Oh dear. Is it 2008 all over again?

Discussion in 'Stock Market Forum' started by User911, Aug 22, 2015.

  1. AtlantaSports

    AtlantaSports Senior Investor

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    I have a feeling that it is only going to go down before anything gets better.
     
  2. User911

    User911 Well-Known Member

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    That was a good point you made about the housing market. I had forgotten about that aspect and yes, it was a critical component of what went wrong back in 2008. However, we have had a VERY lackluster growth rate for years now and we have no wiggle room in our budget either considering that we are 18 trillion in debt. Different problems but we'll see if they have a different result, I guess.
     
  3. Onionman

    Onionman Senior Investor

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    There are definitely going to be some good buying opportunities here. I'm just not sure whether it is yet. I'd certainly be more wary on some of the high beta areas and things like social media or biotech. A lot of hype and hot air pushed them up. I think it pays well to go for boring and blue chip in this kind of environment.
     
  4. crimsonghost747

    crimsonghost747 Senior Investor

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    Too bad I'm working full time now with no access to a computer during the day, certainly some nice opportunities here.
    I've got a bit of cash on my brokerage account now waiting... got a couple of things in mind but I'm waiting at least until tomorrow before doing anything.. hopefully we will see one more big down day this week.
     
  5. baudwalk

    baudwalk Senior Investor

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    Am I missing something? Why just not use your brokerage's Android or iOS app? I'm with Fidelity; the app is installed on both a phone and a 4G LTE tablet. I toss the tablet in the car when on the road. (For security reasons I don't use open/public WiFi spots when accessing my account.) I rarely have to go to the full web site, but I can do so with the tablet.
     
    Last edited: Aug 26, 2015
  6. norms options

    norms options Well-Known Member

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    I'm with you crimsonghost. The market is always going to have pullbacks and corrections and the occasional bear. It proves that you are wise when you look at these as buying opportunities instead of worrying about the value of your investments when the market drops. I don't think we have even begun to see the end of this one. I think we are in for a long steep tumble before the year ends, but that is just my gut feeling. Obviously I cannot predict the market accurately, nor can anyone for that matter. Take your lumps and continue to build the portfolio.
     
  7. avion

    avion Member

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    It actually WAS all corporate greed that caused the housing crisis

    No actually it was all corporate greed. Bankers earned fees for mortgages. More mortgages, more fees. Since banks could sell off risky loans to the secondary markets mixed in with good loans and let investors be screwed by defaults, there was no incentive to screen out risky mortgagees. Banks abandoned all reasonable standards like 20% down payments (so the buyer has a stake in the house and doesn't want to lose it), Principle Interest Taxes and Insurance less than 35% of gross income (to ensure ability to pay), and fixed rate loans (to ensure affordability in the future). Instead banks made loans with 0% down, no income documentation at all and low teaser rates and variable rate mortgages that rose with interest rates and made previously affordable loans unaffordable. It was the banks' fault, not the mortgagees and not government. Per the mostly republican committee that reviewed Fannie Mae and Freddie Mac: "Only 4% of all loans purchased by Freddie between 2005 and 2008 were purchased 'specifically because they contributed to the [homeownership] goals.'"
     
    Last edited by a moderator: Jul 8, 2016
  8. avion

    avion Member

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    Reported inflation understated and reported earnings overstated. Mkts could be in for trouble.

    The Consumer Price Index (CPI) definition has been changed twice since 1980 and no longer reflects reality. The website, ShadowStats, tracks the pre-1980 inflation and shows that in 2014, true inflation was around 9%, compared to the 0.8% reported by the government. (Tried posting a link but the site wouldn't let me. Will post after site verifies me.)

    The government now no longer compares apples to apples in measuring inflation. Instead it allows cheaper substitutes. (Tried posting link here too but site wouldn't let me. Will post after site verifies me.)

    Inflation rates are inversely correlated to price-earnings ratios (P/E's). If this real inflation rate was reported, P/E's would plummet. Could this be what's happening to the US stock market?

    Also, reported earnings numbers are high by about 15% compared to the 1947-2014 compound annual growth rate (38% high compared to the 1901-2014 growth rate). We could be in for some real trouble.
     
  9. petesede

    petesede Guest

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    Of course this is true, but it was the policy and regulation changes that Clinton enacted that allowed the banks and mortgage companies to act that way. Both are to blame.. but it was the rules that Clinton changed that allowed it to happen. It is exactly the same as what is happening in China.. you can blame the investors who were margined up to 90% for the bubble, since they invested way more than they should have... but it was the changes in regulations by the China gov´t last year that allowed them to margin that high.

    When Trump ( bankrupt 3 times) goes on and talks about ´deregulation´ as a way to grow the economy, he should be reminded that it was mainly deregulation that prompted 2007. Our country over-protects individuals during bankruptcy, this causes people like Trump and other rich people to exploit it. They want deregulation so they can act like idiots (like the mortgage companies last decade), and when their irresponsibility blows up in their face, they just claim bankruptcy and lose nothing. Do you think any of the people who had mortgage companies last decade actually lost anything? Sure they all went out of business in the end, but that was after 10 years of making a ton of money risk-free... just file bankruptcy at the end and you are fine.
     
    Last edited by a moderator: Jul 8, 2016
  10. petesede

    petesede Guest

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    Agree with this as long as you don´t bring in politics. Both parties, while in power, benefit from lower inflation rates, so both want and do try to change the measurements during their time in power. That said, when the inflation index was changed, it wasn´t for political reasons, it was changed because the world was changing. We are much more a technology and service industry based economy then we were before. It would be silly if we measured inflation mainly based on the price of farm food prices, when farming is a very small part of our economy now... the same way with automobiles. Back in the 1960s and 1970s, the automobile industry was a huge chunk of our economy, so it made sense that it was a big chunk of the inflation rate analysis.

    No ´index´ is ever going to be perfect and there are always going to be anecdotal evidence that something is amiss.. but both times they adjusted it, they did adjust it for the right reasons and in the right ways. And I would have said the same thing 10 years ago when Bush was president.
     

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