Nasdaq 4000 — This Time It's Different? 241
Hugh Pickens DOT Com writes, quoting USA Today "The NASDAQ has topped 4000 for the first time in 13 years, but much has changed since then. ... Tech investors in 2000 were right about the possibilities of the Internet and mobile computing. But they were dead wrong about which companies would be in the vanguard ... The recovery of the NASDAQ has been a complex tale of creative destruction, where old companies that once fueled the index have been pushed aside by new players. Back in 2000, Microsoft, Cisco Systems, Intel, Oracle, and Sun accounted for 8.9%, 8.5%, 7.1%, 3.6% and 2.6%, respectively, of the value of the NASDAQ composite. Today, companies that were just starting out or didn't even exist — think Google, Amazon, and Facebook — are in the top 10, accounting for 4.7%, 2.7% and 1.5% of NASDAQ's value. Microsoft, Cisco and Intel's weight has fallen sharply. Apple, which wasn't in the top 10 in 2000, is a behemoth at 7.9%. So is the NASDAQ enjoying a long overdue catch-up with the rest of the market, or is the broad market overpriced, with the NASDAQ being pulled along for the ride? 'The reality is that the only thing that's the same from Nasdaq 4000 in 1999 and Nasdaq 4000 in 2013,' says Doug Sandler, 'is the number 4000.'"
Comment removed (Score:5, Interesting)
Re:BFD (Score:5, Informative)
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But did they have smartphones?
Re:BFD (Score:4, Interesting)
But did they have smartphones?
The cell phone I had in the year 2000 could memorize more phone numbers than I could; that seemed pretty smart to me for its time. There was even a camera add-on available for it.
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Sorta... For some Motorola flip-phones, there was a PDA that snapped on the back which gave some primitive capabilities over an addressbook.
That is one thing I don't miss... the IT "bat belt" and carrying a cell phone, a PDA, a Blackberry (it was for text messages at the time), a satellite pager, and a MP3 player like a Nomad Jukebox. No, a smartphone isn't as good as each individually, but just one device to worry about is a lot easier than five.
Re:BFD (Score:4, Informative)
The Matrix came out in 1999. Remember those switchblade phones they used? That was a Nokia 8110 [wikipedia.org]... state of the art in 2000. The PalmOS phones wouldn't come out for a few years after that, which are arguably one of the first mass-produced "smart" phones.
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http://en.wikipedia.org/wiki/Nokia_Communicator [wikipedia.org]
Yeah, x86 based too.
though, in the 55" inch tv index we have all gotten incredibly rich in the past 10 years.
Re:BFD (Score:4, Informative)
And you would still have been better off investing in the NASDAQ – once you factor in dividends. The bad thing about these indexes is that forget to factor in dividends.
For the past 13 years (11/30/2000) inflation has averaged about 2.3% NASDAQ has gone up about 3.3%. Once you factored in dividends it goes up to 4.2% which is a bit more respectable. Still lower than from the peak, but still.
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Right, you could sell your house for an inflated amount back then!! oh wait...
Quick and dirty analysis post. (Score:5, Interesting)
This runnup is mostly QE - the Fed printing money - and also the fact that corp profits are at record levels.
But it can't continue forever. I don't see in the fundamentals how corp profits can continue their upward trend. Corp America has cut expense to the bone and getting anymore productivity increases out of their employees just won't happen.
As far as QE is concerned, that money is being borrowed by the hedge funds and other institutional investors very cheaply and funneled back into the market - among other investments like housing. But whenever "tapering" is mentioned, you always see a sell off.
But that's the market.
As far as the economy in general is concerned, we are not recovering - we are recovered. This is all there is, folks and the policy makers are too chicken shit to admit it.
So, what does that mean? As soon as corp profits slide, expect a bit of a sell off but not a crash because all of this QE has inflated asset prices Although, if interest rates spike, there could very well be a huge (20%) correction.
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There's no production capacity problem. There's a demand problem. There's no scarcity of labor. Obviously, the solution is to create money and use it to empower individuals, instead of corporations.
Re:Quick and dirty analysis post. (Score:4, Interesting)
There's no production capacity problem. There's a demand problem
Nope, we're past that now. This is business-cycle-as-usual, and heavy industry is doing capacity build-out. Other goods and services will follow in the years to come (the usual business cycle is 10+ years).
When coming off the bad times, the first areas to improve are big-ticket consumer items, from cars to washing machines. Stuff people have been fixing (or just working around) instead of replacing for years, but finally the annoyance has exceeded fear of things getting worse. So right now there's demand for those items, and energy/raw materials are at the very bottom of the cycle, price-wise, so heavy industry is gearing up.
Right now energy companies and raw materials have demand ramping up and prices are starting to follow (up from 2009, but not really high yet), but in a while (not this Christmas) we'll see the next leg up, where demand comes for more "fun" consumer items and people finally start to admit to themselves the recession is over.
Re:Quick and dirty analysis post. (Score:4, Funny)
it's "phony" because it's mostly because of asset inflation because of all that money being printed. In other words, I really didn't gain.
If you think your investments aren't really worth their valuation, they why don't you sell them? Put your money in inflation protected bonds, and sit out the crash that you are so sure is coming.
And I just got back from the supermarket where I just paid $0.99 for a tomato - one tomato
That is not caused by inflation. Look at the calendar. It is late November. Where do you think tomatoes come from?
Good news for all us have-nots!!! (Score:5, Funny)
Now it's bound to trickle down to us, right?
Re:Good news for all us have-nots!!! (Score:5, Insightful)
Pretty on the nose there. The headline asks "This time it's different?" The answer is "yes, this time the employees aren't seeing any of the money"
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Well yes and no.
The problem during the Tech Bubble, was the industry was Employee Driven. In order to get employees you needed to offer them a lot to get them. Hence the 6 Figure Web developers, and all this other stuff.
The bubble popped, and it became Employer driven. So the Employees want these jobs and will follow the demands of the employer.
So right now trickle down isn't working, because we still have an Employer market.
That said they are hiring more as their companies grows and that does trickle dow
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Except that, you know, in the face of absurdly high corporate profits, employees still eat the bullet because that's made up nonsense. Trickle down never works. It has never worked. And trying just leads to abuse and human suffering.
Re:Good news for all us have-nots!!! (Score:5, Insightful)
I think trickle down has always been premised on the idea that rich people and CEO's would voluntarily do the right thing with their money and increased profits. It's premised on the idea that a CEO would act in the best interests of the company and invest his profits the company's long-term future--not just go for the quick short-term profit, use it to pay himself a big bonus, and then bail with his golden parachute when the long-term problems hit. It's premised on the idea that a rich individual is going to share his wealth (hiring more servants, buying more stuff, and spreading it around)--not just horde his money and be a cheapskate fuck to the illegal immigrants he hires on the cheap to do all the work around his mansion.
In other words, the premise that trickle-down is based on is complete bullshit, as has been evidenced by over three decades now in the U.S. of watching money NOT trickling down for shit.
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No it's based on the flawed assumption that companies hire employees based on available resources, not the amount of work they have to get done. If you lower their tax burdens(and their investor's) then they'd hire more people. The reality is that companies will perform layoffs with record profits(mine sure did).
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I don't know what "trickle down" even means, but life sucks for everyone in a recession, and is better for everyone in the boom times.
The average man's wage is always going to buy an average amount of stuff. When the economy as a whole stumbles, we make less stuff, and during the boom times we make more stuff. The total dollar value of that stuff is largely irrelevant.
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It seems like every two weeks my employer transfers money into my bank account. But maybe you're right and I'm wrong.
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Hope you don't mind that it's less than the average developer was getting in 1999 even before inflation adjustment.
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I actually dropped out of college in 1999 because I was offered a job as a developer. Salaries were *ridiculously* overinflated. A 21 year old who doesn't know shit about anything should not have been making $45k/year in a medium sized city.
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Pretty on the nose there. The headline asks "This time it's different?" The answer is "yes, this time the employees aren't seeing any of the money"
Meaning they're actually getting paid instead of getting worthless stock options that supposedly will be worth a bazillion dollars when the firm IPOs (I've got lots of pretty wallpaper from the previous bubble to remind me NOT to go for stock options).
cheers,
Dave
Re:Good news for all us have-nots!!! (Score:5, Insightful)
Battered down? More like bought themselves into paycheck to paycheck living.
Need proof of this? Take a look at your neighbors. If they're anything like the typical American family today they're driving a car that is worth nearly as much as their home, both of which they're still likely making payments on unless they're in their 60s. 3-4 TV, 3-4 cable boxes, 3-4 media players, hundreds of movies that they've either never watched or watched twice and will never be seen again. Smartphones for dumb kids and 60 dollar video games that have even less ROI than the BluRays and DVDs. Big cable bills for 850 channels that never get watched. Trips to Disneyland that cost more than a year's tuition for junior to go to state college. 40 dollar t-shirts with a NFL teams name printed across it. Tablets and MP3 players that become paper weights after a year because of the flawed perception of obsolescence. Half a day's wages to watch the latest CGI frag-fest with average shot lengths under 2 seconds and music/sound that's louder than a train...
We've gone crazy is what it is. We consume like we're millionaires even thought we see the bills coming in and knowing it's not going good. But no biggie... bankruptcy is there to save us all, right?
People who blame companies for what people consume are about as insightful as people who blame spoons for obesity. Markets don't create themselves without consumers. Not in the long term anyway and certainly in no great numbers. Wasteful spending is the order of the day because people have no desire to live lives that are practical and sane.
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It is indeed astonishing how consumer driven and wasteful we all are. Owning things doesn't make me happy, some things I own do help me do things that are fun. But I think life is more about personal experiences, learning and developing yourself and the lives of those around you. I am having a very difficult time teaching this to my three children, they are at the age where they don't listen to me so much anymore and they listen to their peers - who all have the same opinions that they have. We would all do
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And the median household income is $50,054 [wikipedia.org], which means that the "average" household can't afford the "average" house or the "average" car. This is the problem the GP was attempting to illustrate.
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Okay, fine.
Let's assume your argument that home buyers tend to have higher incomes than renters is correct. In that case, the median household income among renters must be significantly less than the $50,054 I mentioned before. Using the common "30% of income" housing affordability rule-of-thumb, that means the median renter can afford "significantly less than" $1251 per month.
Unfortunately for your argument, the average US rent is actually $1,231 per month [cbsnews.com] -- pretty damn close to th
Re:Good news for all us have-nots!!! (Score:4, Informative)
Anyone can live paycheck to paycheck.
I have a colleague who makes mid 6 figures and still can't manage to save more than what's put in automatically to his 401k equivalent by our employer. I also know several friends making ~80K a year that are on the verge of bankruptcy.
It's called living below your means. If you can afford a 1200/month rent, pay 1000/month and put the rest away in long term savings. Put it into an ETF (exchange traded fund) and get an average 5% per year growth.
1 year - $2454
2 years - $5031
3 years - $7737
4 years - $10579
10 years - $30873
The miracle of compounded interest.
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Please, list some of these ETFs that have made 5% returns for at least 10 years every year.
Seriously, I would love to invest in those.
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Try an S&P 500 index fund at either Fidelity or Vanguard. Average rate of return over the past 100+ years for the S&P 500 has been around 10%. That includes both the Great Depression and the recent recession. Not sexy but just keeps churning out money. I recommend the funds at those specific firms because they both have extremely low management fees (less that 0.1%).
I stay away from ETFs. They are a neat idea but the trading costs can easily eat up any profits you make. It costs me just the ma
Re:Good news for all us have-nots!!! (Score:4)
No, in general you want to avoid the ones that did great for the past few years, as it's someone new's turn; otherwise investing would be easy!
But the S&P500 is up over 50% over the past 10 years (much of that just happened this year), so you should have to look far. Unless of curse you're looking for stocks that never go down - sorry, stocks don't work that way. The reason stocks have been the best investment for any 30 years period for 100+ years is precisely because for any 3 year period they can make you cry.
Re:Good news for all us have-nots!!! (Score:4, Insightful)
Now it's bound to trickle down to us, right?
Only if you put some skin into the game. You did invest in the stock market after the real estate crash, right?
I was fortunate enough to have some spare cash to invest. My only regret is that I didn't put more in over the last two years. It's my opinion, though, that we are near the end of the bull market. I'm thinking that interest rates will go up and the shift will be to the bond market once Quantitative Easing ends. But, I am not a professional analyst, it's just my personal opinion...
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Heh, the best investments I've made so far in life were in real-estate-related companies back in the darkest times. Half of my picks failed, the others gained 5-10x in just a few years. Sadly, my current bet on emerging markets is proving my lack of genius in investing. Oh well, can't win em all.
BTW, interest rates are already going up, but that means it's a terrible time for the bond market - as rates rise the price of existing bonds falls, and long-term bonds fall dramatically. I was late getting out
Re:Good news for all us have-nots!!! (Score:5, Informative)
There's no reason you can't start collecting on that trickle at an early age. At 23 years old, I had $600 to my name back in '82, and on the advice of a broker (and remembering that my grandmother had invested in the same company) purchased 60 shares of Detroit Edison. I joined their dividend reinvestment program (DRIP), which was much better back then (no fees, and 5% discount to the market price). I've long since sold the original 60 shares, and only hold onto those that were accumulated via dividends and reinvestment...now worth about $20k.
If you participate in a 401k, chances are that you're already in the market, and enjoying some trickle.
Do some homework on the markets, it's much easier now than when I started. It's not only for 1 percenters.
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If someone opposed that system, why would they participate in it?
Note I am not speaking of myself.
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I really doubt you are a have not. Funny how most people want to claim (and take pride in announcing) to be part of this non-exclusive club.
I could be completely wrong, but I'm guessing that most people who hang out on this board would not qualify as true Have-Nots. I took it to mean people who are working for a living and who haven't gotten a decent raise in a few years. Otherwise, we are talking about the truly poor and, for them, what the stock market does is inconsequential. It's more important to them to feed and cloth their family and try to get a better job.
Facebook is still overvalued (Score:5, Insightful)
Re:Facebook is still overvalued (Score:4, Interesting)
Re:Facebook is still overvalued (Score:5, Insightful)
Over the last 12 months, Facebook, had revenues of nearly $7B and profits of about $1B. You can argue that their stock is overvalued (and I'd tend to agree), but they clearly have a pretty solid business plan.
http://finance.yahoo.com/q/ks?s=FB+Key+Statistics [yahoo.com]
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what is their business plan?
Maybe aggregate a wealth of information on people for whatever purposes the highest bidder may pay. But then again, NSA and Marketing would have no need for any of that so I'm probably wrong.
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what is their business plan?
Maybe aggregate a wealth of information on people for whatever purposes the highest bidder may pay. But then again, NSA and Marketing would have no need for any of that so I'm probably wrong.
Selling ads only gets you so far, if people don't click on the ads you show them (regardless of how tailored they are) or more importantly don't actually buy anything from the people the ads are for. Eventually people will stop advertising on facebook when they realize that they aren't generating enough money from the ads to justify their costs. At that point, the whole business collapses as the NSA already has all the data they need (and wouldn't pay facebook for data anyways).
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Selling ads works for Google.
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If they're so smart, how come I keep getting "Hello Kitty" adverts from Amazon?
Slashdot cries wolf - again. (Score:2)
*Yawn* Slashdot has been predicting the imminent end of Facebook since about thirty seconds after it first became available to the general public - almost ten years on, and it still hasn't happened. If/when Facebook crashes Slashdot will crow about how they've been 'right all along', conveniently forgetting that even a stopped clock is right twice a day.
Re:Facebook is still overvalued (Score:4, Interesting)
Facebook had $2.02 billion in revenue [fastcompany.com] this past quarter, the bulk of which is advertising, up from $1.59 billion a year ago, and generating $621 million in quarterly profits. [nytimes.com].
They have a good chunk of the worldwide digital advertising market and seek to expand further, especially through mobile. That's their plan.
Re:Facebook is still overvalued (Score:4, Insightful)
Facebook allows a granularity of advertising targeting that was hard to get before. For example, I've been involved in a community organizing effort that had trouble getting media attention and had no real budget for advertising, and I've found that $50 in Facebook advertising targeted to our zipcode got us about ~5000 views and ~150 clicks. That was about as much participation as we got in months of free community newspapers articles, and we largely hit a different audience.
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There is a point where advertising has a place as a market, but right now, sites like Facebook are playing the game of offering advertisers a bit more info, notching up the intrusiveness on subscribers just a bit more.
One can compare this to boiling the frog. But, there is a point where people will say enough is enough and move to another social network (even though VK is Russian, it functions closely enough to Facebook that the learning curve wouldn't be that difficult), or G+ (where there are actually in
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This makes no sense to me. First of all, G+ is a non-starter because Google is even worse than Facebook about collecting all the data they can on everyone who touches their services and trying to sell to them. If it ever were to catch on (however unlikely that may be), you'd see the exact same thing there or worse. The rest, well, if you can't monetize it somehow, who's going to pay the developers to develop it? A bunch of enthusiasts only gets you so far, and won't be able to keep up with an organizati
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All of that is true. However, in the past, people said that MySpace would never die. FB has some long term obstacles:
1: Right now, they can keep expanding market by getting more and more info from their subscriber base. However, if some event happens where people start valuing privacy, people can leave in a heartbeat. There is nothing FB offers that G+, MySpace, or VK doesn't, other than being the central watering hole.
2: FB keeps getting new advertisers because they can promise more and more info fro
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I hate FaceBook as much as the next guy (and refuse to use it) but their business plan is actually pretty straightforward. They sell ads and data about users to advertisers. They're part of the cadre that's turned the Internet into 21st Century TV.
The better criticism of FB's current valuation is that it projects too much growth. The user base is kind of saturated. Once you have a double-digit percentage of the entire planet, it's hard to go much higher. If they try to grow revenue through increasing a
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The better criticism of FB's current valuation is that it projects too much growth. The user base is kind of saturated. Once you have a double-digit percentage of the entire planet, it's hard to go much higher. If they try to grow revenue through increasing advertising, they run the risk of alienating users.
Spot on. Facebook is a classic example of a good company that's a bad stock, due to its high valuation. As shown by Yahoo Finance [yahoo.com], Facebook's trailing P/E is over 100 and its forward P/E is over 40. That's compared to a typical "growth" company that might have P/E's of 15-30. So why is Facebook worth several times what investors are currently paying for companies that still have room to grow? Just doesn't make any sense.
However, that's not surprising for a company that has a double-digit percentage of
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How long before the user base starts to decline precipitously? There's the mom factor. For all the young kids who get a kick out of posting outrageous stuff to Facebook, the fact that their mom is now on facebook is a killer. There’s the “it’s the new email” factor. By that I mean, it’s the new thing that everyone uses to communicate, so I get tons of useless shit, and I mostly ignore it all now. I think you can spot this with Facebook event RSVPs having earlier been more
Free FED's Money (Score:2)
How nice is to have private bank's cartel that prints and prints the money like there is no tomorrow.
Stocks up, profit up, US people deeper and deeper in debt.
Perpetuum mobile for Wall Street.
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I agree. 'Wall Street breaks record' is just a sign of the end of the bubble.
Expect it to come down hard and fast once the QE backs off.
Yes, please tell where the market will go next. (Score:4, Informative)
...but don't tell everyone, just me.
If you can predict its future behavior, it's not a market. "Technical analysis" is today's astrology, and like yesterday's astrology, it works only so long as you're surrounded by believers.
That said, there are ways to reliably outperform the market:
I've got money in the market, because in general it outperforms other investments over the time horizon I'm facing. But I don't delude myself that I can outrun the pack.
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Or, you could simply put your money into the S&P500, and do pretty well. You'd also save yourself a lot on broker fees, and the headaches of researching individual companies. Here's a chart going back to 1950. You can clearly see the "Internet bubble", and the collapse from from the housing bubble as well. But, over time, it's essentially, a continuous climb.
http://finance.yahoo.com/q/bc?s= [yahoo.com]^GSPC&t=my&l=on&z=l&q=l&c=
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Yup.
You can't beat the averages. People who try always finish behind the averages because their costs are higher or they take on more risk.
Take the pro money managers on Wall Street and track their picks over time and you will find random selection actually gets better results.
There is no persistence in managed investments. There is no correlation year to year in actively managed funds. Major ratings agencies actually find that their ratings are anti-correlated with future performance.
What you can do is con
Blowing bubbles again? (Score:4, Interesting)
I think the world is starting to wise up. The idea that the market is anything but a casino has taken root. It is demonstrable that the current highs in the market have little to no effect on the rest of the economy as [real] unemployment continues to grow, as businesses continue to decline, as welfare programs grow and on and on. Is the word recession or depression? I can never quite tell the difference and it doesn't help that the media and the players making money in all of this are in complete public denial over all of this.
The pedestrian banks are going to begin charging customers for keeping their money in accounts as interest rates are lowered to the point that lending profits are too low for operations to continue.
All of this and they have the gall to report on the market's activities as if it represented the economic health of the nation or the world? This reality is too big to hide any longer. This is especially true as the house votes to restore the conditions which trashed the world economy [congress.gov] back when things really went bad before. It has passed the house but not yet the senate. I can't imagine what these people are thinking except that they don't care about the larger economy in the slightest and that's pretty much the 99% of us.
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Having played in that "casino" for over 30 years, I'll call BS. Unemployment has always been a lagging indicator of the direction of the overall economy, while the markets are forward looking. You can certainly approach it that way by placing your money on more risky companies, but that's entirely up to the individual investor. There are plenty of lower risk investment vehicles...S&P500, utilities (I have my own anecdote on that one above), etc. where you can put money down long term, and expect a de
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That doesn't quite account for the rapid devaluation of the dollar resulting from "quantitative easing" by the Federal Reserve Bank does it?
Re:Blowing bubbles again? (Score:5, Informative)
What rapid devaluation? The one happening inside your head?
Here in the real world, inflation has been less than 2.5% annually since 2008, lower than in any similar period in at least 50 years.
Re:Blowing bubbles again? (Score:4, Insightful)
If your 401(k) retirement savings are getting high return, they probably also have a high risk. Whether that's right for you or not depends on how close you are to retiring, but generally speaking, a modest return from a retirement plan is a safe idea. If you want to gamble on high-return stocks, use disposable money for that.
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My Northrop-Grumman stock (401-K) has almost doubled over the last year. I don't consider NOC to be high risk. S&P 500 (rollover IRA from 401-K) is up just under 29% for the year. Again, not high risk.
Cheers,
Dave
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If you've only gotten a 9% return in the past 12 months, you should either be near retirement or are way too conservative in your fund choices. I have a very diversified portfolio and still easily have a return above 20% in the last 12 months.
or made the wrong bets... (Score:2)
There are plenty of big name stocks that have gone down or stagnated over the past 12 months. I own several of them. No need to assume someone is too conservative just because they don't match your gains.
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That is a good point. My money is mainly in market indexed accounts and my last twelve months have seen a 22% return. Trying to pick winners and losers seems like a losers game to me. Granted this means when the market is down so will my value but the market in the long run has pretty good returns as a whole. We keep a six month buffer in savings and the rest we invest into market indexed funds.
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Buying individual stocks is a sucker's game. Basically you are taking on something that the statisticians call uncompensated risk when you do it. That risk is why you only made 9% this year.
Much better to invest through low cost index funds.
Eugene Fama baby. 2013 Nobel Memorial Prize in Economic Sciences.
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Macro-economics is more psychology nowadays... (Score:5, Interesting)
At the scale of the US economy, it's important how people 'feel'. If people feel like things are crashing or will crash, then things will crash. If that means 'printing money' to make people *feel* like things are good, then so be it. Obviously you can't do that indefinitely, but if you have no flexibility then things have historically proven to bubble and crash.
It does mean that comparing most economic indicators is not necessarily apples to apples, but if people *feel* like it is, and it makes people willing to move money, then it does have some value. The key is finding the right balance between inflexible metric, mob rule economy, central manipulation of the markets, etc.
Re:Macro-economics is more psychology nowadays... (Score:4, Insightful)
At the scale of the US economy, it's important how people 'feel'. If people feel like things are crashing or will crash, then things will crash. If that means 'printing money' to make people *feel* like things are good, then so be it. Obviously you can't do that indefinitely, but if you have no flexibility then things have historically proven to bubble and crash.
I guess, if all you have is a hammer, then everything looks like a nail. The problem here is twofold. Bubbles and crashes aren't inherently bad in themselves. They're just a manifestation of imperfect knowledge and that's not going away.
They also happen with greater severity when someone tries to game the psychology of economies. The 2007-2008 real estate crash, for example, can be traced back to nation-level policies which freed a lot of easy leverage in North America and Europe for real estate. These policies were enacted in order to recover from various economic problems of 1998-2002.
Good and bad... (Score:3)
The danger here is that there is some speculation involved, but if not for the Quantitative easing, we may well have been on the trajectory to a repeat of the great depression. A lot of theory suggests that such moves globally might have averted the great depression. You are right that bubbles and crashes to some extent is not bad, but no one can deny that the great depression was bad.
This is not to say governments should feel they have free reign to print money (see Germany post world war i, the confeder
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This, so very much.
The fundamental point of the economy is to let people get what they want. Ideally, if I want a product, I will be able to get it, and the person I got it from will be able to get whatever he wants, too. Volume is king.
Ultimately, it doesn't matter whether a loaf of bread costs $1 or $100, as long as people can get a loaf of bread when they want it without too much hassle. It doesn't matter that trillions of dollars got dumped into some particular accounts, as long as those trillions are
Betteridge's law of headlines... (Score:5, Insightful)
Again, the answer is 'no'. Some people think the age of the companies is different, and the problem last time was too much faith in fuddy-duddy old companies. No, they were just in the position to be riding high on the influx of VC to all sorts of new, not established startups that had to buy their hardware and software from *somewhere*. The bubble popped around the new companies first, not the old. The big, 'old' companies suffered the downstream effects of that bubble going away.
Again, we see the signs all over the place of the late 90s. Massive investment in endeavors without any sign of profitability yet and not really a good sign of how profitability will occur (hello Snapchat). Lot's of 'new blood' with money being spent under the assumption that 'oh, these whipper-snappers are refreshing, new, and might completely change the world *this* time for a long term and better be a part of that'.
The bulk of Amazon's success is still yet predicated on operating on razor-thin margins (and you already see investors grumbling). Their EC2 unit is currently the beneficiary of the same dot-com rush that the 'old' companies benefitted from in the late 90s. Facebook I'm not quite sure about, but it does seem to be a potentially troubling sign they feel they have to shell out billions frequently in order to stay 'cool'. Google and Apple are about the only one of the mentioned three that I think has an undeniably working business model without a huge sign of long-term problems (well, except for 'growth' might plateau since there is only so far they can go). I do think in another economic downturn, Apple would go down pretty hard since market tolerance for premium brands gets hit hardest.
2000-2013 comparison (Score:2)
Economy is in a much better shape now. Top 10 NASDAQ companies are producing tons goods and giving 1000's of jobs to the people.
Thanks god society is eager to buy those "likes" thingies that boost the economy. And what about those "character" things? 1 is not enough, everybody wants 140 of 'em!
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"giving 1000's of jobs to the people"
And the US still has 7.4 pct U-3 unemployment and it worse in many other places in the world. Maybe if people and corporations stopped hoarding wealth we could pay for important things, such as infrastructure, and put people back to work.
No, it isn't different (Score:2)
There are still companies that are incredibly over valued in the Nasdaq and the entire stock market (not just Nasdaq) has been inflated by the Fed QE of 85 billion a month.
It will come tumbling down and then we'll start the whole thing over again.
(that is when you buy)
articles like this shout "bubble" (Score:2)
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Valuate?
Wasn't 2000 in the middle of a bubble? (Score:2)
So that does not bode well. But maybe it's different this time. Or maybe I just don't "get it". Or maybe it's a new economy.
Probably not. My advice, run for the hills while you still can.
SELL!!! (Score:2)
about to fall (Score:2)
We got the recovery we asked for (Score:3)
This is a Wall Street recovery, not a Working Man recovery. Keynesian is an epithet nowadays, so instead of going the 1930s route and investing in infrastructure and public works to put working stiffs back in the field, we elected to dump money on Wall Street until the investors felt happy enough to start diversifying out of their tortoise shells. No one should be surprised that the effect is great stock prices and mediocre, trickle-down improvements in the economy everywhere else.
These index milestones are irrelevant except for the fact that the trickle down effect might raise the flow up to Babbling Brook.
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Keynesian is an epithet nowadays? Only if you're in the Tea Party movement. This would be the second time it has "worked", with actual unemployment and general market outlook increasing as a result of federal stimulus (aka wonton spending). It actually has sent money to infrastructure. Given that the collapse eliminated trillions upon trillions of dollars of "equity," and was the biggest collapse since 1929 (which took close to 15 years of stimulus to dig out of).
People forget that the unemployment rate t
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I disagree w/ your comments about the "new" economy. We still need those manufacturing, agriculture, and manual labor jobs. We just decided to pay indentured servants sucking toxic fumes in Asia 1/10 and Latin American illegal immigrants 1/2 the cost to do the work.
Different? Indeed. (Score:2)
Multiple expansion (Score:2)
With the S&P 500 up about 28% for the year, yet corporate profits up by only a fraction of that, what I think what we're seeing is "multiple expansion", that is, higher P/Es, which indicates investors are willing to pay more per dollar of profit. I don't think that's reached "bubble" status yet, but it's hard to find bargains in the market at the moment, and the bargain stocks I bought a couple of years ago now seem to be fully valued.
With regard to the NASDAQ, I think we're seeing a mixture of new thi
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Corporate profits are up around 20%. There really isn't much multiple expansion.
Really P/Es are pretty much where they should be compared to historical averages. The real question is what the end of QE will do to corp profits.
The people I feel sorry for are those who sold at the bottom or those who don't realize that you buy stocks when everyone else is selling, not at the top of the market.
What I do is pretty simple. Keep about 60% in low cost index funds the rest in bonds or cash. Costs really do matter o
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A decentralized network of social networks likely will be a better replacement for Facebook than anything else, just like E-mail is decentralized for the most part.
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The one thing keeping the dollar from hyperinflating is the fact that oil transactions are done in USD. A move to the basket system by OPEC... and there will be a world of hurt.
I wonder if BitCoin may end up being the world's "lingua franca" currency, sooner or later. The downside is that all transaction chains are public, but that can also be an upside to show that a business's books are legit.
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The one thing keeping the dollar from hyperinflating is the fact that oil transactions are done in USD.
And that 350 million people have to pay their taxes in US dollars.
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I wonder if BitCoin may end up being the world's "lingua franca" currency, sooner or later
I continue to be amazed at the faith in BitCoin displayed.
No, you won't be constructing a massive large scale stable economic system out of bitcoin. History has shown at modern economic scale, *some* degree of money manipulation has to occur to counteract the realities of human psychology. People romanticize the gold standard and assume it was left because some nefarious plot by the powerful. It was left because a relatively hard fixed resource that a critical mass of people consider to be 'currency' res
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If I were to have my ideal currency, it would be a Chaumian one based on a precious metal or combination of metals. Gold is an OK candidate, but platinum, palladium, and others are also useful.
That way, if you get one unit of this currency, it translates to one troy ounce of metal.
Of course, this was done before (see eGold), but if done right starting from the ground up, it might be something acceptable by all parties.
There is a downside though... unlike a fiat currency which can expand to handle a booming
Re:What if you could earn money on a CD? (Score:4, Informative)
I cashed out of the equities the afternoon that putz dubya signed the tarp. I doubt I'll ever be back.
IOW: "I got scared, cashed out at nearly the lowest point possible, lost a ton of money, missed a historic run-up and now I'm bitter!"
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I use CDs as a place to park money for semi-long times. As an investment, meh. I've done worse [1].
These days, I focus on stocks that are stable, tough to kill, and don't feel bad ethically by owning them. RedHat comes to mind, because they actually expand the "pie" and make new things.
I also have done some personal loaning. A couple thousand lent to a farmer so he can increase his animal head count and have plenty of fowl ready to slaughter come T-day is one example. A bank wants to charge 15% APR, I
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How do you do #2 without a lot of work? I like the idea of microloans where someone else does the legwork and paperwork but I don't have the know-how to find a farmer, convince him to borrow from me instead of a bank, and then do the paperwork right.
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Friends of friends mainly. One should never mix business with friendship, but loaning to someone at the right time can be a good thing.
One person had his CNC sign making business grind to a halt due to his core mill having a clutch implode. A few thousand, and he is grinding signs again.
Another had a lucky break with livestock boosting headcount. So, a loan for additional feed got him a fairly large sum of cash when it came time to get the animals to market a few months later. I got my interest on the l