An observation --Just Why did the DOW climb to all-time high of 14000? Theories?

[Blackhatjack]

I have heard experienced stockmarket watchers say that a run up in the price of the overall stockmarket where there is no discernible legitimate reason is almost always a WARNING SIGN that people at the top are about to bail out and the market is about to tank.

Did that happen here? Was there unusual selling by insiders before the drop last week?

Was there a legitimate reason for the the pre-drop run up of the Market?

[dkofos]

1. Forced up to make the economy look good, and to screw the small investor.

[Junkdrawer]

2. Pump-And-Dump...

"Come on in...The water's fine...(suckers)..."

[Blackhatjack]

3. That is my suspicion ... but there had to be some reason sold to other stockmarket investors

We know how ENRON 'pumped and dumped' its stock to enrich those at the top.

WHO benefitted most from the run up? Can we identify those individuals?

WHY were other investors 'duped' by the reason sold to them?

[NMDemDist2]

4. here's a chart of the market in the Depression years

note the high point right before the bottom dropped out (#4&5)

here's the post that includes the comments in the numbered bubbles

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x26545



and the last five years as a comparison


http://chart.finance.yahoo.com/c/5y/_/_dji

[Blackhatjack]

9. Sounds like the Bush Administration is singing from the same choir book.....

"All is well... All is well ... All is well, until ... it isn't"

[MadHound]

5. Yes, it was Alan Greenspan's way of delaying the full effect of the tech bust

When the tech bubble burst many people lost a lot of money, but the effect of a full collapse and recession/depression were staved off. In his quest for giving the investor class a safe haven, Greenspan slashed interest rates making the housing market the next attractive bubble. However Greenspan possibly didn't see that this housing bubble he'd created would also create a financial sector bubble concurrent with the housing bubble. More and more money investing in more and more bizarre credit schemes until the first card fell. Now they're all coming down, the sub-primes dragging down the mainstream lenders, the outstanding consumer credit dragging down the entire economy, bringing down the leading economic sector of our economy, the financial sector.

When the housing bubble burst, the investment money fled back into the markets, but the markets are unsustainable at these levels, especially with the financial sector bubble bursting at the same time. This dual bubble burst could very well be the last straw that drops us into a major economic crisis. Our leading economic sector is starting to collapse and Americans largest single investments are now losing value, value that a lot of Americans used to live beyond their means.

This is not a good combination, and frankly I think that we'll see much worse before we see things get better.

[sendero]

8. Exactly...

While the idea of staving off a major crash 6-7 years ago was a good one, it took Herculean efforts on the part of our money-printing machine, and it was massively overdone. Thanks Mr. Greenspan.

Turns out that the crash was not prevented, merely forestalled.

At least Reagan/Volcker had the good sense to go ahead and let the economy endure some pain "now" - all we have done here is put a huge debt on a gigantic credit card and now the bill is coming due.

[EST]

6. It's a high stakes poker game.

I have observed a few poker games over time-I can't lie worth a crap so I learned not to participate-and one of the most important techniques for the successful player is to find a way to allow the other players to be drawn in and commit their assets when the really good player has a winning hand.

That's what it looks like to me.

[burf]

7. Maybe this will help answer your question

Stock Market Meltdown

By Mike Whitney



"We are now beginning to feel the first tremors from the massive credit expansion which began 6 years ago at the Federal Reserve. The trillions of dollars which were pumped into the global economy via low interest rates and increased money supply have raised the nominal value of equities, but at great cost. Now, stocks will fall sharply and businesses will fail as volatility increases and liquidity dries up. Stagnant wages and a declining dollar have thrust the country into a deflationary cycle which has---up to this point---been concealed by Greenspan’s “cheap money” policy. Those days are over. Economic fundamentals are taking hold. The market swings will get deeper and more violent as the Fed’s massive credit bubble continues to unwind. Trillions of dollars of market value will vanish overnight. The stock market will go into a long-term swoon."

http://www.informationclearinghouse.info/article18119.htm

I tend to agree with Whitney. This is only the beginning of a downward spiral. As you cannot defy the law of gravity, you cannot defy the economic fundamentals.

[L. Coyote]

10. Simple. Dollar devaluation. One dollar buys less stock, real estate, etc.

[skids]

11. And yet economists babble on like the numbers mean something...

...without even factoring in the USDX or CPI or something, anything, to reflect the actual value. Almost all of them to the man -- liberal, conservative, or just plain greedy... none seem to look at the value of the dollar at least when speaking about it publicly. I guess it became conventional wisdom that the dollar was not volatile, which is certainly not true anymore.

[L. Coyote]

12. Compare stocks in other countries wth their currency fluctuations.

Check the correlations. And, keep currencies in mind when deciding where in the world to invest. What percentage of the valuation of a stock is outside the USA and where?

[tjwash]

13. Pump and dump, combined with record war profits for defense contractors and gouging oil companies.

nt

[Blackhatjack]

14. Very simplistic logic here friends, but why would this not be a wise move?

Instead of paying off our debts in full by sacrificing our homes and other assets --why not borrow all the money we can get our hands on and invest that money today in foreign markets/currency?

If the market tumbles and the value of the dollar takes another steep drop, the 'value of the debt' would become less --meaning that the debt in terms of dollars should be easier to pay off with foreign currency. Right?

So if the US currency were to drop another 25%, and we invested those dollars overseas, then we could use those overseas assets to pay off the existing debt and get an additional 25% buying power in doing so.

Seems to me that this is what the wealthy intend to do, along with use the foreign invested money to pick up discounted US assets that had to be sacrificed because of the collapse.

[Blackhatjack]

15. How do you go about investing in overseas currencies? Which ones? Gold/Silver?

Is there a way to invest in overseas currencies by buying US stocks or instruments so that you do not have to convert US Dollars?

Why invest in Gold and Silver when those commodities can be manipulated as well? I read where Russia is holding back tons of gold reserves to manipulate market prices. Other countries do this as well.

Owning a fixed asset that will hold its relative worth seems to be the only hedge for the average citizen.

[NMDemDist2]

16. I have put most of my Mutual Funds into European holdings

here's Fidelity's list of foreign stock funds


http://personal.fidelity.com/products/funds/content/FidelityMutualFunds/browse_funds.shtml.cvsr?refpr=mfrt3

[Blackhatjack]

17. Any particular international stock funds you are in?

The returns on these look way above average.

[NMDemDist2]

18. i did a European diversified and an Asian one with Korea and China n/t

[Chemical Bill]

19. I'm sure it has nothing to do...

with their habit of kicking underperformers out of the 30 and replacing them with companies that are expected to thrive.

Bill