After shedding nearly 60 points or 3% Tuesday night, the S&P 500 regained 35 last night or 1.8%, ironically spurred along by more poor economic data out of the US, meaning less likelihood of Fed tightening (bad news is good news for pretend markets). Whilst there is no doubting the volatility of markets at present there is plenty of debate around “correction”, “bear”, or “crash”. The S&P500 is now down 5.3% this year (by the way gold is up 11.1% and silver up 8.9% in AUD terms), that’s nowhere near the 20% required to be technically a “bear”. So where to from here? These 3 graphs tell a compelling tale… (oh and why just US share talk? Because whilst the rest of the world is going backwards, the US is supposedly our saviour…. You make your own mind up…). First – crossing ‘the line in the sand’… Second – as we keep harping on – these are not values based on fundamentals – just an easy money bubble… (Google CAPE – it’s the more instructive P/E measure out there). You only need one hand to count how many times it’s been higher… Third – they don’t call this the “death cross” for nothing…
"Stocks are down 5% and gold is up 11%", yeah, but the game is the long run. As an aside, does the quotation that stocks are down 5% include dividend payments, or simply stock prices. Lots of pm folks, since gold does not pay dividends, "conveniently" never factor this in. I have a miner now paying nearly 7% dividends. Not picking a side sir, I own both. I will say trying to brag about an 11% increase after the history making shellacing pm has had over the past few years will sound kind of hollow. I bet the guy who paid $1800 for gold, or $45 for silver, is too awfully excited about it.
This is a correction in the market. It raced upward while basically our economy remained stagnate. The only other positive was the housing market which continued up with good sales and property values increasing. The correction could last through September, which has always been a bad month for the market, and to the end of the year, but we should see and upswing late December and into next year. My opinion only, I'm not an economist.
Our economy remained stagnant? I would say economic growth numbers here have been pretty good this year, and most economists would agree. Of course its uneven, it usually is, but most indicators are up. One thing to remember about the stock market is usually it goes up before the economy heats up, and it cools down long before a recession hits. 2008/09 was an anomaly due to liquidity. But in general there IS a slight disconnect between the two, with the market trying to predict a year or two out and price it into equities. This causes the things that confuse the general public, like the market going up coming out of a recession before profits have started to increase, or the market going down when the economy is still going well. Lots of very bright people trying to be the first to act on new knowledge. Not saying they are always right by any means, just explaining something that confuses many people.
No, I believe he used almost 100 years of history. Something like 27 corrections (drops of 10%) and they all recovered 100%, NO exceptions, but you know this. Why are you busting bkozak for stating facts????? http://www.yardeni.com/pub/sp500corrbear.pdf
Agreed 100%, and one of the oddest things is markets go up strongly when things look less than stellar. When everything looks perfect, it is much too late as all the sideline money is already in the market, so the amount of new money to flow in is decreased and things turn. Markets are funny!!!!
I see a lot of short term views in this. The market has done exceptionally well in the last year or two. Look where everything was 5 years ago. Housing was in the dumps, jobs were in the dumps, stocks were in the dumps. I remember losing my shirt on AIG (only to have them yell out "GOVERNMENT BACKED DO OVER!") and turn immediate profit - because they wrote their losses off to the taxpayers. There was nowhere to go but up. Gold was at an all time high because of fear and protectionist strategy. Of course it looks good the last year or two. It had nowhere to go but up, or the entire USA would have become defunct. Nobody is addressing the dramatic inflation of government. Taxes have gone up, fees have gone up, massive expansion of IRS and other entities, a new healthcare system at both state and federal levels. More people taking from private enterprise than ever before. A lot of these were jobs that were created that brought consumers back were government jobs - and re-distribution of wealth. Nobody is acknowledging the massive burden these increased costs will have on the economy yet. I encourage everyone to look back to the early 90's and see how the markets played out after the big crash and recession - because I am betting we will see the same effects over the next few years. Given enough time, costs of all types go up. Stocks, bonds, metals, real estate - even beer! If you bought a house in 2006 expecting it to go up in 3 years, you didn't have a realistic horizon. If you bought in 2000, even in 2010 you still had some equity and now 5 years later were unaffected. Now I need to write to my congressman about the cost of beer... This is getting serious!
Actually Gold is not up 11%, The uh hum "author" quoted Gold against the AUD. I know his company is "down under" but still extremely misleading as Gold is Priced USD. Gold is actually down 7.5% against the Greenback including today's whomping. This is slighly worse than the S&P this year. So the only thing the OP told us was it would have been better off for Aussies to be selling AUD and buying USD instead of purchasing Gold.
The capitalists are never satisfied. I see the recovery in my investments. Maybe it's more political than everything. I'm up in the market but down in the precious metals. Maybe they aren't as precious as before. Are they panicking, not believing or just plain stupid? I have invested in both so don't complain about one. I have them both. Why is everyone so one sided?
Not everyone but just a point, there are much more than two sides. you don't need them all covered, but the correct number is most likley more than one. I personally like three.
