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So why is the Dow Jones so high right now?

I'm in a debate with my friend. I want to say it's because of the FED but I need more substance.

Does anyone else have any indicators why the Dow Jones is the highest its been since 2008?



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inflation goes into stocks

inflation goes into stocks too. that's why long term keeps up with inflation just like Weimar Republic if you held stocks you eventually stay with inflation.

Just A Thought

How many Americans have 401K plans? By law the managers of these funds have to buy according to the allocations prescribed by the owner of the account. It seems this would put constant upward pressure on the price of equities.

Over the last few years there seems to be a trend of low market trading volume on the up days and high volume on the down days. Could it be that the low volume upward movement is caused by the big guys staying out while the 401k pressure raises prices? Are the high volume down days the big guys jumping in to reduce their positions?

It takes more Dollars

to equal the same amount of stock.

Cyril's picture

+1 Simply equational. Bear.

+1 Simply equational.

Bear.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Price the Dow in Gold or any Commodity

If you measure the DOW today in ozs. Gold Price you will see it is 7.6 oz. If you measure the DOW 5 years ago it was 24 ozs. of Gold.

It is the dollar that is down, since the dollar is down the DOW appears high...

Alternatively you can price it in Gallons of Gas, or any commodity...for reference of the "real DOW".
Today DOW = 3,100 Gallons Gas, Five Years Ago DOW = 6,700 Gallons of Gas

Here is the FED's Adjusted Money Supply chart.

http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D...

This chart is scary, since we will see some either inflation on fixed commodity goods, or if global easing continues then our savings and wages will be worthless. Same end result...worthless dollar.

"This isn't what the govern meant"

"Win the crowd and you will win your freedom"

when the market goes up

that doesn't necessarily mean the companies are worth more, sometimes it just means the dollar is worth less. A loaf of bread in 1960 was 25cents. Now it's $2.00 - it's the exact same loaf of bread. Actually, now that I think about it, even the bread was better in 1960.

stock market high cuz there is little else where to invest

Even so it is stalled until economy picks up...which is very soon.

Really ?

Most Stock Investors do not account for taxes and inflation and the value of the dollar. Some foreign currencies and off-shore investments have been better than the NYSE.

Although APPL and ELLI have been pretty good, but few non-inside people really rode all the way to 5x values.

I am with Peter Schiff on anything SHORTING the dollar right now is a good bet.

"This isn't what the govern meant"

"Win the crowd and you will win your freedom"

the stock market is a get rich work scheme for the middle class

Not as quick as lotto, but they are lured in by the promise of getting wealthy without work.

So yes they don't account for a lot of things.

BTW: the get rich scheme for the lower middle class this century has been gold. Some of the wealthy got that what by preaching buy gold, then selling gold to them (shiff).

I "should have" bought silver

I "should have" bought silver @ 27/oz. Should I wait for it to drop back down? Or is 34 the new bottom? Where can I get good insight to bond, equity, metals investing? My 401k is all in equities -- small, mid, large and international at about equal proportions. Where can I go to get real advice on asset allocations?

I Bought at $15

And again at $30. Then it went down, and now it's back up.

I'm absolutely confident it will go to $50, and maybe $500 or more per oz. That's how little the dollar will buy.

Have you noticed how dollar bills look smaller and smaller, and more fake every day? Pretty soon, people won't bother to pick them up off the ground.

Pennies, on the other hand, if they look like they're copper, I pick up.

What do you think? http://consequeries.com/

There's a Peter Schiff add right next to your post. Lol

I would start with reading some of his teachings but I'm sure you have already done that. My attitude has always been to ignore the spot price and just buy whether $27 or $34 just buy. Get out of paper as soon as possible and transfer your assets to something solid like metal..

Law and liberty cannot rationally become the objects of our love, unless they first become the objects of our knowledge.

James Wilson

The DOW is priced in dollars

When you print (devalue) money you naturally caus ethe price of anything which is priced in dollars to rise. The all time inflation adjusted high for the DOW was in 1999, not 2007. If inflation adjusted the DOW is about 40% lower than the top line number, or around 8000. The DOW will likely run up to 17000-18000 over the next two years. A leveraged long fund in general would be a good investment to hold for the next 2 years at least. The market party will continue until you see the inflation number go above 5%, and the FED is forced to pull in its horns. There is a lot of gloom out there, but the fed will feed us sugar and make us feel good for as long as they can get away with it, probably 3-5 years more at least, but that is only a very rough guess.

Josh Brueggen
Engineer
Entrepreneur
Gardener
Jack of all Trades
Precinct Commiteeman Precinct 5 Rock Island Co Illinois

Institutional trading specialists...

Remember that last QE...you know, the one where banks were supposed to purchase toxic assets and make their books look better? Well, that's not quite where that money went (that money that you and I are paying interest on).
Each and every morning, between 9:30 and 9:42am, in those first 12 minutes of trading, institutional buyers spend between 1.2 and 1.6 BILLION dollars in the market!! This is the money YOU & I are paying interest on, and the banks are spending it in the market in an effort to keep things propped-up. They are making monstrous profits and we're getting stuck with the check.
To make and analogy of this, imagine a monkey with a bicycle pump trying to keep a beach ball inflated...that beach ball has holes in it, but as long as the monkey and pump like crazy the ball will stay inflated. After a while, however, the monkey is gonna get tired. That day is fast approaching.

------------------
BC
Silence isn't always golden....sometimes it's yellow.

"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them." - Patrick Henry

The DOW going up is an

The DOW going up is an illusion.Since 2008 the DOW has doubled but so has the price of everything else.All that fed money printing causes inflation wherever it goes.Since most of the money went to banks,the stock market has mostly benefitted the rich and banksters.
Gold and silver have also increased because of inflation but they have increased much more,not only keeping up with inflation but surpassing it.It's possible that the DOW may double to 26,000 but gasoline will be $8.00 a gallon and food prices will also skyrocket.As we go forward,Gold and silver will continue to surpass inflation but the DOW will not.

It will keep going up....

In general, it will keep going up, right up until it all comes crashing down. The trick is to know when that's going to happen. Personally, I think it may go up to 15,000 to 16,000 sometime in the next year. At that point, I'll be very tempted to cash out. Yeah, I pay a 10% penalty, but that beats a 50% to 90% penalty once the market cannot sustain itself any more.

In my view, the crash is now inevitable, since Ron Paul did not win. Invest in gold, silver, and even more, in food, water and other survival items, including barter items.

Note that I am definitely NOT a financial expert, so take my opinion with a grain of salt, if you take it at all.

Don't "cash out" and pay the penalty

Instead roll the 401K into an IRA with an attached LLC which can invest in anything. You can do a one time roll over regardless of the 5K per year cap on contributions to an IRA. You can then use the money to invest in hard or semi-hard assets such as farm land, or rental housing. The returns still must go back into the IRA until retirement age. Just an Idea to get out of the market, but still be invested in something with a return. Good hunting.

Josh Brueggen
Engineer
Entrepreneur
Gardener
Jack of all Trades
Precinct Commiteeman Precinct 5 Rock Island Co Illinois

Thanks, Josh!

Sounds a bit complicated to me, but might be worth it...especially since I was already considering buying a parcel of land for self-sustainable living and/or putting together a small community...

Would I be able to invest in the land and then use it for whatever purposes I wanted?

Just to be clear, this is something you can only do once?

That is really good advise

I'm just jumping in to the conversation. I need to look into what your saying and see if it applies to my situation. I have been contributing to my retirement plan through my employer for 5 years which pays 2 1/2 to 1. I won't be vested for another 3 years. Do you know off the top of your head if that strategy works with most retirement plans or just 401k?

Law and liberty cannot rationally become the objects of our love, unless they first become the objects of our knowledge.

James Wilson

Also to mention interest

Also to mention interest rates. Because those on fixed incomes and say pension accounts. CD's have yields of .25% in many instances so there is no protection against inflation and no real increase. So the only option is the stock market. There is no choice for many but to take dangerous chances in the stock market.

Commerce with all nations, alliance with none, should be our motto. - T. Jefferson rЭVO˩ution

"Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.” - BASTIAT

Yes

It's really easy to watch the market when the Fed announces a continuation of the rate cuts, or actually cuts the rate even further...market rallies....like immediately after the announcement hits the air waves. If you want picture overview of it check out this for a more long term view of QE and the market:

http://kenhoma.files.wordpress.com/2012/08/image16.png?w=848...

It's a stock market run based on a fraudulent foundation. Think about how even though they've pumped these trillions of dollars into the market and we still have high unemployment and the economy hasn't really improved that much (stagnated). Now think about when rates are forced up again...which they will. I think this is the major damage starts to happen. They can't keep rates low forever...and when they rise...hold on to you seat.

So why is the Dow Jones so high right now?

It's because of the Federal Reserve buying back U.S. Bonds in order to keep interest rates low. Their logic is that it will create opportunities for people and small businesses to borrow money with low interest rates in order to boost the economy. The problem with that is buying back our own debt isn't a solution to our economic problems because the debt continues to loom over us, increase, and cause our credit ratings to drop thereby devaluing our currency, destroying our reputation, and decreasing the strength of our economy (which is one thing I can agree with Romney about that this makes us weaker as a nation). With low interest rates for bonds, savings, CDs, and money market accounts, investors and businesses have nowhere else to put there money. It can be said that the Fed is doing this intentionally in order to avoid the underlying problems with our economic policies and in order to create the illusion that our economy is picking up.

Simple

Wall Street loves cheap low interest money being pumped into the system. QE3.

Those who expect to reap the blessings of freedom must. like men, undergo the fatigue of supporting it.-Thomas Paine

The R3volution requires action, not observation!!!!

Easy

QEternity inflated Bubble.

The Dow Jones measures stock

The Dow Jones measures stock prices. QE, adding money to the money supply, pushes up prices because it buys less, i.e. there is more of it. The stock market loves QE. See if you can find a Peter Schiff video about this, he is extremely smart.

END THE FED 22nd SEP

come on guys.. its coming up quick we need this on the front page.

Here is a link to my post, but if you don't like it make your own up or vote someone elses up.. I don't care simply get this on the front page.

http://www.dailypaul.com/255310/international-end-the-fed-da...

They just announced QE3. The

They just announced QE3. The market will stay up as long as credit expansion continues, and entrepreneurs will continue to invest because the distortion in the market is sending false signals. This article explains everything
http://mises.org/daily/6197/Why-QE3-Will-Fail

Two reasons, both are the same.

1. Plunge protection team of executive branch.
2. Counsel on Foreign Markets of the Federal Reserve Bank Corporation.

The Rothschild owners of the Fed Reserve Bank Corp create money as debt out of thin air, then they use this false debt money to own everthing, so the stock market is only part of the evil puppet show that debases the audiance as false debt slaves.

The Plunge protection of the President is also a arm of the Rothschild crim orginazation and only a puppet position. This team borrows counter fit false debt money from the Fed corp bank and uses said money to fix the market.

The truth is the truth.

sovereign

Great comments.

So many well-informed minds and inspired hearts in this community. This is the very reason I keep coming back here.

Inflated financials

I would say a part of it is that prices are inflated which will lead to inflated earnings and can lead to the illusion of more value.

Take a look at this chart though, it is the real value (gold adjusted) of the Dow since 1999:

http://www.zerohedge.com/news/zee-stabilitee-wealth-effect-n...

The destruction of wealth has been going on for over a decade and people don't even realize it. We are truly in a bubble economy!