Dow actually flat last 12 months !

[ex_jew]

Has anyone else pointed out that while the Dow was zooming from 8500 to 10250, the dollar was slumping from $1.03 to $1.24 per Euro ? The Dow went up 20% at the very same time the dollar went down 20%. I think it's safe to say that the zooming Dow is a complete mirage. No wonder there are few other signs of a healthy economy.

[rogerashton]

1. If you are a European investor, that's true.

And it is probably the reason European investors are diving out of US stocks -- which could lead to some real problems.

The DOW, however, is not an index of economic well-being.

[tom_paine]

2. Unfortunately Corporate TV Pravda often makes it out to be just that

And the Imperial Subjects of Amerika just sort of nod along...

[Frank Rose]

3. Dow, gas, unemployment......

Hello,
Just want to add: Dow is BACK to 10k (2.4k short of the high and 10k short of 1998 projections for 2004) gas prices are down to $0.60 higher than 1999, unemployment is down to 2002 levels, and this the good news? They don't want to talk about debt/deficit, world opinion, trade balance...

[INTELBYTES]

5. Hey Frank!!

From another semi-newbie, welcome to the DU!!
:hi:

[Capn Sunshine]

22. welcome both of you

nice to see some articulate balanced posts :)

[BurtWorm]

6. Excellent points. It's got a long way to go to 11,000, where it was

at its peak during the Clinton years.

[Frodo]

4. That would only be true if...

... americans invested in the stock market with something OTHER than dollars.

Since a dollar is still worth a dollar.

[ze_dscherman]

15. How do you think money is pouring INTO the U.S.?

There's lots of invenstment from foreign countries propping up the U.S. economy. The stock market is not for Americans only.

Don't forget, the U.S. is running a HUGE trade deficit. To balance this, it needs lots of money pouring in, via stocks, bonds, or by buing the ever faster printed dollars. Like someone hemmorraghing that needs a constant blood transfusion.
If neither stocks nor bonds are attractive to foreign investors, this vital supply dwindles. Exactly this is happening right now, with foreign investment leaving bonds and dollar. Had foreign banks like the Bank of Japan not intervened massively (BoJ intervened by buying about 160 bn $$$ this year), and were the Eurozone not in crisis as well, the U.S. currency would be in much bigger trouble. And stocks as well.

[Frodo]

16. But that isn't particularly relevant.

Investors in other countries don't vote here. It doesn't affect anything politically for someone in Spain to lose money in the US markets. If the market is going up, people here in the US are making money (generally).

Yes, it can cause some investors overseas to "sell", but any sales are obviously already included in the market averages and if the dollar continues to get cheaper you get more incentive to "buy low" from people overseas than you get people trying to sell AFTER they've already lost money.

[West Coast Democrat]

18. A dollar is not worth a dollar

if you're planning a trip to Europe

[Frodo]

25. True, but that's the "beauty" of it.

People DON'T travel to europe (at least not as likely as they would be in strong-dollar times). They stay here and go to the beach instead. Or Six Flags. Or something.

And on the other side of the pond people are marginally MORE likely to come spend their money here than they would have been with dollars more expensive.

The only thing that affects the value of the dollar here in the states is inflation (non-existant) and any international activity you go in for (like buying things that are only made overseas)

[West Coast Democrat]

26. No, It's Not Beautiful

I can't even afford to go to Canada anymore.

[Frodo]

28. So I take it you won't be spending any money there this month???

I think that's what they're hoping for.

[info being]

7. I've been saying that for a while

I think you're right on.

[Yavin4]

8. The Dow Is Mostly Tied To Fed Interest Rate Policy

Unless there are other larger mitigating factors like the tech boom in the late 90s which kept propelling the Dow and the Nasdaq even though interest rates were high or 9/11 and its aftermath which kept the Dow low even though interest rates were low, without such large events, the Dow follows interest rates. The recent announcement by the Fed that low interest rates would stay in place for most of 2004 has meant that the Dow is nearing 10,000.

[Frodo]

17. The DOW is MOSTLY tied to corporate profits.

If rates are going up because the economy is growing rapidly, you'll still see large increases in the DOW. On the other hand, rates have been low (and gotten lower) during the last four years... three of which have been "down".

[West Coast Democrat]

19. Stock Market is not necessarily tied to corporate profits

but to expected earnings

[Frodo]

24. True. And a great big dose of psychology.

I'm just saying that interest rates aren't the primary driving force behind stock prices.

[rumguy]

21. corporate profits

from crappier jobs, with few or no benefits - and the easing of enviro. regs allowing companies to pollute at will.

It's the rich getting richer, the poor getting poorer - the middle class still treading water - and the environment going down a hell hole.

[nolabels]

9. Does anybody think the stock market is indicator about the average.......

Jane / Joe is doing? Most people don't own stock and retirement funds they are part of have gotten taken to the cleaners lately. Mostly nowadays when the Dow goes up its only because they have figured out a new way to screw the general public in my opinion.

Really it does not seem to me that any real forward progress is being made on the US economic front as of late, but there seems to be a few people getting richer of the misery of others.

Maybe I am mistaken but it seems that this is what happened at the start of the depression back in the late twenties. Speculators getting rich, oblivious to the world around them, just like the great ponzi scene it was.

[Yupster]

13. From 2000 Exit Poll

Do you own stocks?

Yes - 70 %
No - 30 %

Of the people who owned stocks, they voted Bush 51-47
Of the people who didn't own stocks, they voted Gore 52-45

[Robb]

10. My amusing father-in-law

...is retired, and always talks about how he eats out more when the Dow is doing better, and tends to stay home when it's not.

Anyhow, kinda funny: the day after they caught Saddam, and the markets went up until noon, then fell a bit by close, his comment to me was "Well, thank God I didn't go out to brunch like I planned!" :)

[beyurslf]

11. And when they talk about the GDP rising at its fastest rate

in 20 years, they are comparing it the same quarter last year. That's like saying the last place cell phone company is the "fastest growing" company. Well yeah... because they have the most growth potential.

[Marxistman]

14. Confused.

This really makes no sense.

[catmandu57]

12. There isn't anywhere else to put money

Savings accounts make very little sense, one almost has to pay the bank to hold their money. I see that as a big reason the dow is so high, it's the only game in town.

[West Coast Democrat]

20. Very True

Millionares, especially, don't want their money to just be sitting there making nothing, and with the dollar losing more value every day, leaving money in a savings account is a money-loser.

[moondust]

23. Looks like a giddy bubble to me.

I don't know what P/E ratios are now but I suspect they are pretty high. Likely still a lot of creative crookkeeping out there.

[Gin]

27. "expected earning" caught my eye in another post.....

I heard stock analysts say on a tv show (before the enron fiasco)that "they" set the numbers the stock has to meet...the companies do whatever they have to, to meet those projections.

Something is not right with this picture.

[moondust]

29. Right.

It's all relative and hinges on whether or not a company meets Wall Street's expectations which can be lowered at any time as far as I know. Sort of like the Bush campaign lowering expectations in order to set the stage for people to later be impressed when he does little or nothing.