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the end of the bull market?

$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
money, money, money.com
Barring a miracle - or the creation of a New Math of the market variety - there's no way we'll ever see a bull market along the lines of what so many of us grew up with. During that enchanted period, the boring old S&P returned more than 19% a year. When you include compounding, your money more than doubled every four years. Pretty slick.
if only even mostly true, i think this'll be responsible - or symptomatic - of a long-term economic slowdown. hope i'm wrong, but i just don't see a way to keep significant economic progress w/o a bull market.
 

LordOpie

MOTHER HEN
Oct 17, 2002
21,033
0
Denver
As we go more global, we start to approach the average of the growth of the globe. Since we're #1, we have no where to go but down.
 

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,007
149
The Cleft of Venus
fvck! i sould have bailed back in Oct... dammit.

Time to take meh money out of the market and buy land.


*edit: Short of a full blown depression however, i'd say they are smoking obama weed...
 

dante

Unabomber
Feb 13, 2004
8,815
8
looking for classic NE singletrack
OH MY GOD!!! :panic: Rich people will have to *work* for their income!


And the author of the piece is entirely correct. Stocks, when nobody was in the market were extremely cheap and returned big dividends. Now that there's so much more money in the market (everybody's dabbling, and have the majority of their 401ks, 403bs, and most pension plans), everything's diluted and stocks aren't so cheap anymore. Hell, the proposed "personal Social Security plan" that the government put forth a couple years ago would dump even MORE money into the market. That money has to go somewhere, and increasing demand without increasing supply (of worthwhile stocks) means prices on stocks are going to go up (and relative dividend yield will go down).

The flip side, is that most people (the vast, vast, vast majority) either have little to no money in the market, or it's tied up in IRAs, 401k/403b, 529s, etc. Few people I know have a significant amount ($500k+) in the market, and nobody (except retirees) is counting on it to live off of. If it returns 15%, great. If it returns 10%, fine, if it returns 5% it still beats the paltry 3.4% savings rate I'm currently getting.

edit: the second point is why I think that the bush tax cuts that reduced the capital gain rate were centered, squarely, on the rich. every time I heard a statistic about how this was helping the 75% (or whatever) of people who had money in the market, I didn't hear any breakdown on a) how many people had money in non-tax-deferred accounts or b) what that mean amount was. I highly doubt that the "average person" got more than a couple hundred bucks of a tax break...
 

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,007
149
The Cleft of Venus
awww fvck it... let's just have some pizza and beer and forget about all this...



Oh wait!!!

:disgust1:

Pizza and beer now cost an arm and a leg
MSNBC

http://www.msnbc.msn.com/id/23415510/
.....
Pizza makers have seen their cheese costs soar this year from $1.30 a pound to $1.76 a pound. Even worse, the flour used to make the dough has gone from $3-$7 dollars a bushel to $25 a bushel in less than a year.

Beer makers have been forced to raise their prices because of the skyrocketing price of hops – one of the principle ingredients. The price of hops has gone from about $4 a pound in September to $40 a pound. The price of barley, beer’s other main ingredient, has nearly doubled....
 

valve bouncer

Master Dildoist
Feb 11, 2002
7,791
36
Japan
Must be a good time to be a farmer. In fact I was reading the other day that in Australia the FCI (Farmer Complaints Index) is at all time low despite the drought. Apparently only 31.6% of all words out of a farmer's mouth are complaints. Amazing.
 

$tinkle

Expert on blowing
Feb 12, 2003
14,591
5
yeah, but you can't take it to the park without getting aqualung stares like you can a leaf blower.
 

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,007
149
The Cleft of Venus
Bond Funds anyone???

March 8, 2008
US Fed releases $200bn as credit crisis hits new depths

http://business.timesonline.co.uk/to...cle3508468.ece
Siobhan Kennedy

The global credit crisis plunged to new depths yesterday as persistent fears over the collapse of a large financial institution caused funding markets to dry up and forced the US Federal Reserve to make available up to $200 billion (£99.3 billion) of emergency financing.

The Fed said that a “rapid deterioration” in the credit markets in recent days had prompted it to begin a series of fresh cash injections in an effort to shore up the balance sheets of America’s stricken banks. Unemployment also shot up in the US last month, adding to the gloom. US stocks tumbled, dragging the Dow Jones industrial average down 138.40 points to 11.902.00. Treasury prices jumped and the dollar fell to record lows.

Bankers said that the moves underscored the deepening severity of the crisis, which was triggered last June by the collapse of the American sub-prime mortgage market and has got progressively worse since. One senior banker in London said: “This is the beginning of the real credit crisis and it’s not going to end without a major casualty.”

Sources said that the present crisis was triggered by cash-strapped banks starting to get tough with their hedge fund clients by making margin calls on loans and drastically raising interest rate payments overnight. The move has pushed the funds into the panic-selling of assets, mostly AAA-rated US mortgage securities, and several are thought to be on the brink of collapse. One of them, Carlyle Capital Corporation (CCC), said yesterday that overnight it had received “substantial additional margin calls” linked to its souring investments in US mortgages.

Thornburg, the US mortgage lender, exacerbated investor jitters when it said that it did not have enough cash to meet $610 million of margin calls. Last week Peloton, a London hedge fund, collapsed after it became unable to meet the banks’ demands.

Bankers said that the problem was related to a perceived increased risk surrounding the AAA-rated prime mortgages and to the consequences of dangerous overleveraging of the funds themselves. In the case of Carlyle, its CCC fund had leveraged its assets by $30 for every $1 of its own cash.

“The whole industry was created by cheap debt,” the banking source said. “It was really all just an illusion.”

Underlining the Fed’s desperate attempts to calm markets, for the first time it said that it would accept mortgage-backed assets as collateral from the banks for fresh loans. As the fear spread, the perceived risk of owning US corporate bonds - measured by the widening of credit spreads – also rose to its highest level.

Friedman, Billings, Ramsey, the US analyst firm, said that the US financial industry would need $1 trillion of permanent capital to maintain current pricing of mortgage assets. However, it added that the industry would not be able to obtain that amount.

Shares of Carlyle’s CCC fund were suspended in Amsterdam yesterday as it disclosed that it had received more default notices from its lenders and that some of those lenders had been forced to sell CCC’s mortgage assets in an effort to recover their loans. The dire forecast came only 24 hours after CCC said that it had been issued with $37 million of margin calls from lenders, having satisfied $60 million of calls only the week before.

Sean Egan, of the Egan-Jones Ratings Company, said: “When financial history is written, the Carlyle liquidation will go down as one of the single most major events. Carlyle has built an image as one of the smartest investors around, and to see one of its funds fall apart shows there is a fundamental problem with themarket.”