ht tp://news.yahoo.com/s/ap/20090206/ap_on_bi_st_ma_re/wall_street
So, this article claims that the stock market rallied because investors think the spending bill will pass. Do you guys agree? Or do you think investors are actually betting that the spending bill will not pass?
I predict a drop in the stock market to 5000-6000 if the spending bill passes, as funds are moved from the stock market to t-bills.
I have tried to notice trends in the market, and the movement since September has defied logic. On a day when unemployment shows it is surging upwards with no end in sight, I fully expected the market to tank. I honestly think that people have been de-sensitized to the realities showing all around them. Another part of it is that there are certainly bargains to be had if you play the market daily, and many feel it has hit bottom (which I disagree with).
Austrian Economics has made me loose money in the stock market in the short term (for the stocks I’ve sold prior to recent rallies). This is because when news such as a new stimulus bill comes out, or worst ever unemployment numbers, I see it as a terrible thing and I want to run the other way. Therefore, days before I sell my stocks. This is not mainstream thinking.
Wall Street and pretty much everyone else are all Keynesians. They believe it’s great for the Fed to counterfit money for the government to misallocate and spend spend spend. The more the better. While this is a terrible Zimbabwe style monetary policy that will do no good and only lead to huge economic collapse, everyone mainstream has their fingers crossed that this will be the fix. Also, there’s a lot of speculation in the market now. You’d have to be an idiot to invest long term in American stocks right now. Most big investers are in one day for the expected boom based on Obama cheer leading but once that peaks out the smart investors will just short the stocks and get out.
If you want to make money on the short term you have to think like a Keynesian, considering it’s all Keynesians that are moving the markets. When news comes out like some new gov’t intervention plan like new price fixing or tarrifs or nationalization and your Austrian brain tells you it’s terrible then you should do like the Keynesians and buy buy buy.
Remember, with all the inflation the Fed is creating and the stimulus packages it is the ones who first receive this new money who benefit. They benefit at the expense of the rest of us, having to pay higher prices for few remaining goods being chased by more money. They get to buy before the prices rise, therefore their profits will be higher than those of us who buy later at higher prices.
Money printing = wealth destruction for the rest of us who aren’t first in line at the money troff .