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Thread: When does the Dow hit 17,000?

  1. #21

    Default

    Quote Originally Posted by JeffChandler View Post
    P/E ratio of the Dow is currently 16.61. The historical average is 15.5. By this benchmark, the Dow is overvalued. And to make matters worse, many believe that corporate earnings are skewed for the following reasons:
    1) Massive stock buyback programs have changed EPS ratios
    2) Productivity gains are slowing, as staff reductions and technology are not having as heavy effect on bottom lines. You can only push your employees so far.
    3) Cheap money by the FED has artifically lowered corporate expenses
    4) The US economy is overstimulated, making revenues higher than would be without QE

    So, if the Dow PE ratio is high now, given overstated earnings, figure it should be higher when corporations run out of options for dressing up their income statements.

    Clearly, the Dow is too high right now. But then again, to hell with fundamentals, go with your gut! Why not 18,000?
    You could make the argument that the Fed's artificial stimulation is already factored into market prices. People know it and so they invest less in the market. Efficient market hypothesis.

    Also the economy could get better. Not everyone believes that we are headed for certain doom or at least headed there any time soon.

  2. #22

    Default

    Quote Originally Posted by StateOfUnion View Post
    You could make the argument that the Fed's artificial stimulation is already factored into market prices. People know it and so they invest less in the market. Efficient market hypothesis.

    Also the economy could get better. Not everyone believes that we are headed for certain doom or at least headed there any time soon.
    Okay, I'll accept your premise that the Fed's number are cooked into the pudding. And, yes, the economy could get better, and it could get worse. Just look at price. This chart shows the current price of the Dow, in REAL money--Gold. This will normalize the variations of fiat currencies.



    The chart is distorted. The scale shrinks as the ratio rises (so just amplify the peaks and troughs in your mind, exponentially). Consider the aggregate numbers. In October 1929, the dow/gold ration was 16.58. When the market crashed, the ratio dropped to 1.94 in 1933. And, remember the big October 'crash' in 1988? The dow/gold ratio was up to 5.64--maybe not such a big crash after all.

    Today, the ratio is 13.76. It's not an all-time high, but there's certainly a lot of downside.

    In my earlier comment, I cited the Dow P/E ratios as being overvalued. Here, I'm showing aggregate price in real dollars. By either measure, the Dow is overvalued. Could it swing to 17,000 before correcting? Yep. But a prudent investor wouldn't accept that risk.

    I have to assume that, being on a gold forum, we all considering our options relative to gold. Right at this moment in time, your assets are best allocated towards gold. I'm all in.
    Last edited by JeffChandler; 01-28-2014 at 09:41 PM.
    "When at last you have made your fortune, you have only to employ it" - Charles Dickens

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  3. #23

    Wink

    Quote Originally Posted by silverone View Post
    http://money.cnn.com what do you think?
    i think the 10 year bond is dropping along with the market..
    x3

  4. #24

    Default

    Quote Originally Posted by silverone View Post
    http://money.cnn.com what do you think?
    Futures are UP today..
    x3

  5. #25

    Wink

    Quote Originally Posted by silverone View Post
    http://money.cnn.com what do you think?
    i think it may be a while.. (if ever)
    x3

  6. #26

    Wink

    Almost at 15,800 after that little bounce on Friday... (gas hit $3.49 a Gallon here Yesterday) still a ways away from 17,000..
    x3

  7. #27

    Default Market Meltup on Yellen

    I just got out of all my stock market (MZZ, QID) shorts on the market.

    If this is like 2013 the market will melt up in 2014.
    January 2014 was bad for the markets...now it is all forgotten.
    It will take some major problem now to cause a downdraft.
    Maybe Russia/Ukraine, or China/Japan/Phillipines/VietNam ?

    I guess all the layoffs, closings, retail issues, emerging market, and the rest don't 'play' on Wall Street this week.

    The companies will get their bonuses and their stocks will continue to rise.
    Their bottom line will improve as they layoff more workers.

    Just keep an eye out for the 10-year Treasury, today the 3-year had the highest indirects since Aug 2011.

    If the EMs blow up, or the Treasury rates take off to the moon...then the markets might react.

    Doing both now...cash and stackin'...waiting for the next stock market short opportunity.


    Today, Tuesday Feb 11, 2014, ... today must be a POMO day ! look at that, melt up like butter.
    Nothing says they can't be using 'extra' powder on any given POMO.
    Last edited by HardlyPeeved; 02-11-2014 at 02:35 PM.
    Buy Gold and Silver, then wait.
    Gold, Silver: Beautiful Insurance in Ugly Situations
    Monetary triangle: U-Unit of Account, W-Store of Wealth, M-Medium of Exchange.
    PMs are unencumbered tangible fungible fractionable portable durable liquid insurance...without counter party risk; elementary, "Internet Safe" w/o tech issues.
    Silver cheaper than Gold, both precious !!
    Gold and Silver are elemental with no man-in-the-middle.

  8. #28

    Question

    can they keep it over 16,000 today? this should be a fun day to watch..
    x3

  9. #29

    Default Up 126.80 ...

    Quote Originally Posted by silverone View Post
    can they keep it over 16,000 today? this should be a fun day to watch..
    Did you enjoy it?

  10. #30

    Default

    Quote Originally Posted by BodieGhost View Post
    Did you enjoy it?
    i was too busy..
    x3

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