Dow Jones

by **parrot** » February 10, 2011, 7:13 pm

I know the sky is falling and the dollar's going to crash and burn and gold is going to go through the roof, but I haven't seen anyone comment on the fact that:
The January, 2011 close at 11891.93 represents a 68% gain
since February, 2009. For all the economic turmoil we've been through the past few years, the US stock market is still a good place to park a little extra cash.

by **BobHelm** » February 12, 2011, 9:30 am

It is strange parrot but I think the link has actually been broken between many American companies & America - in the same way as it previously had between British companies & Britain.
Yesterday the Dow went up to 12273.26, yet this horrific bit of data was released

US trade deficit widened by 33% in 2010

http://www.bbc.co.uk/news/business-12431066

When I was doing Economics 101 those two pieces of information would have been impossible to print on the same day.
Unfortunately the world of finance just seems like all smoke & mirrors these days with (in my opinion) many markets being deliberately manipulated for the financial benefit of the already rich.

by **nkstan** » February 12, 2011, 10:45 am

I don't believe the stock market is a good gage for the economic situation of the country.Companies may produce and sell less,have fewer employees and decreased inventories while increasing profits and future profit forecasts which are what the price of the stock is based on!Many of the companies traded on the stock exchanges are multinational corps or /and responsible for selling products that are manufactured outside the country,imported to and sold in country!

No ''smoke& mirrors'' involved in gaging the worth of a companies stock at the present!

The ''smoke&mirrors'' that caused the economic crash was basically the allowance of the financial sector to bundle junk financial instruments into derivatives rated falsely in value!Companies investing into these derivatives,took major financials losses,therefore the decrease in the value of the stocks and the overall stock market!

Companies can downsize and continue downsizing while increasing profits and still have the stock price increase legitimately!It just will not increase as fast because as they downsize,their longterm potential for earnings growth diminishes.

The trade deficit is a drag on the countries economy as it creates higher unemployment and its associated costs and results to the economy!

by **BobHelm** » February 12, 2011, 10:58 am

If you think 'smoke & mirrors' financial manipulation only applies to banking institutions then you have a short memory Stan...
What about Enron??
There are a multitude of smoke & mirror tricks that (for example) manufacturing companies employ that keep 'stocks' off the books at end of quarter/end of year accounting times when the real financial liability for them is already there.
As I am sure Jimbo will agree (if he is not having too much of a good time in Udon) company financial accounting has come far away from when an good accountant could look at a balance sheet & quickly tell you the solidity of the business.

by **nkstan** » February 12, 2011, 11:56 am

BobHelm wrote:If you think 'smoke & mirrors' financial manipulation only applies to banking institutions then you have a short memory Stan...
What about Enron??
There are a multitude of smoke & mirror tricks that (for example) manufacturing companies employ that keep 'stocks' off the books at end of quarter/end of year accounting times when the real financial liability for them is already there.
As I am sure Jimbo will agree (if he is not having too much of a good time in Udon) company financial accounting has come far away from when an good accountant could look at a balance sheet & quickly tell you the solidity of the business.

I didn't mean to imply that shady practices and manipulation of the company books doesn't happen in business,because it does and there have always been instances throughout history.I was speaking to the overall effects the market has on gaging the economy!Out and fraud relating to reporting earnings and income,is an anomaly for listed companies on the stock exchanges,not the norm and usually related to the actions of an individual or small group within management,not the company as a whole!!

by **parrot** » February 12, 2011, 8:12 pm

Given a choice of investing in the:
US stock market
gold
Thai banks
Thai stock market
Lao stock market

I'll take the hazards of the US stock market in a heartbeat. Had I not done so 30 or so years ago, I certainly wouldn't be living the retired life in Thailand today. For all the shenanigans that go on in the financial markets in the US, conservative investing and not chasing the top performers has paid healthy dividends over the years. And, I can read a performance report from a US company/mutual fund with a certain degree of confidence that there's not a lot of smoke and mirrors involved in what's being presented.

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