HOLY SMOKES : Did i read this right? Dow below 10,000 S&P;1,100 Nasdaq 1500. Is this possible by October?

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Graph, you seem to be a very smart guy. Yes, the dollar did rally from its bottom for the past three weeks and yes, it did rally today crushing Commodities, Euros, Swiss Francs, and the London Pound. Let me ask you question? What do you believe are the true fundamentals allowing this dollar to rally? What economic factors are causing this rally in our dollar? Do believe it is happening naturally or there is some manipulation happening behind the scenes? It is interesting that several banks took big stakes on shorting gold all around the same time in August when gold made a significant drop. Was this luck or was this manipulation?



You have reminded me many times not to bet against the dollar. Why do believe that dollar has now finally come off the bottom and now it will rally against all commodities and other strong foreign currencies in the next 5 years?



http://www.marketwatch.com/news/story/big-jump-gold-sale-spurs/story.aspx?guid={25D66623-29F3-434B-9B7A-5CE76D3C38F9}&dist=hpts</blockquote>


Simple answer is to ask another question. What is the best performing major market in the world year to date? Answer: UK down 25%, Germany down 28%, Hong Kong down 36%, Japan down 28%, Russia down 47% and last but certainly not least China down 57%. Believe it or not we are only down 21% year to date and it is percieved that we are further down the road than the rest of the world. Money if flowing in as the rest of the world hits the skids...dollar rallies. Magic. Been long UUP at 22 now up 14%.
 
[quote author="morekaos" date=1222860885]Graph, you seem to be a very smart guy. Yes, the dollar did rally from its bottom for the past three weeks and yes, it did rally today crushing Commodities, Euros, Swiss Francs, and the London Pound. Let me ask you question? What do you believe are the true fundamentals allowing this dollar to rally? What economic factors are causing this rally in our dollar? Do believe it is happening naturally or there is some manipulation happening behind the scenes? It is interesting that several banks took big stakes on shorting gold all around the same time in August when gold made a significant drop. Was this luck or was this manipulation?



You have reminded me many times not to bet against the dollar. Why do believe that dollar has now finally come off the bottom and now it will rally against all commodities and other strong foreign currencies in the next 5 years?



http://www.marketwatch.com/news/story/big-jump-gold-sale-spurs/story.aspx?guid={25D66623-29F3-434B-9B7A-5CE76D3C38F9}&dist=hpts



Simple answer is to ask another question. What is the best performing major market in the world year to date? Answer: UK down 25%, Germany down 28%, Hong Kong down 36%, Japan down 28%, Russia down 47% and last but certainly not least China down 57%. Believe it or not we are only down 21% year to date and it is percieved that we are further down the road than the rest of the world. Money if flowing in as the rest of the world hits the skids...dollar rallies. Magic. Been long UUP at 22 now up 14%.</blockquote>


I know that many here will go on about the fundamentals of the dollar and commodities combined with inflation, but I look at the fundamentals of who we are compared to the rest of the world. We have performed better than most other economies, if you can believe that. Not only that but we are much further along in the down turn, and other nations are just beginning to feel the pain. Like I have said before too, they will usually suffer twice as much due to a lack of free market, government collusion, or just flat out lying about numbers like inflation. So currency traders and foreign banks have figured out that our currency and markets really are the strongest. Hey, if commodities were rising and the Euro region and China were doing better than us and not dropping their rates, and inflation was rising, then I would say those fundamentals would mean for the dollar to be toast. But we are doing not nearly as bad as everyone else, every other nation's downturn will be worse, every other nation's inflation is worse, and their economies are just now feeling the pinch, meaning interest rate cuts for them not us, will only make the dollar rise.



Sometimes fundamentals have that "if" about them, this is that time where the "if" is happening.
 
[quote author="blackvault" date=1222833103]But I'd rather invest in stocks than things like homes anyday in my life. Over past 100 years stocks returned 8% inflation adjusted. You know how much homes have? ZERO...thats right...a big fat ZERO! (inflation adjusted)</blockquote>


Somehow that big fat zero turned my $50K condo investment in 2001 into $280K by 2008. Hum, and that gain is tax free as well. Yikes, that's a head-scratcher. I won't even factor in the much lower net after-tax cost to live every month as an owner vs. renting into the gain calculation. What's that work to be, something like a 25% compounded return annually, unadjusted for inflation of course? Glad I didn't decide to hold my condo for 100 years...



Strangely, I think the S&P was right around where it is today back in 2001 when I bought my condo. The Nasdaq too... How much would my average annual return have been on that $50K over that same period bv if it would have gone into equities instead and kept on renting? What, what's that you say, maybe "a big fat ZERO"? Heck, it could very well have been a negative real return right? No need to answer, rhetorical question. The charts are pretty easy to read.
 
[quote author="ipoplaya" date=1222864365][quote author="blackvault" date=1222833103]But I'd rather invest in stocks than things like homes anyday in my life. Over past 100 years stocks returned 8% inflation adjusted. You know how much homes have? ZERO...thats right...a big fat ZERO! (inflation adjusted)</blockquote>


Somehow that big fat zero turned my $50K condo investment in 2001 into $280K by 2008. Hum, and that gain is tax free as well. Yikes, that's a head-scratcher. I won't even factor in the much lower net after-tax cost to live every month as an owner vs. renting into the gain calculation. What's that work to be, something like a 25% compounded return annually, unadjusted for inflation of course? Glad I didn't decide to hold my condo for 100 years...



Strangely, I think the S&P was right around where it is today back in 2001 when I bought my condo. The Nasdaq too... How much would my average annual return have been on that $50K over that same period bv if it would have gone into equities instead and kept on renting? What, what's that you say, maybe "a big fat ZERO"? Heck, it could very well have been a negative real return right? No need to answer, rhetorical question. The charts are pretty easy to read.</blockquote>


Duh... you can't short your house, but you can short the stock market. Er, maybe not so much any more. Wait... you can short your house with the Case Shiller index, but you can't short the bank who has the mortgage on your house. Yeah... I get it now. Nevermind.
 
Remember last week when oil went up $30?

Oil didn't really go up $30. The price of the front month future contract went up because it was expiration day. The other months went up a bit, but nothing outrageous. The price of oil did not go up $30, even though the financial media reports it that way.

The dollar did not get stronger by $1.29 yesterday. The index, and only the index, moved based on massive hedge fund short covering due to massive hedge fund redemptions to be paid at the end of the quarter, yesterday.
 
[quote author="ipoplaya" date=1222864365][quote author="blackvault" date=1222833103]But I'd rather invest in stocks than things like homes anyday in my life. Over past 100 years stocks returned 8% inflation adjusted. You know how much homes have? ZERO...thats right...a big fat ZERO! (inflation adjusted)</blockquote>


Somehow that big fat zero turned my $50K condo investment in 2001 into $280K by 2008. Hum, and that gain is tax free as well. Yikes, that's a head-scratcher. I won't even factor in the much lower net after-tax cost to live every month as an owner vs. renting into the gain calculation. What's that work to be, something like a 25% compounded return annually, unadjusted for inflation of course? Glad I didn't decide to hold my condo for 100 years...



Strangely, I think the S&P was right around where it is today back in 2001 when I bought my condo. The Nasdaq too... How much would my average annual return have been on that $50K over that same period bv if it would have gone into equities instead and kept on renting? What, what's that you say, maybe "a big fat ZERO"? Heck, it could very well have been a negative real return right? No need to answer, rhetorical question. The charts are pretty easy to read.</blockquote>


You do realize that the 2001 to 2006 period was an anomaly for both markets?
 
[quote author="IrvineRenter" date=1222893211]

You do realize that the 2001 to 2006 period was an anomaly for both markets?</blockquote>


Of course I do. Anomalies can be very profitable... Everyone told me I was nuts to plow my dollars into tech stocks when the Nasdaq was at 2000 in '98 too. The stock market action then was an anomaly as well right?



None of us are going to live for another 100 years or even 50 years probably. My wealth-building horizon is the next 20 years or so and as a result I have to pay attention to the movement in different asset classes, cycles, etc. While equities may provide the best return historically, I want my investment dollars in the best performing asset classes over the next 10-20 years.
 
[quote author="ipoplaya" date=1222896993][quote author="IrvineRenter" date=1222893211]

You do realize that the 2001 to 2006 period was an anomaly for both markets?</blockquote>


Of course I do. Anomalies can be very profitable... Everyone told me I was nuts to plow my dollars into tech stocks when the Nasdaq was at 2000 in '98 too. The stock market action then was an anomaly as well right?



None of us are going to live for another 100 years or even 50 years probably. My wealth-building horizon is the next 20 years or so and as a result I have to pay attention to the movement in different asset classes, cycles, etc. While equities may provide the best return historically, I want my investment dollars in the best performing asset classes over the next 10-20 years.</blockquote>


It is interesting how FED policy and excess liquidity in all financial markets has made market timing so much more important. There was a time when you could hold assets for the long term and value them based on cashflow. Now it is all about speculation and guessing which asset class is going to see the biggest infusion of cash. So much of the financial lives of ordinary people is determined by the capricious nature of the markets. Those with either good luck or great analytical skills can come out way ahead, and those with bad luck or herd following investment instincts get slaughtered.
 
[quote author="IrvineRenter" date=1222893211][quote author="ipoplaya" date=1222864365][quote author="blackvault" date=1222833103]But I'd rather invest in stocks than things like homes anyday in my life. Over past 100 years stocks returned 8% inflation adjusted. You know how much homes have? ZERO...thats right...a big fat ZERO! (inflation adjusted)</blockquote>


Somehow that big fat zero turned my $50K condo investment in 2001 into $280K by 2008. Hum, and that gain is tax free as well. Yikes, that's a head-scratcher. I won't even factor in the much lower net after-tax cost to live every month as an owner vs. renting into the gain calculation. What's that work to be, something like a 25% compounded return annually, unadjusted for inflation of course? Glad I didn't decide to hold my condo for 100 years...



Strangely, I think the S&P was right around where it is today back in 2001 when I bought my condo. The Nasdaq too... How much would my average annual return have been on that $50K over that same period bv if it would have gone into equities instead and kept on renting? What, what's that you say, maybe "a big fat ZERO"? Heck, it could very well have been a negative real return right? No need to answer, rhetorical question. The charts are pretty easy to read.</blockquote>


You do realize that the 2001 to 2006 period was an anomaly for both markets?</blockquote>


It is very interesting to me that you Ipoplaya only uses data to support your points. So for you buying a home in 2001 was very profitable, but the person that bought at 2006 levels got screwed. I attempt to use historical averages, you like to use a small period of time to prove your point. So be it.



I bought puts and calls on AAPL the day before the market went down -777. My puts profited 650%, my calls down about 95%. I netted 500% atleast. So based on your logic I'm going to dismiss any of your attempts saying housing is better than the stock market. Because in essence, I make returns of 500% now do I? No I don't because I'm not so irrational and far out of reality that I assume that I will always have that value of return like you do.
 
[quote author="blackvault" date=1222904814][quote author="IrvineRenter" date=1222893211][quote author="ipoplaya" date=1222864365][quote author="blackvault" date=1222833103]But I'd rather invest in stocks than things like homes anyday in my life. Over past 100 years stocks returned 8% inflation adjusted. You know how much homes have? ZERO...thats right...a big fat ZERO! (inflation adjusted)</blockquote>


Somehow that big fat zero turned my $50K condo investment in 2001 into $280K by 2008. Hum, and that gain is tax free as well. Yikes, that's a head-scratcher. I won't even factor in the much lower net after-tax cost to live every month as an owner vs. renting into the gain calculation. What's that work to be, something like a 25% compounded return annually, unadjusted for inflation of course? Glad I didn't decide to hold my condo for 100 years...



Strangely, I think the S&P was right around where it is today back in 2001 when I bought my condo. The Nasdaq too... How much would my average annual return have been on that $50K over that same period bv if it would have gone into equities instead and kept on renting? What, what's that you say, maybe "a big fat ZERO"? Heck, it could very well have been a negative real return right? No need to answer, rhetorical question. The charts are pretty easy to read.</blockquote>


You do realize that the 2001 to 2006 period was an anomaly for both markets?</blockquote>


It is very interesting to me that you Ipoplaya only uses data to support your points. So for you buying a home in 2001 was very profitable, but the person that bought at 2006 levels got screwed. I attempt to use historical averages, you like to use a small period of time to prove your point. So be it.



I bought puts and calls on AAPL the day before the market went down -777. My puts profited 650%, my calls down about 95%. I netted 500% atleast. So based on your logic I'm going to dismiss any of your attempts saying housing is better than the stock market. Because in essence, I make returns of 500% now do I? No I don't because I'm not so irrational and far out of reality that I assume that I will always have that value of return like you do.</blockquote>


I've never said housing is the best investment. My point is Average Joe shouldn't ignore all other asset classes besides equities, which have contended... Seven years is hardly a small period of time. People only build wealth for perhaps thirty years of their lives. Seven years is almost a quarter of that timeframe. Doesn't the word diversification mean anything to you? You are the one studying for your CFA right?



Obviously a trader can make huge amounts of money without market values changing over a long horizon. I spent almost two years of my life doing nothing but trading. I've had days where I made $35K and days when I lost $50K. If your contention is that everyone should not buy a house and actively trade equities instead, I think that is moronic. 99.9999999% of the people in this world don't even know what a put or call is. They couldn't pick a wise or good investment if it fell from the sky and hit them in the face... Owning a home at least allows them to keep up with inflation and if they get lucky or smart on occassion, make a nice tax free profit. If home prices fall to the point where it saves them money over renting, they probably should and likely will, buy a home. And in most cases, that is probably the smartest thing for them to do.
 
[quote author="PANDA" date=1222833235][quote author="Shooby" date=1222827758]Shower with my girlfriend (WIN WIN HERE!!) :)</blockquote>


You are taking a shower with your G-Friend and you and not even married?? WHAT THE HECK IS WRONG WITH YOU???? Graph, needs to come over there and give you a "B" Slap.</blockquote>


PANDA He said He is taking a Shower with His GF...he didn't say He wasn't married, and/or maybe she is married too!! ?? YOU don't know!!



And since when does one have to be married to someone to take take a Shower with them? I was never married to anyone in my old Football (soccer) Team and we used to Shower together every Saturday afternoon!!!!



Maybe your mind needs a Shower PANDA!! ?? ;-P
 
[quote author="graphrix" date=1222837219][quote author="PANDA" date=1222833235][quote author="Shooby" date=1222827758]Shower with my girlfriend (WIN WIN HERE!!) :)</blockquote>


You are taking a shower with your G-Friend and you and not even married?? WHAT THE HECK IS WRONG WITH YOU???? Graph, needs to come over there and give you a "B" Slap.</blockquote>


Are you kidding? More like high five. Shower with the girlfriend is FTW! In fact I was going to make a comment that it definitely is a WIN WIN!



I b-slap you about the dollar though, as I told you so.</blockquote>


"Only single People have dirty Backs" :cheese:
 
DANG!!! Everything is down except for the dollar? Gold and Silver Down, Foreign Currencies Down, U.S. Stock Market Down, Europe Down, Asia Down...... Only thing that is going up is the dollar breaking the 80 threshold. Now Graph is going give the Poor Panda the Beta 2X Bitch Slap and say "I told you so!" "I told you so!"



Panda wishes he was sitting on 100% cash like IPO and Irvine Renter.



I remember what my Rich Uncle in Asia told me when i was little, stay the hell out of the stock market, hold a lot of cash and be liquid, and buy as much real estate as you possible can when prices are dirt cheap at the low end of the cycle. Hold Cash and Real Estate, and stay OUT OF STOCKS! Honestly, I have never seen anyone from the Panda dynasty get rich from stocks.



The Stock Market is SO EVIL. Muzie, I agree with 100%, you could of totally bought yourself a brand new 700 series BMW instead of losing 15% in the stock market this year. Atleast you can enjoy that loss by driving in style. I think you told me that you are 66% in cash right? I am still 50% Cash / 25% Foreign Currencies / 25% Gold and my (25/25 allocation) is getting eaten alive today. Not selling any of my holdings though... Still holding tight.



Year

2006 > Panda is Shopping for a New Home in Irvine

2008 > Panda is Shopping for a New Home in Aliso Viejo

2010 > Panda maybe shopping for a New Home in Santa Ana.
 
[quote author="PANDA" date=1222989032]DANG!!! Everything is down except for the dollar? Gold and Silver Down, Foreign Currencies Down, U.S. Stock Market Down, Europe Down, Asia Down...... Only thing that is going up is the dollar breaking the 80 threshold. Now Graph is going give the Poor Panda the Beta 2X Bitch Slap and say "I told you so!" "I told you so!"



Panda wishes he was sitting on 100% cash like IPO and Irvine Renter.



I remember what my Rich Uncle in Asia told me when i was little, stay the hell out of the stock market, hold a lot of cash and be liquid, and buy as much real estate as you possible can when prices are dirt cheap at the low end of the cycle. Hold Cash and Real Estate, and stay OUT OF STOCKS! Honestly, I have never seen anyone from the Panda dynasty get rich from stocks.



The Stock Market is SO EVIL. Muzie, I agree with 100%, you could of totally bought yourself a brand new 700 series BMW instead of losing 15% in the stock market this year. Atleast you can enjoy that loss by driving in style. I think you told me that you are 66% in cash right? I am still 50% Cash / 25% Foreign Currencies / 25% Gold and my (25/25 allocation) is getting eaten alive today. Not selling any of my holdings though... Still holding tight.



Year

2006 > Panda is Shopping for a New Home in Irvine

2008 > Panda is Shopping for a New Home in Aliso Viejo

2010 > Panda maybe shopping for a New Home in Santa Ana.</blockquote>


Everything going down is a sign of massive deleveraging. This will probably continue.
 
[quote author="IrvineRenter" date=1222990923]



Everything going down is a sign of massive deleveraging. This will probably continue.</blockquote>


Credit market woes and economic concerns will continue to keep money on the sidelines.
 
In a typical depression the market decline is 30% peak-trough. That's based on historical data.



To date we are still only down 20%. Given that things are continuing to worsen the market will continue to go down regardless of what congress does. Monday's spike down may have been more rapid than people were ready for but really was inevitable, instead of occurring over a month of paper cuts it took place in a day.



Congress can't save the market, their ego's make them think they can.
 
[quote author="alan" date=1222991933]In a typical depression the market decline is 30% peak-trough. That's based on historical data.



To date we are still only down 20%. Given that things are continuing to worsen the market will continue to go down regardless of what congress does. Monday's spike down may have been more rapid than people were ready for but really was inevitable, instead of occurring over a month of paper cuts it took place in a day.



Congress can't save the market, their ego's make them think they can.</blockquote>


Yeah, I?m beginning to understand the logic behind comments about things needing to get worse before they can get better.
 
[quote author="skek" date=1222993136]If I recall (can't find the article on the website), a recent article in Fortune put the average market decline of the five biggest US stock market corrections at 43%, although that includes the 80%+ decline during the Great Depression. It could indeed get much worse. Frankly, like some others here, I'd much rather experience some sharp pain and get it over with than suffer a lost decade like the Japanese.</blockquote>


skek - For clarification, does this "sharp pain" come from A) <span style="color: blue;">government bailout</span> or B) <span style="color: blue;">letting the financial institutions melt themselves down without intervention</span>?



And to show good faith that I'm not baiting you, I'll state that I take the unpopular stance here that I think some form of government bailout is my preferred choice.



Several here have stated specifically that, "you do not cure a heroin addiction with more heroin," but I'm not sure that is the best or most appropriate metaphor for the current scenario that is unfolding. What we have currently is clearly a deleveraging movement. I think that is unmistakable. I am hopeful that Nude's point is correct; that the efforts being made are essentially an honest attempt to <u><strong>extend the time horizon</strong></u> for the solution of this problem.



My hope is that the actions are less like breaking off an addiction cold-turkey, and more like letting people in/out of a crowded stadium. In the latter case, if there is an unchecked crush towards a single access point, the resulting human toll (and collateral damage) is extensive and unnecessary. Both the strong and the weak can be swept under due to panic and mob fear. Take your pick of soccer disasters, but for convenience take <strong><a href="http://en.wikipedia.org/wiki/Hillsborough_disaster">Hillsborough Disaster at Sheffield in '89</a></strong> as an example. If there was some order presented, or more egress points made available, it is commonly accepted that the disaster should never have occurred.

Much like that situation, I think (again hope!) that slowing things down a bit is in the best interests of all. I believe it will cost less in the long run.



Acknowledgements:

Yes, I know it will probably cost me personally a bit more in the short run.

Yes, a part of me would like to some of the greedy take a big kick in the beans.

And yes, I would like to see more accountability.



With that said, I do not, however, think that it is worth watching the rest of the system crash while people point fingers and blame the other side of the political/financial fence, or reveling in seeing many fall because "they got themselves into this mess and they can get themselves out." I think the result would hurt many who have acted with good fiscal responsibility, but have the unfortunate timing of needing their credit/retirement/other investments now.



Time will tell.



so skek - I value your opinion and would like to hear your thoughts.

Thx,

IR2
 
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