Friday, February 27, 2009

Visualize the DOW at 6000

Oh God !! Please no !!

Back in July of 2008, Mike Whitney wrote a piece called Crystal Ball Gazing: Visualize the Dow at 6,000. 

Is it possible? And what would that mean to what we call today ‘Capitalism’. 

Stock market mayhem is just around the corner. Visualize the Dow at 6,000 and then hang on for dear life. The indexes will tumble and Wall Street will be reduced to Dresden-type rubble, nothing left but toxic fumes and twisted iron. By the end of 2009, the last few bulls will be driven out of the exchanges and onto the streets where they’ll be slaughtered one by one. It won’t be pretty. 

But no matter how bad it gets, the media will still bang-out its “Sunny Jim” market-forecasts while reiterating every mangled phrase and muddled thought from our alcohol-addled Dear Leader (referring to Bush now cocaine –addled Obama). The lines from the shelters, pawn shops and soup kitchens may stretch from the Golden Gate to the Statue of Liberty. 

He wrote that in mid-2008. It’s true now as much then. 

Obama’s cheerleaders point to the latest polls pointing out that his poll numbers are still above 50%. I guess those are the people who voted for him. 

But there is only one poll that counts and it’s not ABC, NBC, CBS, USA Today, Gallup or even Wall Street Journal’s poll. The only poll that counts, the one that supplies the capital for Mr. Obama’s grand social experiment, is the DOW, S&P and NASDAQ. 

And they’re saying NO !! 

According to some technical analysts, next stop after 6000 is, GULP- Oh God !! – 4000 on the Dow. 

In the 1980s there was a popular commercial that went, "When E.F. Hutton Talks, people listen”. Every time Obama speaks, the Dow listens – and DROPS

  • Jan. 9, 2009 (one day after Obama speaks at George Mason University on “need” for $800 billion stimulus package): -143 (1.6%)
  • Jan. 20, 2009 (Inauguration Day): -332 (4.0%)
  • Feb. 10, 2009 (one day after Obama declares that without a stimulus, “an economy that is already in crisis will be faced with a catastrophe”): -382 (4.6%)
  • Feb. 17, 2009 (market opens for the first time after Congress passes $787 billion stimulus on Feb. 13; Obama signs bill into law, declaring, “The stimulus lets Americans claim destiny.”): -298 (3.8%)
  • Feb. 19, 2009 (one day after Obama announces potential mortgage relief plan): -90 (1.2%)
  • Feb. 25, 2009 (one day after Obama’s first speech to the full Congress): -80 (1.1%) 

Is it time for Obama to shut up for the good of the nation? 

Talking about fiscal responsibility and cutting the deficit when he is responsible for the biggest spending bill in history. Its all appears to be "do as I say not as I do." Is he deliberately trying to destroy our wealth? 

Or perhaps he and the Democrats are deliberately making war on Wall Street? You know, those that have IRAs, Keoghs, 401ks, Pensions, Roth IRAs, individual investors? The sector of society that works for their money? 

Perhaps by killing capitalism, socialism will win by default. 

8 comments:

Anonymous said...

"Is he deliberately trying to destroy our wealth?"

Bingo.

Ro

Always On Watch said...

Isn't the tanking of the market part of BHO's beloved wealth redistribution?

Anonymous said...

AOW - Yes. However, shouldn't we start calling it "poverty redistribution?"

The two most chilling things I heard BO say prior to winning were - 1. Who cares if cap gains tax cuts actually increase revenues? This is about fairness. and 2. I know some people think the Constitution is about limited government and negative rights, but I don't see it that way. I am interested in positive rights.

How the heck can someone who says that take the oath of office??

Did he actually pledge to defend the Constitution (abridged version), or the Constitution - as understood by me, and not the actual Constitution, written in English, and as applied to tests of federal power over the years by the courts?

Just words? as he used to like to ask. Yep. Nothing he says means anything. It is the scariest thing I have ever seen.

Ro

kevin said...

Wealth reduction is more like it. There are no winners here, just smaller pensions, savings, and delayed retirements. Even tax dollars will be decreased as there will be a lot less to tax.

"Perhaps by killing capitalism, socialism will win by default. "

I must admit this has crossed my mind. BHO's economic policy is so ham-handed that it's hard to BELIEVE he's even trying to help.

Michael Travis said...

The DOW and Stock Market are International.... Las Vegas on Wall Street, they do not represent the United States "economy". Production in the USA and American (not Chinese) employment are the true measure of our economy.

I don't care what happens to the Chinese or Saudis. Cheap gasoline is GOOD for us...reasonable home prices are very good for us. Those who have relied on inflation and home equity to fill their ATM's are lazy M'fuckers who refuse to work, they caused this mess and we all suffer for their stupidity. Bankers who, instead of investing in US communities, chose to gamble with our savings on the International Stock Exchanges....should be lined up against a wall.

Peace,

Epaminondas said...

Food for thought... the stock market is not capitalism.

It is a means to raise money for capitalists to EXPAND PRODUCTION AND FUND RESEARCH by promising some future profits against cash now.

Entrepreneurship, enterprise, invention and the making of things expand wealth. Doing that for a profit with your own property, brains, and effort is capitalism.

The stock market just makes that easier.

But that's NOT what the market is today. Today it is a forum for the invention of financial products to increase the wealth of those who can reason out (or FIND OUT) the correct moments to buy or sell, or discern those edgy niches to drive financial inventions thru. The result has been a nation whose growing wealth was based on the increasing value of our LAND, and whose 'strength' was our ability to SPEND IT. And PS, the whole world bought into it. The driving economic force IN THE WORLD was the rising value of American real estate equities.

Real wealth however, is based on the production of THINGS and in support of things, SERVICES.

Never mind the DOW (and envision 2500 not 6000 ..the stimulus is NOT going to work)

What do we MAKE? What do we invent?

Anonymous said...

The DOW isn't the interesting thing to be looking at. The DOW is a combination of large companies and it moves slow relative to other indexes. The S&P Financial Industry Index is where the real interest is. Look at the downward trend since the beginning of September 2008. That doesn't look good in itself, but the real tell of where this is going is the FAZ Financial Bear 3x fund . This fund does 3x the inverse performance of the S&P Financial Index. In other words it's a short fund that does well when the market does poorly. YTD it was up more than 100% at the end of Feb 23 on fears that Citi and BofA were going to get wiped out. It also dropped by 20 points when the Fed announced they weren't going to nationalize Citi and BofA at the beginning of the week. The volatility signals that the markets don't know who to trust. The other area of concern is the Russell 3000 Index. Unlike the DOW 30 which follows only the 30 largest companies, the Russell 3000 is 3000 companies so you're getting a chunk of small and medium sized business (read the companies that really make up the economy). It's down about 40% since the end of September. If your financial adviser is of the "buy and hold" variety, fire em' right now. Unless you're in Bear Market funds you're probably down 20-40% and it's looking like the only way to cover yourself is to switch between bull and bear every few days.

WC said...

Good points EPA. But what you said here: "It (the stock market)is a means to raise money for capitalists to EXPAND PRODUCTION AND FUND RESEARCH by promising some future profits against cash now." agrees with what I said. The Markets provide the capital for ideas to become reality.

Remember the Right Stuff -"No bucks. No Buck Rogers"