Stocks start 2011 with a big lift

[ShockediSay]

Source: AP - Yahoo Financial

Stocks started 2011 with a big lift on Monday, and that could be a promising sign for the rest of the year.


Read more: http://finance.yahoo.com/news/Stocks-start-2011-with-a-big-apf-775279613.html?x=0&sec=topStories&pos=1&asset=&ccode=

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This is great for The Top Two Percenters

The ones who are paying less taxes than they ever have
for at least the last 60 years.

WHAT ABOUT THE 98% OF THE REST OF US

Middle class my ass

I'm talking about NINETY-EIGHT PERCENT of the rest of US

[Statistical]

1. 55% of Americans have wealth in the stock market.

How does the stock market going up hurt you?

Either you are in the market and it is a good thing, or you aren't and it is neutral.

[Pale Blue Dot]

3. Michael Hudson: Average Stock Held for 22 Seconds and Average Foreign Curre

http://www.washingtonsblog.com/2011/01/michael-hudson-average-stock-held-for.html

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

Yesterday, Hudson said:

Take any stock in the United States. The average time in which you hold a stock is--it's gone up from 20 seconds to 22 seconds in the last year. Most trades are computerized. Most trades are short-term. The average foreign currency investment lasts--it's up now to 30 seconds, up from 28 seconds last month.

See also this and this.

[Statistical]

4. Your point? How exactly does the refute what I said.

55% of Americans have wealth in the market. That wealth increased in 2009, 2010 and now the first day in 2011.

[Pale Blue Dot]

6. The point of my links (and if I have time I'll search for more)

is that the increase in the stock market isn't based on anything real. It's based on very few large investors making computerized trades that have little to nothing to do with market fundamentals. And if the rally is based on nothing, it can (and I believe, will) reverse course just as quickly and disastrously.

I hope I'm wrong. I suspect we'll know by March.

[Statistical]

8. ROFL.

Ok. So the fact that companies have nearly $1.1 trillion more cash on the balance sheets comapared to 2 years ago has nothing to do with the fact that those companies are simply worth more. The fact that for 96% of the S&P500 profits were up year over year has nothing to do with it either. I guess the fact that GDP growth is accelerating has no effect on valuations. Maybe the fact that likelihood of double dip is significantly reduced has no effect either.

Why do you assume computerized trades are making the market go up? HFT can profit in up/down/sideways market. Why would they bias it to the upside?

[Pale Blue Dot]

9. I invite you to laugh all you want in March.

I'll put myself on the line and say that this cannot last. It's based on nothing, and will fall apart soon.

Again, I sincerely hope you'll be the one laughing in March.

[northzax]

13. so you're shorting?

only reasonable response to your thoughts.

[Pale Blue Dot]

5. Floyd Norris On The End Of The American Love Affair With Stocks

http://www.zerohedge.com/article/floyd-norris-end-american-love-affair-stocks

Three weeks ago when we noted the 30th consecutive outflow from US-based equity mutual funds (now at 33 straight weeks), we said: "America's love affair with stocks is over, has bypassed the marriage stage and gone straight to the bitter divorce." Today, we are happy to see that the the NYT's Floyd Norris for repackaging our metaphor in a slightly more palatable fashion: "The love affair of American investors with the stock market appears to have ended." His piece in today's NYT "For U.S. investors, the glow is off domestic stocks" will not be news to anyone who follows our weekly report on ICI data: "The year now ending will be the fourth consecutive year in which mutual funds that invest primarily in American stocks experienced net outflows of funds, meaning that investors as a group withdrew more money than they put in." And yet stocks continue to ramp higher, in big part due to the rapid increase in NYSE margin interest which means the bulk of investors are buying stock increasingly on leverage, but still the question to just who continues to do the actual holding remains unanswered. Indeed, only a few people, Charles Biderman among them, have answered with the response that everyone knows is true, yet most are afraid to utter.

As for Norris' observations, which finally bring broad popular attention to this key topic which we have been hammering on for about 33 weeks in a row, here is the gist:

[Statistical]

7. Net outflows are slowing and in nominal terms are trivial compared to total.

Stock mutual funds are worth collectively around $4 trillion. A net outflow of $50B represents 1.25% of assets. Another thing to consider is S&P500 (use that a proxy for average return) returned 13% in 2010. Thus although there was a $50B net outflow it was overwhelmed by the organic asset growth.

Sadly the net outflows are dumb money. It is small time investors and mostly fear driven. They stayed it right to the crash, then waited and poured at just as the market recovered. When net inflows turn highly POSITIVE that is when I would be looking for a multi-year tap. Most likely those who got out (or more realistically slightly cut exposure) in 2008-2010 will peak their net inflows sometime around 2016-2018 just in time for the bull rally to end.

[northzax]

12. I think a lot of the outflows are generational as well

frankly, the first wave of boomers are starting to retire (earlier than some might want) and are beginning to take money out of their 401Ks and IRAs. over this three year period, my mother, father and step mother have either all retired or will in the next 18 months.

there is still more than enough capital inflow, especially from overseas, to make up for that outflow, it just may not be going into traditional mutual funds as much. while I save about half as much a month as my mother will be taking out next year, I am much more diversified than she was (she is straight SP500 and blue chips). so this is all to be predicted.

[ShockediSay]

11. Is this a debt bubble or a stock market bubble?

"And yet stocks continue to ramp higher, in big part due to the rapid increase in NYSE margin interest which means the bulk of investors are buying stock increasingly on leverage"

Do you think it makes sense to allow Big Banks & Investment Houses to borrow money for nothing, while states, municipalities and community banks, all of whom are in a position to fuel job
growth, go without cheap credit?

Whatever happened to Nixon's concept of Revenue Sharing?

[Itchinjim]

2. This 98% er has gained back in the last two years what his 401k lost

during the eight years of the Bush administration. Thanks to President Obama, my retirement fund is looking much better than it did in 2008.

[prolesunited]

10. That's exactly what I was going to post

I've finally regained my losses and am starting to move ahead.

As someone pointed out, even if you aren't directly invested in stocks, many people have retirement plans that are. You don't have to be rich to have a modest 401(k).

[On the Road]

14. Today Was Pretty Predictable

January is usually a strong month anyway. Turn of the month effect is pretty reliable. Economic news is gradually getting better. Confidence is slowly improving.

Finally broke down and bought some more last week for the rollover IRA -- should have done it a year and a half ago when Warren Buffet said it was time for folks to get back in the market. But so far so good.

[Statistical]

15. According to many on DU you must be part of the top 2% parasite class.

Everyone knows the market is a tool of oppression by the ultra rich and nothing more.

[On the Road]

16. Some Days I Wish I Were a Parasite

I have tried fundamental investing, technical analysis, contrarian strategies, and momentum plays. It's really hard to make money in the market. A little inside information would be nice.

The chart for gold just looked toppy. If the economy keeps improving, the gold rush will subside, just like oil prices a couple of years ago.