Why the F**k is the Stock Market Going Up?

[bobd]

I know this has been discussed before but I really, really thought that the stock market would tank today after the ijit mortgaged our future in last night's speech.

I know that the market is inscrutable but I simply don't understand its reaction this morning. Can someone shed some light on this?

Bob D.

[JHB]

1. No, no one can...

...but keep watching...

[bryant69]

3. It would be interesting . . .

to know about what percentage of people at DU own stocks. I do, personally, so naturally I'm happy when the market goes up, even if I feel a little guilty knowing that it helps President Bush.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[samsingh]

37. i own a lot of stocks and mutual funds

however, i have no trust in the markets today and with the deficit and unemployment in general feel that it is artificially propped to high. This could be related to the tax cuts on the markets.

Here's a what-if: imagine if they repealed the tax cuts on dividends to help pay for the $87 Billion that Shrub requested? The markets will tank faster an average IQ of a group when Bush enters it.

[trof]

2. No rational reason this I can see.

Neither do these guys:
http://www.dailyreckoning.com/home.cfm?loc=/body_headline.cfm&qs=id=3410
Manipulation?
Maybe, but how?

[JHB]

7. Rationality and the stock market...

...often have very little to do with each other, despite the advertising.

[wtmusic]

4. Virtually always happens after a presidential address

Public confidence stemming from the illusion our leaders are in control.

[Brucey]

5. Money goes where?

If congress approves more expenditures, it doesn't mean the money will be given to Iraqis; the money goes to Halliburton and the Pentagon's money pit companies. These companies stand to make huge profits and therefore lots of money for Shrubheads friends.

[uptohere]

6. lots of reasons

none of which involve that...

http://my.netscape.com/corewidgets/news/story.psp?cat=50580&id=200309080959000278146

http://netscape5.marketwatch.com/news/story.asp?siteid=netscape&dist=netscape&guid=%7B35245039-77E4-41DF-A5FB-828A28FC8F5E%7D

... to name a few.

The funk that it had around the beginning of the year or thereabouts and its suseptability to news of this sort only plays when the economy is in the shitter and it certainly was at that time. Its come out of the shitter and is making it's way over to the sink to wash up. Ergo the optimism.

Believe it or not, 87m can be made up by revenues on a steaming economy and Wall Street knows this.

[GR]

10. That Was $87 Billion, Not Million...

And a steaming economy won't bring back the revenue stream like it should because of the massive tax cuts Bush has implemented and the off shoring that is going on in corporate America...You may not know it, but he also implemented a lot of additional tax cuts by executive order which will keep the tax revenue stream from coming back when the economy does...I've saved that reference to my hard disk..

[uptohere]

20. my bad, concept still holds though

n/t

[GR]

8. It Went Down Friday....When Traders Sold....Now They're Buying

back in to ride it up for a while...then they'll lock in gains and wait for it to drop again...these folks are playing it like a video game...

also, there is a large security organization which has the power to manipulate the market for national security...they may be trying to manipulate the market..

You're stock may go up...but if you lose your job, what have you gained...

[freethought]

9. Can you say 'bubble'?

Their have been some increases in corporate profits but that is only because of corporate belt tightening i.e. layoffs. Rational thinking does not drive the stock market any more. The way I see it, mob mentallity and reactionism drive the market. We are still hemorrhaging jobs! I think the market is overvalued and will pop again.

[Art_from_Ark]

17. Sounds like a sucker's rally to me

It happens all the time.

[Walt Starr]

11. I would think defense industry stocks would be skyrocketing

$87 billion is a lot of cash to spread around.

[cjbuchanan]

12. Because they know pork money when they see it

They know America is about to hand $87+ billion over to private industry. They also know that America is going to be in Iraq for a long time, which means more military spending. Average Americans might spend a little less, but it looks like the government is going to more then make up the difference.

Just my thoughts.

[TahitiNut]

16. ... and because bonds are down.

Greater debt means greater borrowing. Greater borrowing, combined with offshore dumping of T-bills means greater supply of debt instruments which drives prices down. "Investment" capital then moves to equities, particularly MIC equities who export jobs. This economy is in an "increasing concentration of wealth" process which will continue for at least 2-4 years, independent of who's elected in 2004. It's now structural and will require prolonged repairs before the trend is halted, and even more before it's reversed, if ever.

[cjbuchanan]

18. Great post

Thanks for this information.

It is said that, as you pointed out, no matter who beats Bush & Co. in 2004, we are stuck with this problem for years.

[TahitiNut]

32. Yup. That's the real reason Commander Codpiece ...

... proclaimed "mission accomplished" -- it had less to do with Iraq than it did with making the long-term structural changes to benefit the wealthy at the cost of our labor and liberties.

[TacticalPeek]

27. Nail and head co-located again.

Can you say LBJ?

Like the LBJ hand-off to Nixon/Ford/Carter, here comes the Shrub hand-off to Clark/Clinton.

Oil was on the back end of the first case, on the front end of this one. Both have that smell of . . . what's that smell? . . . elective war expenditures.

Thank God Clark/Clinton will have the chops to fix Shrub's mess, but there's much Piper to be Paid in the interim. Hasta la vista, empire.

[barbaraann]

13. Fascism = corporatism.

And the bastards at the top know it.

[punpirate]

14. Why did the market go up?

Now, now, Econ 101: a) when the taxpayers pay corporations money they don't deserve through open-ended, non-competitive contracts, the profits of those corporations go up, b) when there is an expectation of profits going up in companies whose CEOs are friends of the administration, or whose former CEOs are now members of the administration, buyers of stock anticipate higher prices for stock, or greater dividends, and want to get in early on the goodies, so they can profit, too, and c) this causes people to buy stock now, which drives up the price per share.

Good. I knew you'd understand. You should get Christmas cards from Halliburton and Bechtel this December: "Thanks, sucker, for all you've given us through the year. Best Wishes."

[ArkDem]

15. You sound unhappy about this.

Why? Think of all the people who are depending on their 401k savings.

[RebelOne]

21. Yes, me for one

I do not need for the stock market to fall. I will be retiring in a few years and will need
every cent I can get.

[bobd]

22. Unhappy? Mostly yes ...

Schadenfreunde fer sure!

The way I see it is that the ONLY way Bush will lose in 2004 is if the economy is really in the shitter. Whether the voters peceive it that way depends on a lot of things, the job situation is one of those, but for those who still have their jobs the health of the stock market is another indicator. If the ijit and his pals can manipulate the market enough to provide the illusion of economic health then that will most assuredly help them in 2004. If they DO win then all bets are off and we'll be in far worse trouble after 4 more years of their shit then we would be with a mere 12+ months. So ...

Yeah - I really, really want the market down for now. Like I said it's a classic case of Schadenfreude for me.

Bob D.

[userdave2061]

48. Sad situation if one uses bad news for gain

Why not propose a platform that voters will get behind and win honestly?

[pansypoo53219]

19. or(I sure Hope)

they see the writing on the wall and if Bush is trounced, the econ will pick up with the next Pres.
but i suppose that ain't it.

[leftofthedial]

23. death and unemployment are serious love juice

for capitalists.


Certainty is also good news, even when it's bad news. A known disaster is better than an unknown future.

[fob]

24. If you were a greedy bastard that just came into several

trillion dollars by abusing your office(which you cheated to get) where would you put your ill-gotten gains? It's gotta go somewhere.

[ComerPerro]

45. No shit

Especially now that you can buy up the market for dirt cheap.

But the problem is, the market is no indicator of the economic climate for actual people. Who cares if a companies stock is through the roof. Why would they hire people for a decent salary if they didn't have to.

[amazona]

25. stock market is random

The mathematicians seem to be satisfied that the stock market is a random walk slanted upward. Random means random, but the human mind is incapable of understanding the concept of randomness. Therefore, when the stock market moves in any direction, commentators come in after the fact and offer various "reasons" why the stock market moved in the direction it did. These "reasons" are purely speculative; they do not lead an investor to be able to formulate theories and accurately predict the future behavior of a stock.

Random does mean that you canNOT predict what the market will do based on common sense or logic. The most brilliant man on earth could not predict what the market will do. The most sophisticated compures cannot predict it. Random means random means random.


If people truly accepted and understood the math, there would be no Wall Street Journal, no CNBC, no endless stream of stock-picking newsletters. (There would also be less self-blame when one's perfectly sound stock choices go in the toilet.) No one can tell you why the market moves as it does or what it will do in the future. It is true that occasionally an individual has a run of good luck, which he prefers to credit to his skill in stock-picking rather than to his good luck. But when he tries to share his advice, it proves out to be bogus, because the information doesn't work for future investors; Warren Buffett, anyone?

That said, I do own stock, but I accept it for what it is --gambling. I have no way to earn a decent amount of money, so gambling is a desperation move. There is no logical reason to believe that investing in stocks over time is a good move. There is a completely bogus claim made that stocks return 10-11 percent a year over time. This is quite untrue. This claim was created by just using the years 1929 through 1999 -- starting with a huge market crash and then including the greatest bull market in human history. It neatly edits out decades if not centuries of stock market history. If you expand the data to include just a few more decades, suddenly you see that a sideways boom/bust ultimately go-nowhere cycle is actually the norm. The "upwards" part of the "random walk upwards" is created by selecting the data. You know...I could stand at a dice table all day and record the results and then just pick the hours when buying lots of numbers would be winners and then go back and claim that playing dice returns such-and-such percent return. But you'd recognize that as cheating. Not sure why people don't recognize the same about the market. Some of it is a failure to realize that the stock market was in operation prior to 1929, although how do they rationalize that it crashed if it wasn't in operation?

Take away from all this...People are strange. They do strange things. If you find the secret of accurate prediction of group behavior, you won't need to play the market to be set for life.

[ProfessorGAC]

26. Very Good Explanation. And, Also. . .

. . .the market is a speculative construct where the only end purpose is to make money. Therefore, the nature of society, and the state of the economy are merely tangential variables.

It may, or may not, influencing the day to day thinking of traders and analysts. The decisions of the institutional trading blocks is preponderantly subjective. They make different decisions on market up or down days, and the thinking is very short term. Therefore, the economy is not a major influence on the short interval behavior of the market.

This explains somewhat why math geeks (like me) are satisfied that the market is sufficiently random to call it so. The subjectivity put into play (intuition, gut feeling, hunch, call it what you wish) by major market players make it so.

There is no real rhyme or reason to the market, so we shouldn't spend too much time fretting about it. In the long run, the market does react to actual financial and economic conditions. They call it a "correction" which is the way of everyone on Wall Street admitting they were wrong about their hunches and instincts.
The Professor

[uptohere]

29. I don't agree

It is not random. There are far more factors at play than the average Joe has any knowledge of. Learn what they are, and you can predict it relatively well. Be more clever still and learn which canaries in the coalmine to watch and make money all the time.

No, I do not know more than a few of the canaries but the people I know who do, have not failed to see around 30% annual increases over the last 25 years.

[ProfessorGAC]

31. Most Such Success. . .

. . .is a matter of doing the analysis based upon timing. It's not the intrinsic variables alone, but analysis of the normal flow and ebb of the market that the best analysts predict. They don't get it right 100% of the time, but have more successes than failures.

It's not the market itself they're predicting, but rather the behavior of the folks within the market. These behaviors (buying frenzies, sell-offs, autocorrections) are actually more predictable, and therefore, less random than the overall chaotic system of the market.

So, the market is, in and of itself a chaotic state. Some of the extrinsic behaviors of the people in and around the market, however, are slightly more predictable. People like the ones you know, are very good at predicting the behaviors of the bulk of the people involved. They are basically investing "against the grain". This has been the most typical route to investing success in equity and capital markets. Has been for a hundred years.
The Professor

[TacticalPeek]

33. This is because the laws of math require that

there be someone to whom the rest of us rubes dispatch our excess money.

[Hanuman]

35. The market is NOT "Chaos."

The market is RISK.

There is a HUGE difference. It is not exactly a science, but it can be predicted to the extent that you can win more than you lose- provided you have access to the research and modeling that will win it for you.

I don't claim to have the insight and knowledge to explain the market and why exactly it goes up or down on any given day- and perhaps no analyst has that ability, But I will tell you this: I have been paying attention to a particular stock market timer, and have paid for his newsletter and bulletins, and this man has predicted, quite accurately, a number of the important bull and bear mega trends. His subscribers have made a LOT of money- me included.

Analysts use information that is available to everyone: orders for durable goods, inflation, consumer confidence, unemployment, P/E ratios, etc. and plug these figures and sentiments into their own proprietary modeling software to create a broad-based prediction.

The fact is, my analyst predicted this upturn in May of this year- and since May this market has gone up steadily as predicted. He also stated that we are currently in a minor bull market within an overall bear market. This bull may last one to two years and the overall bear may last up to twenty (!!!) years. But there will be a cycle of bull counter trends within the overall bear mega trend.

The key is to know exactly when to buy and when to sell.

It is not likely that Bush's tax cuts stimulated the bull mini-trend in any meaningful way, just as it is not fair to say that Bush "economic policy" contributed to the twenty year bear that we are likely facing now. These are cyclical events in the ebb and flow of a great and complex economy.

My advice to you, my friends, is to learn more about how the market works, and most importantly, if you want to invest FIND AN ANALYST YOU TRUST. That is, a market timer with a proven history of nailing the trends.

There is risk involved, but you can make money- even in a 20 year mega-bear.

[bookman]

28. 89 Billion

Companies will be lining up for their share.

[snippy]

30. Because the Fed is printing money like it was made out of paper.

The three measures of the money supply, M1, M2, and M3, increased in the 3 Months from Apr. 2003 TO July 2003 at annual rates of 13.1%, 12.4%, and 14.5% respectively.

Although the economy is improving, much of the rally is liquidity driven.

[TahitiNut]

42. Bush I Redux

That's what Poppy Puke did, and Rayguns did in his first term -- grew M1 at double digit rates for years. Clinton/Gore reined it in (actually shrank/recovered M1 in first term) and now Junior Puke is behaving like the counterfeit(er) he is.

[Bushknew]

34. Big time Saudi money maybe?

[leftyandproud]

36. this proves once and for all..

...that corporations are NOT on our side...They are propping up their prices for Bush...and we can't do jack about it.

[SoCalDem]

38. Could it be that $87B wad of cash that will be fed to munitions makers???

:shrug:

[John_H]

39. Why would the market tank?

chimpy just anounced he was going to break the bank by paying billions to big companies.

[chiburb]

40. Because Kerry is buying Walmart? :-) n/t

.

[w4rma]

41. It goes up and it goes down ALOT over short periods of time.

Look at it over the long term, instead.

Also, the speech signaled that Bush *may* do the opposite of some of his miserably failed policies. That would help the economy a little bit.

Also, the stock market is an indicator of how BIG buisnesses are doing. They are moving their jobs overseas where it costs them very little to pay them. They are also more able to buy out America's resources at discount prices.

Small buisnesses, jobs and middle class strength are the indicators we should care about, IMHO.

[RapidCreek]

43. Can you say 87 Billion Dollars?

This is part of the Bush Economic package. Government mandated supbsidies to rebuild what they destroy. It's called destroy, borrow and spend. The stock market is not now, nor has it ever been a measure of the real health of the economy. It's about goddam time people start figuring this out.

RC

[Stone_Spirits]

44. The "Jobloss Economy"? n/t

[userdave2061]

46. Would you prefer it to go down?

I know many elderly with retirement funds that are needed to survive.

Bad economy and unemployment may be good for elections but it's not worth it if it hurts people. There are better ways to win an election - like a platform that voters agree with.

[KoKo]

47. bobd, Here's a Chart for you of the NASDAQ! From 1999.....!

I can also post the DJIA if you want to track that.....but I'm thinking you are focused on the "Techs."

What's the big deal about this? Hedge Funds are in the market BIG TIME. And, you think the markets are UP?

Hello! Don't get your knickers in a knot over this......you aren't missing anything.....unless you are an investor with MEGA BUCKS who can trade with the HIGH ROLLERS! You think this chart shows UP, UP, UP??? compared to what?

[TahitiNut]

50. FWIW: That chart starts in Sep 1998.

Now wouldn't it be "interesting" to see these longer-term charts reflected in "constant dollars" rather than nominal dollars? :shrug:

[jeter]

49. A crash is coming

Today only proved it.

Wait until bad earnings come in. It will crash hard. 500 to 1000 points.