Illusion of wealth: Dow 36,000 even while wiping out 80% of real investment values.Submitted by go213mph on Fri, 02/01/2013 - 20:23
As I keep hearing the dow go up and up...it reminded me of this article I came across sometime last year. Its very interesting. While I personally expect the stock market to behave almost exactly like it did in 2007 - 2008 when the market tanked when it got around 14500, an ever increasing dow...especially if it continues its rapid skyward trajectory while the printing presses are locked in overdrive...might just be another way that Wall-Street and the banksters use to deceive people into thinking that they are making lots of money. Never forget that prices are not increasing...the purchasing power of the dollar is decreasing. Just because a stock price rises does not mean it has increased in real value...in the bizzaro world in which our markets and economy now operate...its entirely possible that regardless of whether the market goes up or down...because of all the money printing, independent investors will likely end up losing either way. People with any sense will buy silver and gold. People that can afford to gamble and have stones of steel can use put options or sell short. But I don't reccomend it. The people that always seem to "guess right" on puts and shorts are people who clearly have access to insider information that us mere mortals are not allowed to see.
Here is the article about dow 36k. Its well worth the read.
To demonstrate why Dow 36,000 could be a nightmare scenario, we will begin with a review of how 70% of stock investor wealth was annihilated the last time the US endured the combination of sustained high unemployment and high rates of monetary inflation. Using a series of simple steps, we will pierce through the generally accepted but false narrative about that market, and show how even with an assumption of "perfect" market timing - that is, buying on the best single day over a near 12 period, and selling on the best single day over an almost 10 year period - that the historical end result was still crippling investor losses, caused by three distinct wealth-destroying forces.
We will then move to today's financial world, and show how the little understood interplay between these same three deadly wealth destroyers could create the glittering illusion of wealth that would be Dow 36,000 - even while wiping out 80% of real investment values.
...Fully understanding this relationship of simultaneous monetary inflation and asset deflation is absolutely essential for financial survival, because there is a very good chance that we may all be seeing the greatest "bull market" in stocks that we have ever seen in the years ahead.