Friday, March 6, 2015

Damn Dow

Let me see if I got this straight. When US job numbers are up, signifying good times, the Dow reflects this optimism by going up. Times are good, prosperity reigns.

When job numbers are down this signifies hard times and the Dow drops. Times are not so good. Investments suffer, fewer Porches are bought. Following so far? Good.

Today job numbers are WAY up. Times are really good! Obama is doing a fantastic job! People are working. consumers are consuming, cash is flowing. All indicators are positive. The Dow should be headed for record territory, right? Yes, using the above logic, times are really good and us small investors should profit along with business and the 1%.

But no. The Dow is currently down 280 points in the face of this great news and it's little Canadian follower, the TSX is down 150 points. Times are really good. No, they are really bad!

What can we learn from this? Well it seems that times are so good that Wall Street fears "The Fed" is going to notice and will raise interest rates, thereby turning really good times into bad times.

I am not complaining. My small-medium portfolio is up several thousand for the year so far (About 3% in two months). Not bad but not enough to pay for my teeth. Some people have done much, much worse. Specially those who were into oil or diversified into oil. I diversified into precious metals which have been dragging me down as well lately but not as much as oil would have. Many of the people who have lost big actually know what they are doing, or thought they did. All I do is trust someone who I hope knows what he is doing. So far it seems he does.

32 comments:

  1. No, it's not because Obama is doing a fantastic job that the numbers are up. It's because the Republicans took both houses and there's relief in sight.

    ;)

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    1. Yes there is Don. Hillary is next. The last time things were really good in the Us was when another Clinton was President.

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  2. I am very happy with my investment returns so far this year. I don't know how they translate in numbers, but it seems like a huge leap to me each month. I switched planners a while back and the new guy moved my money around and seems to be getting a lot more for it. I trust that he knows what he's doing. It sounds like your guy is good as well.

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  3. Actually, the market does best when a Democrat is president.
    http://billinnebr.blogspot.com/2012/10/which-political-party-does-stock-market.html

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    1. Can you show proof that it's due to the Democrat being president instead of ALL KINDS of OTHER ISSUES that drive the market, the least of which is whether a Democrat or Republican is in the white house?

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    2. Well Don, if you read my post you will see that it was statistical data from JP Morgan (I didn't make it up) and was only as related to how the market did when which party was in the White House and Congress. I also said, "It sure seems that when the Democrats have some majority control, whether the White House or Congress, the stock market performs better and returns are higher. I’ll let the ideologues argue the details, but from what I can tell Democrats are not a hindrance to the stock market." Obviously other forces impact the market. Not unlike when the Republicans deregulated and allowed the banks to cause the 2008 crash with mortgage derivatives. Now that the Republicans are in control in Congress they are doing everything they can to eviscerate Dodd-Frank. So, yes it does matter who is in the White House.

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    3. How about the overwhelming evidence that it was the CRA that caused the 2008 crash? Any comments on that?

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    4. What I have to say is that I am aware of that bogus claim that the CRA lead to banks risky lending. Studies have shown that it was accounting control fraud by banks who wished to report stellar profits to fend of regulatory reform, not the CRA, that was one contributing factor to the crash.

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  4. http://content.screencast.com/users/donlafferty/folders/Jing/media/2ce5fce3-1f1a-45f3-978c-51883bffd9e2/2015-03-06_1822.png

    That's one of the most telling graphs about how the country has done over the last sixty some years.

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    1. Huh?! What does that have to do with the Dow?

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    2. It doesn't, it has to do with how the country is doing vs which president. I thought it was self-explanatory.

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  5. Lol...Croft...the DJIA hit a record all time high only 3 days ago. It was due for a drop...

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  6. Ah...yes....the market? Unless one has strong insider knowledge, it's anyone's guess why your formula for growth does not ring true at times. Being diversified is a good thing. And it seems you are sufficiently diversified to weather the storms.

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    1. And I am always thinking, "If only I had it all in ___" I would have made twice as much.

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  7. We don't do the politics thing, but do know our investments are supporting us, and then some, thats all that matters to us.

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  8. ye pI am one of those unfortunate souls who is diversified into the oil sector and yes we have paid the price... now if it will only go back up (and it eventually will)...

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    1. One thing about the market, it always comes back. Just wait it out.

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    2. Exactly. Just don't jump at every little bit of news or Chicken Little ranting.

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    3. A blogging friend who is heavily into oil said, "It is OK to panic, just make sure you are the first to panic".

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  9. for me Croft the only market I worry about it the Mexican market...do they have watermelon today, strawberries today.....making light I know..good luck... my investments let me live my lifestyle ...the other thing you could do if you DARE is limit Norma's store time!!!!!!!!!Cheers les

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    1. May as well try to stop the tides Les!

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  10. I've never invested in the stock market as I feel the game is pretty much rigged - just like casinos. I do buy lotto tickets though.

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    1. I was given an interesting piece of advice about 20 years ago. If you are willing to deposit your money in a bank savings account, why wouldn't you purchase that same bank's stock? It was given to me by a bank manager, but despite the admittedly biased perspective it's been good advice. Our bank stock have done a whole lot better than any savings account.

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    2. My father in law always said he would rather play the horses.

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  11. "Some people have done much, much worse" = ME!!!!
    But there's no loss until you sell and I'm not selling anytime soon.
    On the upside, this energy spanking has taught me to diversify. Again. Same lesson I learned in 2008, 2011, 2013, etc, etc...
    It doesn't seem to be taking. My skull must be thicker than I thought :)

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    1. It was you I was thinking of Kelsi ;) Yes just grit your teeth and wait it out!

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  12. Obama is doing a fantastic job... Of wrecking the country!

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    1. Way to go, Bill! If you guys ever tire of Obama, send him North to Canada.

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  13. If one is gambling in the market with borrowed funds, interest rate hikes take the cushion out of the bet. The dreaded margin call from the broker is something anyone gambling in the market has to fear, so even a whiff of wind in the direction of a rate hike sends people to the cash-out window .

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    1. Thanks for this Norm. I never considered that people invested with borrowed money but yes, of course they do. I recall having a friend who took out a mortgage to invest the money in mutual funds. Puts things in a slightly different light.

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