Thursday, September 06, 2012

Oh, by the way the stock market hit a 12 year high today...

**** Sorry for the long radio silence.  I've hinted at some major changes that could be coming and I hope to reveal more on that subject in the next week. 

Back to the markets - seriously, that isn't a joke.  The NASDAQ is at it's highest levels since October 2000. 

* That's a year before 9/11
* That's 6 weeks before Florida's hanging chads would give us GW Bush's first term.
* The number one song in the country was "Music" by Madonna
* The average cost of a gallon of gas was a laughable $1.51 (side note: while looking up that stat I saw a story that said "Gas Prices Soar: Smashing the $2 mark")

So what gives?  All we hear is gloom and doom about how terrible things are yet the markets are partying like is the middle of the dotbomb era.  Turn on any talking head it's "$16 trillion in debt, 47 million on food stamps, buy your 25 year supply of freeze dried calf livers for $188.25, blah, blah, blah."

Well, this isn't an easy question to answer.  First, the US stock market is largely comprised of global firms doing business around the world and frankly many of their profit levels are near record levels.  Historically, high profit levels have filtered down to employees as companies have shared their success.  Higher profits have also historically led to expansions which further primes the pump of the economy.  However, in today's world companies hold onto every precious penny like it's a gold ring in a Peter Jackson movie. 

Second, Apple rules the world.  Apple represents about 13% of the stock market.  The stock has been on a complete tear this summer - adding $55 billion in market value (more than Facebook's total value) in just the last month!!  The expectations that millions of people are going to fall all over themselves to get the new iphone next week has been driving this stock and because it has an unreal impact on the stock market that has pushed up the market.

Third, hope rules the day.  There is a great deal of fear that the global economies are slipping back into recession.  This fear has caused governments to consider intervening in the markets as they did in 2008.  If you remember in 2007 and 2008 as the economies started to falter, the stock markets were near their 2000 levels again on the HOPE that we were going to get a kick save from the governments.  However, we all know what happened 6 months later.

I've said multiple times that 2012 has a very 2008 feel to it but I might be a year early and maybe we're actually in a 2007 pattern.

Hit me up with any questions because there has been a great deal of activity over the past couple of months.

Again, apologies for the slow posting but I have some good news coming and I hope my loyal readers will be the first to spread the word :)


Deepak said...
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