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The only chart that matters for the past 3 decades, courtesy of Morgan Stanley.
And the same idea, from Katana Capital
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Occam's razor.
Until you correct S&P 500 for POG. Then you get an entirely different outcome.
Your complicating the razor bro'.
Pardon my ignorance, but what is POG?
That is "gold-enthusiast" parlance: "Price Of Gold".
POG is a fat and happy (rotund, thus the "O") two legged pig of the corporate kind. This term has an open license. Use it all you want ZH.
It's a morning drink in Hawaii- pineapple, orange & Guava. Quite tasty actually.
add some rum, curacao and orgeat, a little lime.
I prefere it without the POG.
perhaps a long(er) enough timeline is in order here?
the concept of opportunity cost. i think i read about this in kindergarten
And continues to keep them buoyant !! Entire generations of Americans have been had and looks new generations will be had as well !!
What's gonna keep equities "buoyant" now that bond yields are going up?
Printing more dollars will float equities. Bulls won't sell until 10% off highs and Bears are afraid to do anything which explains the VIX. All IMHO.
higher taxes and fees maybe ?
would draaisma agree ~ only chart that matters ?
just bc something seems to be, or even is, Occam's Mach 3 ... doesn't mean it is accurate.
You're complicating the razor, bro'. Its friday afternoon; lay up and play for par.
I would be very interested to see that chart in "constant
dollars" and logarithmically (the SPX)....it would make
an enormous difference
I would like to see the same chart in "constant dollars"
and the SPX on a logarithmic scale....it would change it
completely
Equities used to pay dividends ... now they are nothing more than "greater fool chips" ... surely someone will come along and take them off my hands at a profit!? right?!
Bingo.
99.9% of all public companies eventually go bust.
To quote Benjamin Graham, "Dividends are the only reason to own common stocks".
Common stocks have now become nothing more than insanely expensive lottery tickets.
I would add: as soon as the "unwashed masses" with their 401k contributions and other passive investments understand this basic truth -- well then, WIPEOUT for the stock market averages! Don't think the public won't wake up to the truth. The public will always be blind to much around them... but to specific ideas or concepts - they will catch up at a time uncertain - and probably all at once!
"Don't think the public won't wake up to the truth."
How many more freakin' alarm bells do they need, and why will this one be the one to finally stir them from their Plasma TV induced slumber?
That same TV that has medicated them all this while, will continue to sooth them with constant morphine-like assurances that this is all being done in the public best interest, and recovery is right around the corner if we will all follow the sound fiscal guidance of our leaders...
agreed... perhaps rather than "waking up to the truth" it might be more accurate to say "scared into capitulative selling" thus allowing stock market levels to become more aligned with rationality.
To quote Benjamin Graham, "Dividends are the only reason to own common stocks".
Common stocks have now become nothing more than insanely expensive lottery tickets.
The crazy thing is that Graham's most famous disciple is bullish on the markets, although he has been quiet since the BNI purchase. Maybe he's starting to see this market's reached nosebleed levels?
100% of all humans eventually die. Quick, lets stop living.
This is totally STUPID and 100% INCORRECT. 99.9% of all public companies DO NOT evenutally go bust.
First of all, I think 1 of the original 12 Dow companies from >100 years ago is still around. So thats 9% of companies... exactly 90x 0.1%.
Second, fully 1/2 of the rest of them... WERE ACQUIRED FOR CASH.. and either went private or exist as a part of a current company. General Electric, Cisco, Microsoft, Coke, Berkshire Hathaway, Blackstone, JP Morgan, etc - are all conglomerate.
Third, many companies that YES, went bankrupt or liquidated eventually... SPUN OFF MANY OTHER COMPANIES.
So overall, this is the dumbest statement basically of "names change" rather than saying anything about L-T value.
Silly silly people. Stay in your gold (flat since 1980!)
Silly silly people. Stay in your gold (flat since 1980!)
Because of the manipulation of the gold market. And silver market. And...... Again once the demand goes parabolic there will be no shorts they won't be able to keep up. Either that or they will be taking paper profits. Gensler has to get his head out of his ass.
"greater fool chips" indeed...
Which is precisely why I NEVER BUY ANY STOCK EVER unless:
a) it pays dividends
b) I sell near term, near-the-money calls against it at the time of purchase
c) or both
I am only interested in pasing my money through the market, in the form of transactions which culminate in the near term and make me a modest gain.
I am interested in owning money, not stocks, and all my stock & options trasnactions are made with that though in mind.
If I don't get called, I sell them a little deeper in the money next time around.
Selling options and receiving dividends are the only two legitimate reasons to have any money in the market, with the possible exception of buying some way-out-of-the-money call & put LEAPS for cheap to tray to catch a market wave inexpensively.
Plain vanilla "buy & hold" is for suckers.
PS: You can also sell puts to enter a stock trade position on an advantageous basis.
selling options gives one a false sense of control.. it lets the fox fool the chickens but the hawks will eat either...
unless you are a very clever, big fox....and the option traders all think they are
If you study a little option theory, you'll quickly learn that selling covered calls is identical to selling naked puts at the same strike. (See the put-call parity theorem).
Selling naked puts can work well for a long time -- until it doesn't. Just ask Victor Niederhoffer.
Here comes the next robbery:
http://www.businessweek.com/news/2010-01-08/americans-oppose-initiatives-limiting-401-k-choices-ici-says.html
Here comes the next robbery:
http://www.businessweek.com/news/2010-01-08/americans-oppose-initiatives-limiting-401-k-choices-ici-says.html
This just means that SS will become like a self directed 401k maybe with a few more options oh like I don't know treasuries and US bonds.
It's the douche from the CBO that is in the Obama admin. Look at the two books he wrote about "fixing" SS. There you go.
Who will get the no bid government contract? Hmmmm. Let me guess. How about whichever one the US government has the biggest stake in.
more on the latest conspiracy of the Fed monkeying around with 401Ks vis a vis forced conversion to Treasurys
http://www.cnbc.com/id/15840232?video=1380436773&play=1 (a minute or two into the interview Bill wakes up for a moment and asks about a rumor that Santelli has reported)
http://market-ticker.denninger.net/archives/1830-401kIRA-Screw-Job-Comin...
http://www.businessweek.com/news/2010-01-08/americans-oppose-initiatives...
Expect this and other desperate schemes to harness the long bond yield. An exploding yield on the 10 year would amplify what the Invisible Hand has been unable to do with all of the indirect schemes to jumpstart residential lending.
The looting of 401/IRA will probably be proposed with some tax advantaged bait on the hook.
Resistance at many levels can be expected. But a National Economic Emergency Bill would not surprise me......tied to an accelerating pricing crash on long dated bonds. Wouldn't surprise me at all.
the tipoff was a few months ago when obama and geithner started talking up "saving" as the new American paradigm.
they will do anything to get more $$ into treasuries. yes, even crash the equity markets, whatever it takes.
i think the european markets tank first this time around while the US trades sideways for half the year
people will unwind into the emerging markets..but china will crash since that is old news and greater fools will come too late to the party..
just a shell game but the money has to go somewhere
This article was conducted by a company that has a lot to lose if annuity options gain traction (unless it gets in the business as well). Like a lot of election/political polling, they have raised the red herring of being coerced into an annuity option in order to stir the pot and protect their baileywick. And lo and behold, folks being polled recoiled.
Not saying that a desperate gov't that may at some point start scrounging for spare change between sofa cushions won't try to go where some posters think it is going, but first things first.
This thing is being engineered by ICI, and they apparently are doing a bang-up job. However, a healthy backlash by the public may help keep it form going to the dark side on down the road, so to speak.
printing more money surely isnt going to help ust 10y stay low. i think whichever way it goes - inflation or deflation - the result will be the same: stocks heading lower. there's no escape, there's a "new normal" coming, forget the last two decades.
We are converting to Treasuries because everything else (literally everything paper) is bust and isn't moving.
Ivy League Econ 101, Treasuries are the safest 'investment' [*cough* *cough*]
Gold: Is there anything it can't do?
As long as the Hft machines are operational, the stock market will remain healthy. The taxpayer feed the flash trades. Can somebody explain when this won't work anymore? The market has been in a world of it's own. Cut off from the rest of civilization. When will this fucker pop?
barring a major geopolitical event, it will pop when Mr. Efficient Market makes one of his appearances. He always shows up, it's just that he doesn't respect time constraints.
A cruel mistress who exists to inflict maximum pain.
Ditto. When Mr. Market suddenly zooms up in his caddy he's gonna jump and start slapping all the bitches who ain't got his money.
"And one ring to rule them all."
Welcome to Mordor.
The best is behind on this metric. If the UST 10yr keeps bumping around this mark thru 2010-2911 it will not be because the Fed wants it there but because it daren't raise rates. The economy is in the ditch. If equities remain elevated they will be performing their own version of the Indian rope trick.
this also has positive implications
assuming not much of the capital is destroyed
if we start growing from here sustainably
we can grow forever
Yeah, growing a service-the-debt economy 'cause we damn sure won't be "growing" any fundamental capital. "We'll" be debasing it.
come on - we havent even legalized weed, gambling & prostitution everywhere yet..there is plenty of growth left
Only truth the public needs is 3-D television and a longer vibrating telephone.
BINGO. And many people think 1980-2000 was an era of "unprecedented wealth creation".
http://www.financialsense.com/fsu/editorials/shepherd/2009/1112.html
Govt. imposed abnormally low rates overprices risk.
And make no mistake....reckoning will show up one day....
...............................
But while were are at it....one could use their imagination....
Here's two choices ....which one is better....
1) Obamanomics
Govt. grows as a percentage of the overall economy ....and
grows even more hungry....as economic food grows more scarce.....
The Fed thinks that it is smoothing the process by adding $Trillions in costs ....to the same economic box....
And will demand more from less.....using additional tax impositions such as an add on VAT...in addition to higher individual and corporate taxes....
Obamanomics is an economy in conflict with itself....
2) A Sole 15% Consumption Tax only
10% to the states....5% to the Fed....NO INDIVIDUAL OR CORPORATE taxes....This tax take is paid by the actual user....and quickly develops increases in valuations .....that are far more real ....than makeshift inefficient propositions imposed by a govt....
If the US were to add total economic asset valuations from both approaches over a 10 year period....choice #2 would dwarf the #1 result a thousand fold....
10% to the states....5% to the Fed....NO INDIVIDUAL OR CORPORATE taxes....
Given that in 2006, local, state, and federal spending totalled 36% of GDP, how are you going to finance that on a 15% tax? Nice try, moron.
Some of us using a fraction of the computer power these firms have access to have come to the same conclusion a few years beforehand...
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3585763
Warning! These charts contain graphic images of government perpetrated intercourse upon unwitting taxpayers. Viewing not recommended for the faint of heart.
great analysis Guido
great stuff! so why dont we pay the homebuilders to not build??? like we do the farmers?
... ROFLMAO... I wouldn't say that too loudly mate... it's not like Turbo Timmy and the gang need more creative ideas... good one.
In looking at these charts, esp. the gold to commodities index, it seems to me that gold is basically in a bubble relative to everything else. It is similar to the way stocks were viewed in 1999. I own gold (both physical and miner shares) and advocate sound money, hate the Fed, etc, but the valuations of gold are a little frightening when chart after chart shows an unrelenting bull market for gold. It could be that gold is in a 20 year cycle and will go higher for ten years, but I expect that gold is not immune from a bubble or the inevitable consequence of a one-sided, seemingly obvious trade (a sharp, big reversal).
I don't disagree with your take. Hence the reason I plot trend lines. When the trend changes, I'll review my position. Till then, gold it is.
That said, chart number 126 that plots the price of gold vs the value of the Dollar should give you some comfort. I freely admit it is clumsy but it is the best I can do to account for the devaluation of the US$ since 1980. This chart does not appear too extreme .... yet.
The thing is that in a fiat monetary system, inflation progressively shows up in fewer and fewer sectors until, towards the end, it only shows up in the financial sector. That's because the finance sector is the first in line for the use of new fiat money. Thus the finance sector benefits at the outset of the inflationary dynamic as it does at the conclusion of it and at all stages in between. Throughout the inflationary dyanmic, many sectors are inflated way out of proportion to intrinsic value. So there is an argument for viewing gold's eight year run in a context of an economy that has been inflated for over 97 years since the creation of the modern Dollar.
Funny thing inflation is.