Is The Dow's Permanent Baseline $6,000?
I am not an investor in the stock market, and I'm not sure I ever will be having tracked its ultimately lateral movement over my adult life and coming to appreciate that it just might be a zero-sum game. We all hear the market analysts remind us endlessly in the face of a bear market that "if you're in this for the long haul, don't worry about these short-term downturns", suggesting that what goes down will inevitably go up. But will it? If the last 12 years is any indication, I doubt it.
Let's take a look at the stock market's trajectory going back to the dawn of the new millennium. At the pinnacle of the tech bubble in early 2000, the Dow topped over at more than 10,000. After the bubble burst and the Enron-style scandals exploded, the Dow average dipped to about $6,000. And then it rose again, to nearly $12,000 if memory serves me, in 2007 when the country was artificially booming amidst the housing bubble. And then in the fall of 2008, the housing bubble worst and the Dow declined once again to.....$6,000.
At the halfway point of 2012, for no explicable reason, the Dow restored almost all that it lost since late 2008 and peaked at nearly $12,000 a couple of months ago. There's no rational explanation when looking at America's abysmal economic recovery why the Dow would rise about 80% over the 2 1/2 years since the financial crisis, but it nonetheless did....until the latest realization that the economy is sputtering again. There's no telling where exactly the economy's weakness will send the Dow in the weeks and months ahead, but based on past experience, my guess would be.....$6,000.
There has long been a disconnect with the hollow reed that America's economy has become in the postglobalization era of the past generation and the soaring value of its investment market. Our economy is scarcely based on anything real at all anymore, as is evident by the fact that absent a housing bubble the economy is stuck in the mud and can't climb out even with the most stimulative fiscal and monetary policies the nation has ever seen. However, the stock market has three times exploded its value over the last 15 years as if investors were looking at an economy poised to do incredible things in the future. What is behind this disconnect and why isn't anybody exposing it?
There was some justification for the "irrational exuberance" of the late 90s, when the internet explosion really did seem poised to radically raise America's long-term productivity and employment capabilities in a way that never actually materialized, but seemed plausible at the time. But after that, what has been the rationale for the market's explosive growth? If it's what I suspect, it's the most underreported story in America....the fact that imminently exploitable Baby Boomers with 401K's are looking to make an easy buck on the stock market to supplement their stagnant incomes....and the combination of ignorance and desperation to replace investments lost in market crashes of the recent past make them easily exploitable by Wall Street sharks looking to blow one bubble after another with other people's money and then pull out their own profits right before the crash.
I mean, seriously....why on Earth would the Dow have risen for a $6,500 ebb in the fall of 2008 back up to nearly $12,000 in April 2011? What has happened in America to possibly inspire such market confidence unless the game has been rigged all along? So I submit that for the foreseeable future, any day that the Dow is above $6,000 is a day that's living on borrowed time...and a "correction" will be imminent. America is very clearly a nation in decline, and nations in decline don't have investment markets that nearly double in three years after a brutal financial crisis. It's all a fraud...and scores of millions of people counting on these investments funding their retirement in lieu of actual livable wages and benefits are gonna learn and relearn this lesson with each new market bubble that is blown and burst. Let's just hope at some point they quit listening to the "analysts" assuring us that those of us in it for the "long-term" will be just fine weathering the latest market collapse.....because I'd bet my stock portfolio on the market's "long-term" value being somewhere in the neighborhood of.....$6,000.
Let's take a look at the stock market's trajectory going back to the dawn of the new millennium. At the pinnacle of the tech bubble in early 2000, the Dow topped over at more than 10,000. After the bubble burst and the Enron-style scandals exploded, the Dow average dipped to about $6,000. And then it rose again, to nearly $12,000 if memory serves me, in 2007 when the country was artificially booming amidst the housing bubble. And then in the fall of 2008, the housing bubble worst and the Dow declined once again to.....$6,000.
At the halfway point of 2012, for no explicable reason, the Dow restored almost all that it lost since late 2008 and peaked at nearly $12,000 a couple of months ago. There's no rational explanation when looking at America's abysmal economic recovery why the Dow would rise about 80% over the 2 1/2 years since the financial crisis, but it nonetheless did....until the latest realization that the economy is sputtering again. There's no telling where exactly the economy's weakness will send the Dow in the weeks and months ahead, but based on past experience, my guess would be.....$6,000.
There has long been a disconnect with the hollow reed that America's economy has become in the postglobalization era of the past generation and the soaring value of its investment market. Our economy is scarcely based on anything real at all anymore, as is evident by the fact that absent a housing bubble the economy is stuck in the mud and can't climb out even with the most stimulative fiscal and monetary policies the nation has ever seen. However, the stock market has three times exploded its value over the last 15 years as if investors were looking at an economy poised to do incredible things in the future. What is behind this disconnect and why isn't anybody exposing it?
There was some justification for the "irrational exuberance" of the late 90s, when the internet explosion really did seem poised to radically raise America's long-term productivity and employment capabilities in a way that never actually materialized, but seemed plausible at the time. But after that, what has been the rationale for the market's explosive growth? If it's what I suspect, it's the most underreported story in America....the fact that imminently exploitable Baby Boomers with 401K's are looking to make an easy buck on the stock market to supplement their stagnant incomes....and the combination of ignorance and desperation to replace investments lost in market crashes of the recent past make them easily exploitable by Wall Street sharks looking to blow one bubble after another with other people's money and then pull out their own profits right before the crash.
I mean, seriously....why on Earth would the Dow have risen for a $6,500 ebb in the fall of 2008 back up to nearly $12,000 in April 2011? What has happened in America to possibly inspire such market confidence unless the game has been rigged all along? So I submit that for the foreseeable future, any day that the Dow is above $6,000 is a day that's living on borrowed time...and a "correction" will be imminent. America is very clearly a nation in decline, and nations in decline don't have investment markets that nearly double in three years after a brutal financial crisis. It's all a fraud...and scores of millions of people counting on these investments funding their retirement in lieu of actual livable wages and benefits are gonna learn and relearn this lesson with each new market bubble that is blown and burst. Let's just hope at some point they quit listening to the "analysts" assuring us that those of us in it for the "long-term" will be just fine weathering the latest market collapse.....because I'd bet my stock portfolio on the market's "long-term" value being somewhere in the neighborhood of.....$6,000.
posted by Mark at 8:58 PM
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