Many economic analysts are taking a very bearish position on our stock markets at the moment. We've seen almost unprecedented rises in all the indexes since the inauguration of President Obama in spite of mostly poor news on the employment front. What does this mean? To me it means there is a huge disconnect between the stock market and the health of the overall economy much of the time. The stock market is really the rich guys playground and is not a driver of real economic growth. In fact its not even DRIVEN BY real economic growth much of the time. I for one, am embracing another sharp downturn in our stock markets, so should you.
As I said above, the stock market is the rich guys playground. Over 90% of stocks are owned by less then 10% of people. (When you have stock mutual funds you DO NOT own any of the stock, you are just getting a cut on the returns). When the stock market is doing well they are loathe to do anything for the real economy..... lest it cause that evil inflation!! Those of us who are hoping for some "main street stimulus" have been told we can suck canal water, cuz the big boys are doing quite well and its important for them to be confident. Give them time, we are told (and huge tax cuts too!!) and employment will rise. It might take a decade or so but those 12 million+ out of work just need patience and some job skills and then they will be alright.
The only thing that will get the attention of the masses AND the rich guys is for their stocks to completely tank. A Dow at 5000 will do wonders for getting the attention our economy needs. Build the stock prices from the bottom up they way they are supposed to be built. A company with strong sales will eventually have a valuable stock, but a company with weak sales that is simply slashing costs (CEO speak for a human worker) is an empty shell waiting to crack. We have a market full of empty shells and until they crack no ones going to look at how to get new ones. Its the sad truth of our two tiered economy.
I do need to admit that I am talking my book here because Ive been out of the stock market since '07. Best decision I ever made. Dont look at the Dow numbers any more and could care less what the CNBC dickheads have to say. I realize I have many friends who still have most of their "wealth" in the market and I feel for them. We do not need to be in the playground of the rich, especially as sociopathic as many are today. Until they are threatened with real losses in their holdings nothing is going to change.