Someone said don't own US stocks b/c the economy
01-21-2008, 05:20 AM
#1
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Someone said don't own US stocks b/c the economy
Somebody here advised that he would not own a dime in US stocks since it was shakey. Note: this was said about 5 months ago which seems to bear out that the US stock market was shakey.
But what effects the biggest market in the world would also effect the rest of the world (ROW)
Today I read than global markets plunge -->>click
UK down 4% France down 4.5% and Germany down 5% and asian benchmark down 7%
Since we live in the US and since the world market is connected does it make sense as the other person advised to not own any US stocks?
Why not own some (most) stocks in the largest economy in the world? If we go down, don't you think India, China, Japan, UK etc. will also be effected?
Just want to hear what people think about this.
But what effects the biggest market in the world would also effect the rest of the world (ROW)
Today I read than global markets plunge -->>click
UK down 4% France down 4.5% and Germany down 5% and asian benchmark down 7%
Since we live in the US and since the world market is connected does it make sense as the other person advised to not own any US stocks?
Why not own some (most) stocks in the largest economy in the world? If we go down, don't you think India, China, Japan, UK etc. will also be effected?
Just want to hear what people think about this.
01-21-2008, 07:51 AM
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As usual, there are many factors at play here. The person you mentioned who said don't own U.S. stocks at that time was probably basing that on the fact we are lacking growth compared to many foreign markets which have become relatively easy to invest in [just a few years ago this was not the case].
However, that doesn't mean we aren't disconnected from the rest of the market. Make no mistake-the U.S. is the global buyer powerhouse. The difference "now" is that the foundation for this relationship is becoming weaker and weaker. Our ability to buy foreign goods at tremendous levels isn't because we are getting richer as a nation proportionally, it's because we are in more debt. The housing equity rise was a shame compared to what people expected [see home prices collapsing], CPI is higher than anyone will admit and our real wage increases are minimal, our trade deficit is broadening [historically not overly significant], the list goes on and on.
There is no doubt [IMO] that the U.S. financial markets and economy and general will slow. I don't give a $hit what name you attatch to it because it won't be 100% accurate until the slowdown is over and that doesn't make me money. The question before was can China, Russia, Brazil, SK, etc. keep up or slightly less than their current growth rates. I think that is fairly obvious now. We've had a GLOBAL bull market for almost 6 years solid. If our bull markets get synchronized what do you expect our down turns to be?
You can still make plenty of money. Healthcare is down 1.7% YTD, to put that in to perspective the major U.S. indexes are down 5-8%. You can still short stocks and you can still make some solid long positions as AAPL, RIMM, and other low/no debt companies get pounded in to more ridiculous price levels. The Hang Seng will probably hit 20,000. It would not be unwise to start dollar costing that index when it gets to that level, it's at 23,xxx now and was at 30,000 just a few months ago.
China only sells us about 30-35% of their goods value wise. That might seem like a good thing if you presume it's mostly cheap junk [i.e. not lexus automobiles] we'll buy anways. However, if they sell 15% to some other east european country that then uses it to make a final product to sell to us [or the rest of europe they are in the same situation we are with their debt risk analysis failure and following housing market collapse] then it becomes much larger than 30-35% by the time you look at the full macroeconomic environment.
I've been expecting this for about half a year now so don't get anxious, it's better this happens now than gets prolonged any more.
However, that doesn't mean we aren't disconnected from the rest of the market. Make no mistake-the U.S. is the global buyer powerhouse. The difference "now" is that the foundation for this relationship is becoming weaker and weaker. Our ability to buy foreign goods at tremendous levels isn't because we are getting richer as a nation proportionally, it's because we are in more debt. The housing equity rise was a shame compared to what people expected [see home prices collapsing], CPI is higher than anyone will admit and our real wage increases are minimal, our trade deficit is broadening [historically not overly significant], the list goes on and on.
There is no doubt [IMO] that the U.S. financial markets and economy and general will slow. I don't give a $hit what name you attatch to it because it won't be 100% accurate until the slowdown is over and that doesn't make me money. The question before was can China, Russia, Brazil, SK, etc. keep up or slightly less than their current growth rates. I think that is fairly obvious now. We've had a GLOBAL bull market for almost 6 years solid. If our bull markets get synchronized what do you expect our down turns to be?
You can still make plenty of money. Healthcare is down 1.7% YTD, to put that in to perspective the major U.S. indexes are down 5-8%. You can still short stocks and you can still make some solid long positions as AAPL, RIMM, and other low/no debt companies get pounded in to more ridiculous price levels. The Hang Seng will probably hit 20,000. It would not be unwise to start dollar costing that index when it gets to that level, it's at 23,xxx now and was at 30,000 just a few months ago.
China only sells us about 30-35% of their goods value wise. That might seem like a good thing if you presume it's mostly cheap junk [i.e. not lexus automobiles] we'll buy anways. However, if they sell 15% to some other east european country that then uses it to make a final product to sell to us [or the rest of europe they are in the same situation we are with their debt risk analysis failure and following housing market collapse] then it becomes much larger than 30-35% by the time you look at the full macroeconomic environment.
I've been expecting this for about half a year now so don't get anxious, it's better this happens now than gets prolonged any more.
01-21-2008, 09:17 AM
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To address the OP....I wouldn't own stocks at all at this point. I just read the other day that David Tice, a renowned bear thinks the US market will drop to below 9000 this year. I agree with him.
When the dust settles, we'll be reading in a few years about how the Fed and US Government ran this country into the ground, how greed by CEOs and BoD's completely hallowed out American manufacturing and left us as basically a third world country.
Let's face it...this country will not be standing in 10 years. You will see the greatest collapse of a society in your lifetime. It will not be for the faint of heart. If you feel like spending money...don't buy stocks...buy guns and ammo.
When the dust settles, we'll be reading in a few years about how the Fed and US Government ran this country into the ground, how greed by CEOs and BoD's completely hallowed out American manufacturing and left us as basically a third world country.
Let's face it...this country will not be standing in 10 years. You will see the greatest collapse of a society in your lifetime. It will not be for the faint of heart. If you feel like spending money...don't buy stocks...buy guns and ammo.
01-21-2008, 10:55 AM
#5
Originally Posted by GPMike,Jan 21 2008, 10:17 AM
To address the OP....I wouldn't own stocks at all at this point. I just read the other day that David Tice, a renowned bear thinks the US market will drop to below 9000 this year. I agree with him.
When the dust settles, we'll be reading in a few years about how the Fed and US Government ran this country into the ground, how greed by CEOs and BoD's completely hallowed out American manufacturing and left us as basically a third world country.
Let's face it...this country will not be standing in 10 years. You will see the greatest collapse of a society in your lifetime. It will not be for the faint of heart. If you feel like spending money...don't buy stocks...buy guns and ammo.
When the dust settles, we'll be reading in a few years about how the Fed and US Government ran this country into the ground, how greed by CEOs and BoD's completely hallowed out American manufacturing and left us as basically a third world country.
Let's face it...this country will not be standing in 10 years. You will see the greatest collapse of a society in your lifetime. It will not be for the faint of heart. If you feel like spending money...don't buy stocks...buy guns and ammo.
won't exist in 10 years? bwahahahahahaha Trending Topics
01-21-2008, 04:22 PM
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Originally Posted by GPMike,Jan 21 2008, 10:17 AM
To address the OP....I wouldn't own stocks at all at this point. I just read the other day that David Tice, a renowned bear thinks the US market will drop to below 9000 this year. I agree with him.
When the dust settles, we'll be reading in a few years about how the Fed and US Government ran this country into the ground, how greed by CEOs and BoD's completely hallowed out American manufacturing and left us as basically a third world country.
Let's face it...this country will not be standing in 10 years. You will see the greatest collapse of a society in your lifetime. It will not be for the faint of heart. If you feel like spending money...don't buy stocks...buy guns and ammo.
When the dust settles, we'll be reading in a few years about how the Fed and US Government ran this country into the ground, how greed by CEOs and BoD's completely hallowed out American manufacturing and left us as basically a third world country.
Let's face it...this country will not be standing in 10 years. You will see the greatest collapse of a society in your lifetime. It will not be for the faint of heart. If you feel like spending money...don't buy stocks...buy guns and ammo.
While GP's 'theory' sounds a little ridiculous, you always get these sorts of things when world wide indexes are dropping 5% by the day. People were saying exactly what GPMike is saying during the 1987 crash. Does that mean he's wrong? Not necessarily, he could know some stuff we don't and be correct. But I wouldn't bet on it.
01-21-2008, 05:29 PM
#10
I believe GPMike leans a bit toward the overly paranoid side. While the US is losing (or has lost?) it's status as the world's greatest economy, there's still a tremendous amount of value creation via our great, innovative workforce.
Yes, our economy has a lot of problems, and unfortunately I don't see any easy, short term fixes, but I'm confident that we will come of out it and rebuild.
Yes, our economy has a lot of problems, and unfortunately I don't see any easy, short term fixes, but I'm confident that we will come of out it and rebuild.