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Cracked the 9k mark again.
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I think its interesting. Year over year everyones earnings look like shit. But many are above "low expectations".
The 3M and Intel numbers were sure nice. I wonder if this is a sign of a 4th qtr recovery, dispite Vllads shipping info. Or is this just antoehr speculators run....
Maul, the Bashing Shamie
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Wow, another bubble. So soon.
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yeah its going to spike up and down like crazy on the next 18-24 months. Alot of money is going to get won and lost.
Gameless (for now)
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Yeah, I don't get it. What are they seeing that makes them figure now is a great time to load up on stock in preparation for further climbs to greater riches?
Or is it just a game of "pass the bomb" where everyone is buying, getting a small rise and selling to the next guy who does the same thing, all hoping they aren't the ones holding the bomb when it finally goes off?
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I don't understand how the stock market is any indication of economic recovery. The stock market is where people buy things with the hope that in the future they will increase in value. When stocks are really cheap you having nothing to lose so you can hang on to risk for much greater periods of time.
Good Dow could also mean we are in the middle of the disaster.
I just have a hard time connecting the stock markets to economies. They sometimes connect but sometimes they don't.
Vllad
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Vllad Wrote:I don't understand how the stock market is any indication of economic recovery. The stock market is where people buy things with the hope that in the future they will increase in value. When stocks are really cheap you having nothing to lose so you can hang on to risk for much greater periods of time.
Good Dow could also mean we are in the middle of the disaster.
I just have a hard time connecting the stock markets to economies. They sometimes connect but sometimes they don't.
Vllad
When you buy a stock, you're essentially buying the future earning potential of the underlining company. Stock markets' use as a leading indicator is only as good as the collective wisdom of the market participants.
"Hamilton is really a Colossus to the anti republican party. Without numbers he is an host within himself. They have got themselves into a defile where they might be finished but too much security on the republican part will give time to his talents and indefatigableness to extricate them. We have had only middling performances to oppose to him. In truth when he comes forward there is nobody but yourself who can meet him. His adversaries having begun the attack he has the advantage of answering them and remains unanswered himself. For God's sake take up your pen and give a fundamental reply to Curtius and Camillas" - Thomas Jefferson to James Madison
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Yea but its definitly not a measurement of economic performance, but more economic confidence.
Still its usually a leading indicator of something.........
I will say that Slamz point on "little games" is way to often true. To many day traders. Even mosty of the mutual fund and ETF guys are day traders (read momentum traders) now.
Just another form of vegas.
Maul, the Bashing Shamie
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Dustie Wrote:Vllad Wrote:I don't understand how the stock market is any indication of economic recovery. The stock market is where people buy things with the hope that in the future they will increase in value. When stocks are really cheap you having nothing to lose so you can hang on to risk for much greater periods of time.
Good Dow could also mean we are in the middle of the disaster.
I just have a hard time connecting the stock markets to economies. They sometimes connect but sometimes they don't.
Vllad
When you buy a stock, you're essentially buying the future earning potential of the underlining company. Stock markets' use as a leading indicator is only as good as the collective wisdom of the market participants.
Vllad is totally right, the market is a lagging indicator, but everyone touts it as the leading one.
Gameless (for now)
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I don't know Ors. I don't know of any times where GDP was growing strong at 4% plus and the stock market was in the tank. I do know of times when the stock market tried to rally only to fall again when the underlying earnings didn't come through.
"Hamilton is really a Colossus to the anti republican party. Without numbers he is an host within himself. They have got themselves into a defile where they might be finished but too much security on the republican part will give time to his talents and indefatigableness to extricate them. We have had only middling performances to oppose to him. In truth when he comes forward there is nobody but yourself who can meet him. His adversaries having begun the attack he has the advantage of answering them and remains unanswered himself. For God's sake take up your pen and give a fundamental reply to Curtius and Camillas" - Thomas Jefferson to James Madison
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The stock market is still all speculation on FUTURE value, so the reason why you see what you see is that people are looking at leading indicators in order to make a decision on what to buy. So the market is still a reaction (lagging) to what has already occured. The market might be a better indication than unemployment, though. Maybe - depends what you're looking for I guess.
Gameless (for now)
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Its both, a leading indicator, based on speculation, that is corrected (Lagging) as reality hits. I view the stock market as a 6 month window of constant speculation and correction to reality. That window travels about 1 week in the rear, to 6 months in the future.
Its funny how speculation slowly rises, (or falls) but reality shoots directly to the point.
Maul, the Bashing Shamie
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I think in order to have this discussion you'd need to find a neutral point between leading and lagging - ground zero so to speak. The concept itself is also in flux depending on what aregument you want to make. And I need to take back what I said, because I mis-spoke.
It works like this:
Say you're building a house. The leading indicators of building said house would be 1 does the demand for build a house exist, is there enough money in the bank to fund the building of a house, are the resources present to build the house, are there enough people to build the house, do the people have the will to build the house (perhaps they could make more money doing something else), etc. Ok so let's assume all of these prerequisites now exist, only NOW do you have the ability to perhaps predict that construction company XYZ has a bright future ahead of it. BUT even at this point it is still a guess, and therefore intangeable, so I think you'd actually be better off making the arguement that is is neither lagging nor leading, it's nothing more than a guess.
Still though, I think it is more a matter of perspective than anything else. To a 90yr old, 60yrs of age is young. To a 5 year old, a 22 yr old college grad is old! So from my perspective, the conditions that have to exist in order for the market to "Be", are leading, while the conditions that result from what the market "Is" are lagging.
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As I agreed and said early, the market is only as good as the collective wisdom of the participants. I think when we start these talks, its important to distinguish between macro and micro theory. For example the price level in the stock market is, without a doubt, a leading indicator according to the Conference Board (the people who define what leading indicators are):
Quote:LEADING INDICATORS. Seven of the ten indicators that make up The Conference Board LEI for the U.S. increased in June. The positive contributors – beginning with the largest positive contributor – were interest rate spread, building permits, stock prices, weekly initial claims (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), and manufacturers' new orders for consumer goods and materials*. The negative contributors – beginning with the largest negative contributor – were real money supply*, manufacturers' new orders for nondefense capital goods*, and index of consumer expectations.
You can view the latest full report here:
http://www.conference-board.org/economic....cfm?cid=1
"Hamilton is really a Colossus to the anti republican party. Without numbers he is an host within himself. They have got themselves into a defile where they might be finished but too much security on the republican part will give time to his talents and indefatigableness to extricate them. We have had only middling performances to oppose to him. In truth when he comes forward there is nobody but yourself who can meet him. His adversaries having begun the attack he has the advantage of answering them and remains unanswered himself. For God's sake take up your pen and give a fundamental reply to Curtius and Camillas" - Thomas Jefferson to James Madison
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But this is where the debate resides. And a lot of people disagree with using stock prices as a leading indicator for the reasons I've stated.
Gameless (for now)
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I just wanted to make sure that everyone here knows the general consensus among economists was the opposite of those views.
"Hamilton is really a Colossus to the anti republican party. Without numbers he is an host within himself. They have got themselves into a defile where they might be finished but too much security on the republican part will give time to his talents and indefatigableness to extricate them. We have had only middling performances to oppose to him. In truth when he comes forward there is nobody but yourself who can meet him. His adversaries having begun the attack he has the advantage of answering them and remains unanswered himself. For God's sake take up your pen and give a fundamental reply to Curtius and Camillas" - Thomas Jefferson to James Madison
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Theres only one leading indicator that I trust. These are the experts.
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Maul, the Bashing Shamie
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"The stock market is where people buy things with the hope that in the future they will increase in value".
Dustie summed this up quite nicely. It's not hope if you know the market, but rather education. Educated people aren't saying: "man, i hope this stock goess up". They're saying, "man, I can't wait for this rollover comming up".
Sure, part of the market is speculative, however there are fundamental the whole thing is based on.... like buffalo being lead to a cliff, the hedgers are setting up for a feast.
I would say the stock market by itself could be a leading indicator once you put all the pieces together because it's made up of corporate finance (economic principals: fundamental) & market values (speculative). But if you look at the stock market and the parts its made up of, it's lagging by principal because it's a reflection of data, by which we then speculate upon the direction.
I guess the question then is, how much truth is in the numbers we're seeing and the honesty of the people issuing those numbers?
On another point, you don't always invest in a stock purely because of the company of that stock.... sometimes, its the competence and track record of the people running that company that's more important: Human Behavior & the psycology of Fear & Greed.
Oui, feels like I'm rambling today. mebbe i'll just go back to my coffee and blunt.
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The main problem I have with today's markets is that the short term focus, has forced companies to do things they would not do from a long term planning perspective. This seems to be a more of an American issue then a EMEA or APAC stance (though Im sure it exist there).
The stock market has become a money changing operation that often has little reference to the underling value of a corporation.
To much momentum playing going on, and the long term investor often gets burned.
Look at all the experts that preach "Buy and Hold" all the while they are buying and dump stocks like day traders. The mnarket is way too manipulated today.
Maul, the Bashing Shamie
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That's my biggest gripe too, i.e. the pressure on companies to produce earnings on a quarterly basis and the 'mostly' real time fluctuations in stock price. Depending on your personality and your situation that kind of pressure on every one of your decisions as a CEO will either encourage you to take greater risks or be more hesitant to take necessary risks.
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I agree. The problem is that it's the company owners who need to set the incentives for the company management. If the owners won't put a long term focus on their incentive plan, then it won't happen. What we basically need, are dozens more Berkshire Hathaway type companies.
"Hamilton is really a Colossus to the anti republican party. Without numbers he is an host within himself. They have got themselves into a defile where they might be finished but too much security on the republican part will give time to his talents and indefatigableness to extricate them. We have had only middling performances to oppose to him. In truth when he comes forward there is nobody but yourself who can meet him. His adversaries having begun the attack he has the advantage of answering them and remains unanswered himself. For God's sake take up your pen and give a fundamental reply to Curtius and Camillas" - Thomas Jefferson to James Madison
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You have to remember that a few months ago the stock market was priced for pretty much the collapse of the financial system, if not civilization itself. While that's not impossible now, it's clearly far, far less likely than it was. And while earnings may not return to last year's values any time soon, stocks were priced as if company's would no have earnings. So it's not so strange that the market would go up with armageddon is no longer priced in.
Anyway, there are plenty of companies that are making a packet despite the recession. Apple just posted their best-ever non-holiday quarter ever. In this evironment? And purely organically, without any aquisitions to jack up the numbers? If that isn't a sign of quality I don't know what is.
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Im usually of the opinion that a person should invest based on dividend distributions rather than stock value. People can guess how low or high a company stock is until the cows come home, but a public company's job is to make a profit, and pass those profits onto investors. And more and more public companies are ignoring that aspect.
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This is true, but you can still lose your ass with a corparation that pays good dividends. I bought GE around 25 and though it was a good deal.
Maul, the Bashing Shamie
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Vanraw Wrote:This is true, but you can still lose your ass with a corparation that pays good dividends. I bought GE around 25 and though it was a good deal.
yeah but that's short term thinking. Do you think GE will still be at 12.25 5 years from now? the bigger question is, "how much is GE paying out in dividends during this stretch?"
I just got a $40 dividend from HIMX based off an initial $335 investment.
PGH has jumped between $5 and $8 since I bought it, but I'm still getting my .10 a share monthly dividend.
That's one of the arguments people keep throwing at Peter Schiff "Oh your investment values have been hit hard." And he responds "All investment values have been hit hard, but mine are still paying out dividends."
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Breand Wrote:Vanraw Wrote:This is true, but you can still lose your ass with a corparation that pays good dividends. I bought GE around 25 and though it was a good deal.
yeah but that's short term thinking. Do you think GE will still be at 12.25 5 years from now? the bigger question is, "how much is GE paying out in dividends during this stretch?"
I just got a $40 dividend from HIMX based off an initial $335 investment.
PGH has jumped between $5 and $8 since I bought it, but I'm still getting my .10 a share monthly dividend.
That's one of the arguments people keep throwing at Peter Schiff "Oh your investment values have been hit hard." And he responds "All investment values have been hit hard, but mine are still paying out dividends."
I dont disagree, but you still have to watch what you buy. GE is a great example. What happens when you bought GE in 2001 for 60, while it was paying .26 in div a share. Its now $12 and paying .10. How long before you think it will be 60 again? Thats the long term.......
I'm bitter because I have seen nice prohets disappear due to my philosophy of Buy and hold, for the long term. I got screwed in 2000, and I got screwed in 2008. In this market there is no longer a "long term". Buy and hold is dead. Buy, lockin prophets, sell, and move on.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
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