... yeah, i guess i could see that. i mean they're only making so many, right? please, find some way to reinforce this very bad decision for me ... it comes in black!?! SOLD!\"
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-327923-100x100.png\")
Yep then enter Bushenomics and the bubble popped pretty quickly. I just know as soon as he finds the yellow cake in Iraq all will be forgiven. NOT.
@bgd7387:
Bshnmcs.. LL
Y thnk th Prsdnt cntrls cnmc plcy n th .S.?
Ths hd nthng t d wth Bsh. Ths bbbls, brsts, blts nd byts r hw th bnkrs hv bn byng p ntns fr th lst 5 cntrs. Pls wk th fck p.. thnk y..
This is true, however, the bankers were not the ones who declared a bankrupting war which effectively complicates everything else.
@MooseOfReason: Shh...don't bother him. He's just another one of the herd that needs to blame everything on Bush rather than think about real causes. I hear they met up last year in Denver.
\"Maybe we have entered a new era of prosperity and profits that represents such an extraordinary break with the past that historical comparisons are meaningless.\"
Or maybe NOT. What comes up, must come down.
Oh, Wall Street Journal. You happy little puppets of the uber-capitalist establishment, you.
@lzbthD:
Whn ll th wlth s prdcd by th lbr f th mny nd thn rdstrbtd mngst th fw, tht s nt cptlsm, tht s slvry.
Whn th cnmy s cntrlld by lrg cntrlzd bnkng systm whch hlds th prs strngs(nd thrfr th plcy mkng dcsns) f scty's gvrnmnt n t's hnds, tht s ls nt cptlsm.
Pls d nt blm ths Fbn-Sc-Fscst stt n Cptlsm. Thr s nthng fr bt r mrkts nymr.
Cptlsm, f w vr hd t, ws lbbd nd rgltd wy lng tm g.
Th nly wy Cptlsm s t blm fr nnsns lk ths rtcl r th rdcls f th crrnt stt f r cnmy s f prhps th cnsqnc f hvng n pn nd fr mrkt s tht smn wll vntlly try t mv n, tk t vr, nd cntrl t frm th tp dwn.
Ths cmmnt ws brght t y by..
*insert comment about hindsight being 20/20*
Honestly, it must be awesome to smugly sit on your little pedestal and giggle at all those dumb people silly enough to have invested money in the stock market. Obviously they thought it would do nothing but go up forever! Well, they learned their lesson now, didn't they!
Stocks go up and they go down. That's what they do. The key is to get in and out at the right times. Even the often ridiculed on this site Jim Cramer will tell you that buy and hold is a terrible idea. PLENTY of people made PLENTY of money buying and selling stock over the last decade or so, and not ALL of them are evil greedy wall street fat cats. Get with the program.
@smrtmffn:
Yr cmmnt s bsrd. Knw wht ls s 20/20? Cmmn ssns. Thr wr plnty f ppl T TH TM tllng s tht th WSJ ws fll f sht; tht nthr bbbl ws nvtbl bcs tht s hw th gm wrks. Th mrkt s PRPSFLLY nfltd nd shvd dwn th thrts f cmmn nvstrs whl th scm rtsts tk th lt nd rn.
ts hg Pnz schm jst lk th ntr fndtn f r cnmy nd th frctnl rsrv systm.
'm srry bt systm whch rps th mny whl rwrdng th fw wh r slfsh ngh t tk dvntg f t wtht rmrs s nt gd ngh fr mnknd nymr.
t's tm fr hmn bngs t grw th fck p nd strt sllng th TRTH fr hlthy prft, bcs bllsht lk ths rtcl nd lk yr cmmnt jst rn't gd ngh nymr.
n prptts th scknss f th wrld by ssmng tht tkng stpd rsks n rdr t gt rch qck t th xpns f thrs s n nvtbl cnsqnc f bng lv. Prhps y r crrct, bt f s, thn w wll ll b brk nd t n th strts tgthr sm dy. t s th nly wy ths cycl f rp nd bs cn nd p; Mr nd mr ppl n th bttm t spprt th bsty f th ppl t th tp.
Warren Buffett would disagree, considering he's been quoted as saying the best time to sell a stock is \"never.\" If nothing else your advice is dangerous for 99% of the population, who don't know what they're doing and shouldn't be gambling their money on their ability to time the market. Hell, there's a good argument that no one knows what they're doing when it comes to timing the market. Sure some people will have some success here and there, but almost no one will be able to continuously beat the market over a long period of time. It's exactly why Warren Buffett is so famous.
@giggitygoo: It's like musical chairs - you can only hope that when the music stops, you're at the right spot. Unfortunately, the wealthy who can afford to pay money managers usually hear the last note sooner then the common folk, so their percentage losses are much less than everyone else.
@smartmuffin: Even the often ridiculed on this site Jim Cramer will tell you that buy and hold is a terrible idea.
I disagree with the argument that buy and (usually) hold is a terrible idea, so that still doesn't say much for Jim Cramer. Buy and hold is fine, just don't be a dumbass and keep holding Titanic LLC after it hits an iceberg, even if the market consensus is that it's unsinkable.
@Michael Belisle: And have the will to hold when things are down, rather than doing what too many people do and ride out the fall only to jump ship at the bottom.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-405274-100x100.png\")
I remember it well because I was working for Janus Mutual
Funds. They were high on their on BS. I knew it could not last. Just over a year later the entire site was shut down. New paradigm, indeed.
DOWn, baby, DOWn!
What about the fact that the cover price of the WSJ has jumped 267% in the past 10 years?
$2 for the WSJ, of course, is still nothing compared to the $5 or something that I paid for the FT somewhere in Europe.
\"Stocks go up and they go down. That's what they do. The key is to get in and out at the right times.\"
This is accurate.
\"Maybe we have entered a new era of propserity and profits that represents such an extraordinary break with the past that historical comparisons are meaningless.\"
This is not accurate.
In fact, it is misleading and insulting to anyone with half a brain. This is why the picture of the article was posted for us to ridicule. Statements from professionals indicating that the market may be near the peak of a bubble, all wiped away with a grandiose and foolish statement like that, is not the kind of analysis I want from any \"serious\" journalism outlet.
@l_dst:
Wt..
Th Wll Strt Jrnl s srs jrnlsm tlt? LLL
Ths s prpgnd nd msdrctn f th trth. Tht s wht th WSJ hs lwys bn nd wll lwys b. t ws nvr bt jrnlsm. t shldn't tk glbl cnmc mltdwn t rlz ths.
This is a good opportunity to read up on the Austrian theory of the business cycle:
[mises.org]
It explains how bubbles are formed in the first place.
Ugh, you can always count on Mises to forget that currency of fluctuating value is not unique to conventional monetary policy. Any and all 'goods as currency' would fluctuate in value, even a rudimentary barter system would have this problem. Modern monetary policy actually mitigates this problem the best it can.
Like Paul Krugman has said, the WSJ has been wrong about everything important economically.
@Antiks:
Would you care to tell us, what, precisely was so spectacularly \"wrong\" in the above article?
Or did you bother reading it at all?
@ntks:
Dpnds n yr dfntn f wrng.
Sr t hs rprtd th xct ppst f rlty snc ts cncptn, hwvr wld rg tht t s thr ntnt t sbvrt rlty bcs mss pblc dlsn s th nly thng tht kps thr stck ntct.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-887707-100x100.png\")
The stock market value is not an indicator of economic scale. Instead, it is an indicator of how well business is adapting to the present and expected economic scales. A substantial factor in the 2009 Dow rise above 10000 is simply business downsizing to match the economy. They have cut costs, including employees, and are now worth investing in.
A more significant measure would be the total value of all stocks. That would be the stock price times the outstanding issued shares of that stock, summing this product for all public stocks. You'd also want to consider the value of private stock (not traded on public exchanges) and valuation of other businesses.
A higher Dow indicates more people willing to buy than willing to sell. The price rises to equalize the buying and selling. Many stocks are simply not there on the trading floor any more. Many corporations have gone bankrupt and this has actually lowered the net value available for trading. That creates lower supply of stock, which drives price up. In other words, there's surplus of investors with positive future expectations and a shortage of available stock in part because the holders also have the same future expectations. But those expectations have limits, and as soon as the price goes above the average of that, many investors will seek to get the returns on their investment and sell.
Today's market investment isn't so much about how well a business will really do in the future, but rather, it is more about how investors expect other investors to expect other investors to expect other investors to expect other investors to expect other investors to expect other investors to expect other investors to expect the businesses to perform in the near future.
@Skprn:
LLLL!!! Th stck mrkt s Pnz schm nd sn't msr f nythng sbstntl whtsvr xcpt f crs fr th dlsn f th msss.
Th mr gnrnt ppltn s t th wrthlssnss f ts crrncy nd ts mrkts, th hghr th stcks g.
Whn sht gts bd ngh fr ppl t wk p nd rlz thy r bng scrwd, stcks g dwn.
t s sly mnpltd by th cntrl bnkng systm, by spcltn, nd by th bnks thmslvs whch hv bcm n xtnsn f dbt, mlnvstmnt nd pr pnzsm.
Thy CS crsh, gt th tx pyrs t py fr thm t byt th cnmy thy crshd, thn strt th bbbl ll vr gn;xcpt ths tm thy r bggr nd strngr.
vry tm thr's nw crsh, mr nd mr f th mddl clss s wpd t bcs thy hv sccssflly cnvncd mr nd mr ppl t \"nvst\" n thr schm. t mks t sm lk t sn't yr nghbr gttng scrwd, whn y rfr t hm s n \"nvstr\".
t's nt bd ngh tht thy stl frm s n rglr cycls bt hv t lstn t my fllw mrcns mk rgmnts fr th jstfctn f th thft.
Wall Street has become far too wealthy through all of this. They control company's capital, so they can take pretty much whatever cut they want because I can't walk up and buy a stock from GE or CAT or anyone else direct.
The government has also made plenty of incentives to get common people to invest (tax breaks on IRAs and 401ks) even though it's pretty dangerous to risk your whole retirement in the market.
What's to stop fund managers from wanting even more in the future? It's pretty hard to retire without investing, when less and less companies offer a pension and who knows what's happening with social security.
The company that manages my company's 401k took almost $80,000 in fees last year, and they offer little support or insight at all - they just pass people's money along (and that money, of course, was crushed with the market collapse). I can't wait to see the fees this year, since the market is back up.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-307161-100x100.png\")
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-37033-100x100.png\")
![[blogs.discovermagazine.com]](\"http://blogs.discovermagazine.com/cosmicvariance/files/uploads/2007/07/thoma1.png\"){kind=link}
Awesome find, Ben.
Reading some of that stuff makes me chuckle. It is also fun to note that anytime a trends graph starts breaking its usual slope and acclerates its rise... it sure is going to come crashing down soon.
2006: Things have never been so good.
2009: Things have never been so baad.
@MostlyHarmless: Uhh, compound growth is an exponential curve, as is compound interest. So if you invested $1,000 at 4% interest in a CD or something, it would still curve up like that. The real scam is that you can't have exponential growth forever without creating more resources. So we get inflation and growth in money supply that reduces the actual value of the compounded investments to the point where the only value added is the labor of the people and machines that create the products and the technical innovations that develop better products.