The thing about the stock market that bothers me.

I have no complains

 

Of course there are ways- but most would involve some kind of conspiracy to avoid the law, thereby violating law.

One of the questions about that would be- Is the law likely to be enforced? Laws that aren't are invitations to violation, not corrections.
We are seeing very selective use of laws today, not anything resembling uniform justice.

 

Agree, but depositors get SCREWED when interest rates on their savings are deliberately crushed to zero so that speculators of all kinds can run wild with essentially interest-free money!

This has gone on non-stop from August 2007 until just a very few months ago.







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Sure, but I am sure that even a rookie financial advisor would tell them to move their money out of a savings or CD accounts when the stock market has gone up five-fold.

It didn't start in 2007, because rates were very low already in 2003 and everyone was taking floating rate loans, which killed them few years later when Fed rates jumped to 5%.

 

Right! And now, as a direct consequence the stock markets are insanely overvalued, the world is awash in vast amounts of imaginary money generated by the Fed, the ECB, and other big-league central banks, and everyone's economy is in disarray.

Just this morning it was announced that the United States has hit a national debt level of $31 Trillion Dollars. Our national debt-to-GDP ratio had already ballooned to 137%, and if there's anything about that recommends any central bank should continue blowing smoke up the stock market's ass, I can't imagine what it would be....







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I remember clearly that the Fed starting pushing interest rates downward forcefully in Q3 2007. It never even made a pretense of raising them again for years after the 'Great Recession' officially ENDED in June 2009.






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It was 137% in 2020, thanks to tsunami of new money, but it has decreased to 121%

They were very low in 2003 and 2004 and Greenspan stood in front of the TV cameras telling people to take advantage of 'exotic' loans. It was election year, soooo......Well, people took his advice, and lost their houses few years later when rates shot up to 5% (APR mortgage rates much higher), and then the entire economy collapsed. That is when they cut rates to near zero and kept it there for a long time.

 

And the universally agreed-upon tipping-point into inevitable financial wreckage (by all respected economists) for any nation's economy is ~76% - 77%. I'll double-check that 121% figure... you might be right, based on newer information than I saw, but in any case, it's not (NOT) good for us at all!






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As of the end of December 2021, the last official report showed 137.2%. There are not any newer figures that I could find that are official.

Link: https://tradingeconomics.com/united-states/government-debt-to-gdp

Where did you see it has dropped to 121%? And, considering that our national debt has swelled to $31 Trillion as of this morning, why would it have dropped at all?









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Not even close to being true. Nearly 50% of American families have investments in the stock markets. Beyond that pensions for union members and government workers are amongst the largest.

Yeah, there is some of that going on, but long term trends are driven by long term investors

"Growing" probably isn't the correct term - we're just barely back to pre-pandemic levels at this point.

Maybe because you've been fed the LW mantra of the "evil rich" by the LW/Democratic Party; if they can convince you only they can "protect you from the evil rich you'll vote for them.

 

It drops when the economy expands. Expanding the economy is the only way to deal with national debt


Federal Debt: Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S)
Observation:

Q2 2022: 121.07100 (+ more)
Updated: Sep 29, 2022

https://fred.stlouisfed.org/series/GFDEGDQ188S

 

The way to win in the market is to do the exact opposite of what the headlines are saying.

 

Thank you for that information, Pro. From the very peculiar behavior exhibited on that graph it sure looks like someone began "cooking the books" -- BUT, if so, that definitely wasn't done by you, sir!

I wonder if the ratio will deteriorate again once our mounting $31 Trillion Dollar national debt is factored into the next report? Thanks again for providing that source!






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Of course the national debt is factored in. The rate of increase in debt has slowed by a lot compared to the insanity of 2020 (actually this year was $380B below forecast), while the size of economy has increased.

 

The stock market is currently not insanely overvalued:



The Dow P/E ratio is currently 17.8. It hasn't been consistently under the 20 level since 2014.

So, if you thought the stock market was overvalued now, you shouldn't have been investing since 2014. Where would THAT have gotten you?

Now, in the late 1990s, there was definitely concern about overvaluation, as was the case in late 2020, when P/E ratio was high because earnings (the denominator) were low.

If you decided to be out of the market above P/E of 18, you would have missed much of the stock market gains since the 1980s.

Food for thought.

 

The way to win in the market is to not pay attention at all to what the headlines are saying. DCA, buy and hold low-cost index funds and rebalance once a year, according to your risk tolerance, and you'll be on the way to a good retirement.

 

Long term still exist and is not gambling. Dollar cost averaging and compounding long term is still the best investment out there. In the old days people bought utilities and big blue chips for dividends and growth stocks for growth.

 

Andnif you are still in you earning and saving years regular routine contributions to you accounts over time.

 

Well, OK, but I looked it up and at the end of December 2021, the national debt was $28.4 Trillion Dollars. Now, even though the debt-to-GDP ratio has dropped to 121% from 137%, as your data from the government points out, the debt itself, as reported today, has INCREASED to $31 Trillion Dollars.

It seems then that our national 'productivity' has skyrocketed almost beyond belief, just like we've been told... right? But, according to the World Bank, in 2022, the United States has a GDP of $20.89 Trillion Dollars. It's the best in the world, but is it THAT good...?

I didn't major in Math, but I believe our debt ($31 Trillion Dollars) is ~147% of our GDP ($20.89 Trillion Dollars). Did I do that calculation wrong? I'm not saying that the World Bank, the U. S. Government, or yourself are wrong, but if I could have miscalculated a ratio as simple as that one is, then I must not be understanding how these two factors interplay with each other. The raw number, 31, is very close to being 147% greater than the raw number 21, right?









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Nice to think about, but impossible to implement. Even a blindfolded chimp can outperform most highly paid fund managers.

 

Yet the tried and true method to investing in the stock market, mostly for us common folks is in 401K plans, is to hold them long term.

The market ebbs and flows up and down. But for the history of the stock market so far, it's be up in the long term.

 

IDK. I am more perplexed by why my 401K is down 23% on the year and my self-managed brokerage is up 8%. If it weren't for the employer match, I would ditch the 401K. I do get dividends but they get automatically reinvested in the same company's stock that produces them. if there is one thing I have gleaned from rich old people is buy, never sell. Over a lifetime, you can build up a nice portfolio

 

the stock market should reflect human choices.

 

Vast majority of 401Ks are self managed, so you can change your distributions to other funds.

 

The distinction is the difference of managing risk (risking a small sum over and over w/ expected probable gains --like OWNING a casino-- versus risking a probable loss w/ a rare chance of gain (losing money at roulette).

Sure, one can say that every time we breathe in we risk never being able to breathe out again, but let's face it, that SILLY. That's why when people say--

--it's when I point out that we're corrupting the language when we ignore the fact that risking w/ probable success is NOT gambling w/ probably loss.