DJIA "Bear's Eye View"

2 Comments

1. Greetings! Chart overlays can indicate a variety of things, convincing one of various true or untrue patterns. I have yet to see a chart which shows the stock market in terms of real currency (i.e. inflation adjusted purchasing power) valuation. Part of the “support” of the markets has been the falling dollar which means over the past decade stock prices appeared to rise, but in dollar terms they didn’t rise as much as they appeared. For example, if the US$ lost 20% of its value while market gained, the gain during the given period would be factored roughly at 80% rather than 100% of the indicated gain.
   As the dollar goes into its inevitable decline due to substantial increases in the money supply, a transfer of ownership of everything in the economy occurs. To see how the stock portfolios can be expected to fare, will depend on who holds the stocks. If individuals with declining purchasing power need the money, they will withdraw from the markets. If the ownership of the stock market has already moved out of private individual’s hands (those who mostly shouldn’t be speculating unless they have money to burn anyway, since the leveraging of derivatives, pre-post market news releases, etc. don’t give individuals the honest edge) to the deeper corporate or government pockets, the markets may not fare poorly. Realizing the fluctuation in currency expected over the next Obama years, the transfer of wealth anticipated will be significant.
   As an individual I traded stocks successfully for several years full time … until it became apparent the natural rhythms and rules that once worked ceased driving the markets.
   Much about the market as with the economic incentives (or disincentives for others), is about transfer of wealth. It would help individuals to realize this as professionals who are better funded than individuals understand the complexities and work them.
   In the above chart, I found it interesting that the big drop happened immediately in 1929 and waited about 40 weeks in the 2007 one. News driven? or does this reflect the more orderly decline of currencies pegged to one another, international investments in our instruments, and the regulations which keep markets afloat which didn’t exist in 1929? There are always many factors to consider as well as plan around.

2. Greetings! Chart overlays can indicate a variety of things, convincing one of various true or untrue patterns. I have yet to see a chart which shows the stock market in terms of real currency valuation. Part of the “support” of the markets has been the falling dollar. Stock prices appeared to rise, but in dollar terms they didn’t rise as they appeared.
   As the dollar goes into its inevitable free fall, it will depend on who holds the stocks how the markets will behave. If the ownership of the stock market has moved out of private individual’s hands (those who mostly shouldn’t be speculating unless they have money to burn anyway, in my opinion), our markets may move differently than one expects if it’s still priced in US$ terms.
   As people are mostly ethnocentric, the fluctuation in the underlying currency is a factor that more should consider in my opinion.
   As an individual I traded stocks successfully for several years full time … until it became apparent the natural rhythms and rules that once worked ceased driving the markets.
   Much about the market as with the economic incentives (or disincentives for others), is about transfer of wealth. It would help individuals to realize this as professionals who are better funded than individuals understand the complexities and work them.
   In the above chart, I found it interesting that the big drop happened immediately in 1929 and waited about 40 weeks in the 2007 one. News driven? or should the overlay actually back up to match the big drops rather than technical start of the bear?

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