[SD_Scott]

I knew there was some funky Expletive deleted. going on in the markets. BE AFRAID! $this->bbcode_second_pass_quote('', 'I') have been watching every tick in the market for the past 3 years and this past few months have been strange. I seem to be noticing a lot of bizarre market action that has me feeling that there may be a concerted effort underway to support stocks. What happened after the London bombings was no fluke. I do not want to be labeled a conspiracy theorist, but something is clearly happening that I can't explain. Last year the market was very sensitive to rate hikes and higher oil prices. Now it seems that this is completely being ignored and every break of key support levels in the market is met with rapid buying. Also, reports that some large player is in the S&P trading pit buying anything at any price. I wonder who that is? This is no longer a free market. Has anyone noticed all the short squeezes that have been created on many large cap stocks. Maybe its just sector rotation into large cap and since small caps may have peaked maybe this makes sense and can be explained. It feels like something more to me. Who knows, maybe the Chinese Government, at the request of the FED, is now purchasing U.S. stocks instead of Treasuries. Maybe we have told them that the U.S. housing boom may be over and our consumer will no longer be able to consume Chinese products unless we can provide another vehicle to provide asset appreciation to support further consumption. Higher stock market returns. Maybe China is upset because we would not approve the sale of Unical and now they are quietly going to purchase our companies one by one with our own money. All potential possibilities. I guess.

[MD]

definitely fuel for all kinds of speculation. All of your stated possibilities can only work for short term. What then?

[Leanan]

I don't know if I buy it. People are still awfully skittish of the stock market since the crash of 2000. That's one reason there's so much money pouring into real estate. A lot of people think you can't lose in real estate. Because, even if the market tanks, "You'll still have the house."

So I can't see huge masses of people becoming day-traders just because they lost their jobs. If anything, they'd be even more skittish then, with money being tight and all. I think they're more likely to become spammers or eBay merchants than day traders.

Then there's demographics to consider. America is getting older; the oldest baby boomers turn 60 next year. The older you get, the less money you're supposed to keep in stocks. I think in the coming years there will be a lot of money flowing out of the market, as older Americans cash in their pensions, IRAs, and 401(k)s.

[Egon_1]

I have been wondering about the markets myself.
They seem to have a mind of their own lately.

I wonder how difficult it would be to deliberately manipulate the markets?
What would you need to do it and keep it quiet?

[dukey]

the SHTF

[Heineken]

I don't see a huge wave of daytrading coming. When the housing bubble collapses, there will be a recession or a depression and millions will be out of work. Most people don't own houses; they own mortgages. They aren't going to have a lot of money to gamble in the stock market, and with their home values deflating they're not going to be able to daytrade on margin. People are going to be worrying about eating and clothing themselves, finding some sort of work, and making those mortgage payments---not making a killing in the stock market.

Remember too that, although daytraders have some effect on the stock market, the real moves come as a result of trading by the big institutions.

[Heineken]

One other point: If the housing bubble collapses, so too will the stock market. Investing psychology among the masses is such that they don't invest in stocks with falling prices. They chase the rising stars, and there won't be many of those in a recession.

[FoxV]

I don't quite buy it either
$this->bbcode_second_pass_quote('', 'I') expect to see a explosion in day trading as millions of of out of work people will put whatever money they have or maybe even borrow money to get into the game.

[Novus]

You can short the market and still make a killing if it goes down. I can see the market dropping thousands of points in the comming months as oil crosses the $70 and $80 marks.

[jaws]

If you're expecting a huge wave of inflation it makes more sense to buy stocks than to buy bonds. Stocks are protected against inflation since the company's assets are real assets, therefore their price goes up with the inflation. A bond is a cash asset, the price remains the same in an inflation therefore the value goes down.

[Eli]

Yeah the editorial is BS as far as day trading goes.


The stock market is going to tank once people realize there 401K is not a smart or safe investment.
Lets look at all the solid companys to invest in on the stock market today.

GM, Ford , Delta , NorthWest, American Airlines, All the Banks who have made loans for housing.

How many average people thought the stock market was a good investment after the crash of 1929?

People are going to be damn lucky to be able to feed their familys. The whole recovery since 911 has been a jobless one that means real wealth has not been created or goods or services just more money has been poored into the economy.

But the recession /depression will definitely be marked by incredible job losses.

Shorting the market is not easy when there is no buyers and the average peon will get killed trying to do that, just try and short NorthWest or Delta.

[SD_Scott]

$this->bbcode_second_pass_quote('Eli', 'Y')eah the editorial is BS as far as day trading goes.

[Eli]

Oh yeah could not agree more I posted that very same thing two minutes ago. We avoided a depression by printing more money. No real jobs or products were created just more debt.

That is going to make the coming depression twice as bad.

My bet on the second point is China.

[SD_Scott]

I read somewhere that the money supply was 4.5 trillion in 1995 and something like 10 trillion now.(sorry if those numbers are screwed) I wonder what it was halfway through that period(2000). I ask because I'm curious if all that money printing was done after 2000?

Doug Wakefield has some great articles on Financialsense. Asiatimes has one of his articles on their world economy page.

[cheaplaughs]

Why daytrade when you can just play texas holdem on line!!!

[DesertBear2]

$this->bbcode_second_pass_quote('jaws', 'I')f you're expecting a huge wave of inflation it makes more sense to buy stocks than to buy bonds. Stocks are protected against inflation since the company's assets are real assets, therefore their price goes up with the inflation. A bond is a cash asset, the price remains the same in an inflation therefore the value goes down.

[eastbay]

I don't see a huge wave of daytrading coming. When the housing bubble collapses, there will be a recession or a depression and millions will be out of work. Most people don't own houses; they own mortgages. They aren't going to have a lot of money to gamble in the stock market, and with their home values deflating they're not going to be able to daytrade on margin. People are going to be worrying about eating and clothing themselves, finding some sort of work, and making those mortgage payments---not making a killing in the stock market.

Remember too that, although daytraders have some effect on the stock market, the real moves come as a result of trading by the big institutions.


My sentiments exactly Heineken... and the big institutions will have less and less money for investing as the economy contracts, led by the housing bubble deflating.

EastBay

[Heineken]

Thanks eastbay. BTW, sorry we tangled earlier. I don't know why I got so ticked off---I apologize.

[Euric]

http://www.resourceinvestor.com/pebble.asp?relid=17860

The recent upswing in the US stock market seems to be agreeing with this. People who were burned in the market in the crash of the late '90s invested heavily in properties. Now it seems properties may not be that good of an investment and investors are returning to the stock market.

One of the most interesting aspects of housing inflation is affordability. The more properties rise in value the less affordable they are to the average person wanting to buy a property. Now that interest rates are rising and the federal rate is expected to top 5 % makes property purchases even less affordable.

The euro is also starting to rise again, despite the delay in the IOB. The US deficit has hit a record level.

http://www.politicalgateway.com/news/read.html?id=6540

2006 will be a historical watershed year. It will be the year the dollar crashes and the US economy swings first into a period of hyperinflation, then into a deep depression. This may take a few years to reach but it has already begun.

I wonder though, would any of this be happening if the euro never existed?

[Aaron]

It's even worse than the capitol flight you describe would indicate.

The fundamentals are not there to support the price points in real estate.

This exponential growth game is similar to "pyramid" schemes, & only works as long as new money flows in from the bottom.

But at some point, the market experiences overshoot, and corrects to more realistic levels supported by the fundamentals.

I woke one day years ago, to find Amazon stock 4 to 5 times as valuable as Barnes & Noble stock during the dot com rush. I realized this was absurd, since Amazon has almost no physical assets compared to B&N, and a correction was unavoidable.

A similar situation has developed in real estate.

And the correction should be nasty...

Not my worst nightmare though.

That's reserved for full-scale global war... & that dream where flying monkey's snatch me away into the dark night sky.

We are most certainly not in Kansas anymore.

$this->bbcode_second_pass_quote('', '"')... & your little dog too."