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Dow Highest Since May 2008? Maybe Not?

Tyler Durden's picture




 

The headlines are crowing of the magnificent CAT earnings (channel stuffing?) which in turn is helping the Dow reach its highest point since May 2008 (CAT is responsible for 27 of the Dow's 30 point gain today alone). This must be the signal that we-the-consuming-people need to borrow-and-spend again right? Well, no. Unfortunately, as many already know, the process of indexing is implicitly flawed in many ways - most importantly survivorship bias. If we compare the performance of the components of the Dow at the start of 2008 to the actual Dow index performance, there is a very significant divergence of around 7% (or around 900 points). This is actually understating the difference (as it is an average) as we note that 5 of the 30 names from 2008 have lost more than 70% of their value (GM, AIG, C, BAC, and AA) since January 2008 (averaging -88% among those). Three names have risen by more than 70% (MCD, HD, and IBM - thank you Warren) as 18 of the 2008 Dow 30 names are lower (on average -36.5%) with the remaining 12 Dow 2008 names up on average 33%. What is worse is the realization of the dramatic loss in real purchasing power as Gold has risen by more than 100% since the start of January 2008 as the Fed continues to realize it can abuse the lemming-like focus on nominal returns.

Dow compared to the Average performance of the 2008 Dow names and Gold.

The Dow and the Dow adjusted for Gold's purchasing power.

 

If it were not for CAT, HD, MCD, and IBM things would look a lot different as we note CAT is up 24% year-to-date (beaten only by the dramatic 32% gain in BofA) and is adding 27 points to the Dow today alone.

 

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Thu, 01/26/2012 - 12:41 | 2099856 Derpmonger
Derpmonger's picture

Al-Qaeda should have hit wallstreet on 9/11.

Thu, 01/26/2012 - 12:53 | 2099899 derek_vineyard
derek_vineyard's picture

Isn't wall street a 'cell' plant by Al-Qaeda?

Thu, 01/26/2012 - 12:59 | 2099916 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Turn those two things around and you have it.

Thu, 01/26/2012 - 15:10 | 2100463 onebir
onebir's picture

Someone did ~ 70 years 360 days earlier

http://en.wikipedia.org/wiki/Wall_Street_bombing

The WTC tower tenants were mostly financials.  Seems even t3rr0r1sm has a long wave...

Thu, 01/26/2012 - 12:42 | 2099858 idea_hamster
idea_hamster's picture

Worst. Graph. Ever.

Thu, 01/26/2012 - 12:57 | 2099907 JPM Hater001
JPM Hater001's picture

This is what we call orgy chart porn. If you don't like orgies well...

Thu, 01/26/2012 - 13:05 | 2099943 Alea Iactaest
Alea Iactaest's picture

I'm OK with orgies. I'm OK with charts. I'm OK with chart orgies. That said, charts should (ideally) make complex relationships easier to see/comprehend. So if the point of that last chart is to show the widely ranging results of each DOW component then I have to beleive there is a better (e.g., clearer and/or simpler) way to make that point.

 

None if this is meant to say I don't like that last chart. I do. It also makes me want to calculate DJI performance without the top and bottom deciles and quintiles -- the central 80% and 60%.

Thu, 01/26/2012 - 14:38 | 2100363 akak
akak's picture

I think that last chart was actually an electroencephalogram of RobotTarder while he was listening to Bernanke's speech yesterday.

Thu, 01/26/2012 - 19:12 | 2101154 LongBallsShortBrains
LongBallsShortBrains's picture

Or a lie detector at the state of the yoonyun speech.

Thu, 01/26/2012 - 14:59 | 2100444 onebir
onebir's picture

You can get a pretty good sense of that by ignoring the top and bottom six lines :)

Thu, 01/26/2012 - 12:42 | 2099859 GeneMarchbanks
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'What is worse is the realization of the dramatic loss in real purchasing power as Gold has risen by more than 100% since the start of January as the Fed continues to realize it can abuse the lemming-like focus on nominal returns.'

That realization is going to hurt. Right Robo?

Thu, 01/26/2012 - 12:44 | 2099864 laspeyres
laspeyres's picture

since when did gold become a useful measuring of purchasing power? Were you celebrating the fact that our purchasing power had increased 20% in Q4 when gold dropped that much?

Thu, 01/26/2012 - 12:48 | 2099885 SheepDog-One
SheepDog-One's picture

Gold is the most relevant pricing measurement to me...I know lemmings like to look at what the FED wants you to look at, price in fiat printed up dollars, but I'll stick to 'priced in gold' thanks.

Thu, 01/26/2012 - 12:57 | 2099908 laspeyres
laspeyres's picture

OK, well then the bad news for you is that everything you own fell by 2/3 in real terms since the start of 2007 (add any extra nominal losses on top of this). The good news is that any debts you have also fell by 2/3 in your preferred measure of reality. You can thank the Fed for that.

Thu, 01/26/2012 - 12:57 | 2099910 laspeyres
laspeyres's picture

OK, well then the bad news for you is that everything you own fell by 2/3 in real terms since the start of 2007 (add any extra nominal losses on top of this). The good news is that any debts you have also fell by 2/3 in your preferred measure of reality. You can thank the Fed for that.

Thu, 01/26/2012 - 13:02 | 2099925 SheepDog-One
SheepDog-One's picture

Remember, just hit 'save' 1 time.

Otherwise......WOW its great that you know SO MUCH about me! 'Everything I own fell 2/3rds'? Uh, no...not at all really, because I dont deal with US fiat dollars. And I dont have any debts, so that category is out too.

Thu, 01/26/2012 - 13:21 | 2100005 laspeyres
laspeyres's picture

Well you sound very clever.

Thu, 01/26/2012 - 13:54 | 2100170 fuu
fuu's picture

11 posts in 2 years. First post 23 weeks ago. Been saving this one for a rainy day haven't you?

Thu, 01/26/2012 - 14:22 | 2100287 laspeyres
laspeyres's picture

Snoop. Monkey. Just getting a bit bored of retarded yanks bleating on about conspiracy, gold and the Fed and not understanding anything. 

Thu, 01/26/2012 - 15:29 | 2100552 slewie the pi-rat
slewie the pi-rat's picture

that's not much a reason to turn into a blithering/blathering/ troll, mate

perhaps you also wanted a little attention?

if you're not too busy preening, try the GATA website or johnnysilverbear's place [or maybe yer search engine of choice] and you'll find plenty of reputable links to the FED's (and PPT's) gold suppression trading schemes which have been well-documented and are therefore factual to most

since this is done in "secret" [sorry, that is simply a fact] and the FED does not act alone, it is, by definition, a conspiracy ['nother fact]

this leads me to understand that you = ignorant shitheaded asswipe = laspeyres

however, i gave you a greenie for Snoop. Monkey.

 

Thu, 01/26/2012 - 13:01 | 2099923 Dr. Engali
Dr. Engali's picture

Do you understand that the value of gold isn't going up? The buying power (value) of the dollar is dropping.

Thu, 01/26/2012 - 14:25 | 2100289 akak
akak's picture

Actually, over the last ten years BOTH the buying power of the dollar has been dropping (as has been the case since the end of the gold standard) AND the value of gold has been going up.  While I don't think the latter will continue to happen indefinitely, it is nice while it lasts (at least for those who own gold).

Thu, 01/26/2012 - 14:00 | 2100200 resurger
resurger's picture

Gold is OWNAGE!

Thu, 01/26/2012 - 12:44 | 2099867 random shots
random shots's picture

So what you are saying is that some stocks have gone up in value and some have gone down in value?

Thu, 01/26/2012 - 12:48 | 2099882 Dr. Engali
Dr. Engali's picture

I believe what he is saying is that a lot of sheeple look to the DOW as a sign of economic health. And based on the fact that three stocks are lifting the DOW higher that notion is far from the truth.

Thu, 01/26/2012 - 12:51 | 2099894 SheepDog-One
SheepDog-One's picture

Exactly, americans have been trained like the brainless sheeple they are to equate the DOW with 'overall economic health' of course theres nothing further from the truth but it works because sheeple can always be relied upon to be sheeple.

On the ride home all americans have to hear is 'And the DOW was up 40 points' and all-is-well.

Thu, 01/26/2012 - 12:57 | 2099911 duo
duo's picture

if banking is an "industry", then I guess so is retail and making hamburgers

Thu, 01/26/2012 - 14:28 | 2100317 akak
akak's picture

And so I guess the Mafia is really the informal market wholesale and personal protection industry.

Thu, 01/26/2012 - 12:45 | 2099871 SheepDog-One
SheepDog-One's picture

Remember CAT is an 'ObaMao partner', therefore theyre allowed to say whatever they want, I dont believe a word of their BS. 

Thu, 01/26/2012 - 12:46 | 2099875 falak pema
falak pema's picture

Aapl, caterpillar, are now going to shove the roller coaster to the hopium side; while BDI makes it dive along with Euro doom n gloom. Perfect symmetry, the key word, in this many balls in the air game. Play on Oligarchs. 

Junk stocks are now stars, Mike Milken resurrected. I love roller coasters, and although I feel I am perpetually 23 in my head, it would be nice to feel 13 to please the MSM crowd. GO long roller coaster rides in 2012. 

Thu, 01/26/2012 - 13:00 | 2099919 GeneMarchbanks
GeneMarchbanks's picture

'Mike Milken resurrected.'

Except there's no RICO in sight...

Turns out you just have to make the racket bigger hence 'globalization'.

Thu, 01/26/2012 - 13:04 | 2099940 SheepDog-One
SheepDog-One's picture

Except when globalization means a loss, such as Greece, we have a Jamie Dimon to inform us we have NO direct exposure to them! Of course thats all BS, as 'indirect exposure' is likely in the trillions.

Thu, 01/26/2012 - 13:15 | 2099877 DaddabhaJataka
DaddabhaJataka's picture

I think that a follow-up chart of the normalized performance of the S&P 500 components from January 2008 is apropos, even if the result would resemble work by Jackson Pollock, not unlike the last graphic above.

Thu, 01/26/2012 - 12:47 | 2099879 sangell
sangell's picture

Stock 'hedonics'!

Thu, 01/26/2012 - 12:49 | 2099888 Gamma735
Gamma735's picture

WooHOO!  A new BUll Market!  Or wait...   a new Bull shit Market.   

Thu, 01/26/2012 - 12:52 | 2099896 spdrdr
spdrdr's picture

"as Gold has risen by more than 100% since the start of January .."

At this rate, it will be $55,000 by Christmas.

Thu, 01/26/2012 - 14:48 | 2100378 akak
akak's picture

"as Gold has risen by more than 100% since the start of January .."

... since January of 2008.

 

As a total aside (speaking of a "two thousand" year), has anybody else noticed the strange and universal predilection of every corporate-controlled media parrot to say the years now as "twenty twelve" or "twenty fourteen" instead of the more rational "two thousand twelve" or "two thousand fourteen"?  NOBODY I know in real life talks of the years that way, nor did anybody talk about "twenty oh eight" or "twenty hundred", so why start this "twenty" thing now?  It just bugs me --- but the complete unanimity of the media parrots on this matter (like so many others) is downright creepy.

Thu, 01/26/2012 - 18:16 | 2101026 spdrdr
spdrdr's picture

akak,

The original posting was as I set out, when originally posted at 11:38.  My comment was at 11:52, 14 minutes later.

In between my comment and yours, the words "of 2008" were added.  I know, because I directly copied and pasted for my comment.

Anyway, to get to the important point - "Twenty Twelve" is completely  logical, and in accordance with historical references.  We don't say "Two Thousand Twelve", just like we didn't say "One Thousand Nine Hundred Twelve".

We say "Eighteen Twelve", "Nineteen Twelve", and now "Twenty Twelve".

In Twenty Ninety-Two we will look back at Fourteen Ninety-two.

That's logic.....

 

 

Thu, 01/26/2012 - 18:35 | 2101074 akak
akak's picture

Actually, I have to politefully disagree.

The most logical way to say the years would be to do exactly as I stated --- "two thousand twelve", or "two thousand one hundred fourteen", or whatever --- which is, incidentally, EXACTLY how years are named in EVERY other language which I know EXCEPT for English.  In Spanish or French or Polish, for example, one did NOT say "nineteen seventy-five", one said "one thousand nine hundred seventy-five".  Why do we, or why should we, do anything different in English?

I will stick with saying "two thousand ---- " until I die.

Thu, 01/26/2012 - 19:44 | 2101228 d_senti
d_senti's picture

The Cambridge Encyclopedia guy predicted that we'd all start saying "twenty" instead of "two thousand" around the 2011-2012 period. Something to do with speech cadence. I suspect that all the news anchors want to sound like they're "in the know," so they all started doing it. I'm sure the 2012 Olympics helped too (as they're officially the twenty-twelve olympics). I suspect that the twenty thing will overtake two thousand over the next few years, or at least by 2020 (see? you said twenty twenty didn't you?).

Thu, 01/26/2012 - 12:56 | 2099905 SheepDog-One
SheepDog-One's picture

George Soros says to get ready for severe economic chaos, 'period of evil' starting early 2012, and advises americans to stock up on guns and ammo.

! N: Soros on 2012, Gold/Silver Zoom, Israel vs. Iran 2012 and MORE! - YouTube

Thu, 01/26/2012 - 13:02 | 2099924 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

He is a vampire and Americans have let him into their house.  Now he is telling them he is going to suck their blood.  And Americans will accept the promise of eternal life.

Thu, 01/26/2012 - 13:13 | 2099974 SheepDog-One
SheepDog-One's picture

Sure, Soros is the one who designed the period of evil no doubt. I guess it must be part of 'the rules' that you have to admit at least once what it is youre doing....somehow 'fair play' to the insane elite I guess.

Thu, 01/26/2012 - 13:00 | 2099921 Dre4dwolf
Dre4dwolf's picture

Lol the last chart is complete chaos and pointless.

 

Thu, 01/26/2012 - 13:03 | 2099929 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

um....did you read it or are you just thinking out loud?

Thu, 01/26/2012 - 13:03 | 2099930 laspeyres
laspeyres's picture

This is bullshit.

a) The dow is a comedy index and everybody knows that.

b) You should have used total returns and not prices.

c) debtors rejoice! if gold measures pricing power, then the Fed has reduced the real value of all debt by 85% since 2000. 

 

Thu, 01/26/2012 - 13:04 | 2099937 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Exactly the Fed's goal.  Bernanke is the greatest alchemist ever!

Can't you see him wearing a wizard's hat and stirring a pot of lead?

Thu, 01/26/2012 - 13:03 | 2099932 laspeyres
laspeyres's picture

This is bullshit.

a) The dow is a comedy index and everybody knows that.

b) You should have used total returns and not prices.

c) debtors rejoice! if gold measures pricing power, then the Fed has reduced the real value of all debt by 85% since 2000. 

 

Thu, 01/26/2012 - 13:17 | 2099958 SheepDog-One
SheepDog-One's picture

Whats wrong, your keyboard messed up or do you have spastic seizures?

Anyway, try to concentrate on hitting 'save' just once. 

Lets see...'The DOW is a comedy index (true) and everyone knows that (false).

No, in reality the average american debt slave thinks the DOW is in fact the only relevant overall economic indicator around. So now that there is near zero volume in the DOW, the FED Maniacal Monetizers know they can use that to keep the sheeple in their green pastures chewing on their green shoots not expecting a bit of the impending total collapse.

'Debt has been reduced 85% since 2000'...I dont know how you figure that, and the dollar has been devalued by at least that much since then anyway.

Thu, 01/26/2012 - 13:21 | 2099996 slewie the pi-rat
slewie the pi-rat's picture

sometimes i have seizu

Thu, 01/26/2012 - 13:54 | 2100173 laspeyres
laspeyres's picture

You are clearly a total retard. 

  • The volume of stocks traded on the Dow has flatlined for the last decade. Did you just make that one up?
  • Gold has increased 5.5x since 2000, so any asset deflated by it has fallen by about 80%. 
  • Housing, based on this measure has fallen by 80% since the start of the financial crisis.
  • Only a halfwit would decide that it is a good idea to adopt gold as the universal benchmark of value after it has risen 600%. I bet you were talking about tech a lot, up 'til about June 2000. 
Thu, 01/26/2012 - 14:09 | 2100240 fuu
fuu's picture

Bravo Johny, bravo.

Thu, 01/26/2012 - 13:12 | 2099971 GeneMarchbanks
GeneMarchbanks's picture

You just said that.

Thu, 01/26/2012 - 13:04 | 2099934 NEOSERF
NEOSERF's picture

$8 Gasoline and $6 Big Mac is coming to a town near you...not to mention $400K college educations and $2500 rent...

Thu, 01/26/2012 - 13:08 | 2099956 njrod
njrod's picture

conservative estimates...

Thu, 01/26/2012 - 13:10 | 2099961 SheepDog-One
SheepDog-One's picture

But....our debt is '2/3rds less', measured in fiat dollars....doesnt that mean we're all multi-billionaires?

Thu, 01/26/2012 - 13:35 | 2099986 RazorForex
RazorForex's picture

The Mini NSDQ is in overbought territory and there has not been a good pullback in a long time. There is currently a very bearish scenario developing on the NQ futures. This is signaling possible reversal on all 3 indecies.

MINI NSDQ Divergence Video

http://www.youtube.com/watch?v=ukgoNRBgMbg

Thu, 01/26/2012 - 13:21 | 2100006 boeing747
boeing747's picture

It will be more obvious if he can compare DOW with GDP, TOTAL DEBTS (PUBIC&PRIVATE) and M3, FED&C0's balance sheet.

 

Thu, 01/26/2012 - 13:25 | 2100024 Cult_of_Reason
Cult_of_Reason's picture

Bernanke: USA is Japan

Here is what it means for the stock market:

NIKKEI 225

http://forecast-chart.com/historical-nikkei-225.html

Thu, 01/26/2012 - 13:58 | 2100189 resurger
resurger's picture

Pumping more money into the MARKETS WONT WORK!!!!!!!!

Dont these mother fuckers learn?!!!

Thu, 01/26/2012 - 14:32 | 2100339 akak
akak's picture

Sure it "works" --- it is just that their final goals do not coincide with yours or mine, nor the average American's.

Thu, 01/26/2012 - 13:26 | 2100027 disabledvet
disabledvet's picture

More like "channel surfing." I mean these folks are so phucking terrified they can't even broadcast the Asian openings anymore! VICTORY...ZERO HEDGE!!!!!!

Thu, 01/26/2012 - 13:35 | 2100073 slewie the pi-rat
slewie the pi-rat's picture

charlie & ed would be so proud!  (est. 1882)

Charles_Henry_Dow.jpg  (ed's photo has was dropped from the index in 1932) 

 

 

Thu, 01/26/2012 - 13:51 | 2100157 rsnoble
rsnoble's picture

I like the Picasso chart at the bottom. Pick your own asshole, asshole!

Thu, 01/26/2012 - 13:53 | 2100166 skepticCarl
skepticCarl's picture

Spin it any way you wish, the fact is stocks are UP.  Maybe they shouldn't be, maybe they won't be tomorrow, maybe precious metals or some commodities are up more.  But let's not deny that stocks, U.S. and worldwide, are in classic rally mode.

Thu, 01/26/2012 - 13:59 | 2100195 resurger
resurger's picture

Am short CAT at the moment!

Peace!

Thu, 01/26/2012 - 14:20 | 2100280 RopeADope
RopeADope's picture

With foreign governments selling their Treasury holdings and investing in BA & CAT equipment? Why not wait until they are net purchasers of Treasuries again.

Thu, 01/26/2012 - 16:54 | 2100803 resurger
resurger's picture

Sure man! remember that the money you pump to buy their expensive stocks is used to make their fucking CEOS Richer!

Remeber that the stocks are rising on no solid grounds, which means

There will be blood....

Its your call...

Thu, 01/26/2012 - 15:36 | 2100578 CPL
CPL's picture

Their isn't enough diesel to go around anymore I would wholeheartedly concur.

Thu, 01/26/2012 - 15:33 | 2100564 CPL
CPL's picture

I wonder what they are going to fill the fuel tanks with in five months.  Probably hopium.

 

It's certainly not going to be diesel.

Thu, 01/26/2012 - 16:48 | 2100785 resurger
resurger's picture

 

Join in Raping CVX ... The true value of this company should be close to the short term US treasuries!

Must watch!

http://www.crudethemovie.com/

"Take off is optional, landing is a must"

Do NOT follow this link or you will be banned from the site!