crws
Active member
This article seems to address my thoughts and concerns going forward
http://www.usnews.com/money/blogs/flowchart/2010/05/21/how-the-markets-outran-the-economy
(excerpt)
The stock market is supposed to lead the economy out of recession, according to the old adage. But what if the economy doesn't want to follow?
Gloom has settled over Wall Street, as the huge rally that ran from March 2009 to April 2010 has turned the other way. From bottom to top, stocks rose by about 83 percent, giving hope to battered investors and repairing some of the damage from the brutal recession we all know about. But now the markets are in decline again, crossing the 10 percent threshold that signals a correction. Manic traders now worry about global contagion spreading out from Greece, the demise of the eurozone and the dreaded double-dip recession.
[See what's going right and wrong with the economy.]
Okay, maybe. But it's also possible that the markets simply got too far ahead of the actual recovery and are now adjusting to more realistic expectations.
First, it's worth pointing out that stock market indexes like the Dow, NASDAQ, and S&P 500 may not be as oracular as they once were. Markets these days are dominated by hedge funds and high-volume traders that account for the majority of all trades. These are not long-term investors who buy because they're encouraged about the future prospects of certain companies or the overall economy. These in-and-outers trade on short-term advantages that are often minuscule, but significant if multiplied by millions of shares or leveraged to magnify their value (and risk). Computers make many of the decisions, looking for price differentials in the decimal points. What matters to these traders is the price of something now, compared with the price a few seconds ago or the price a few seconds in the future. The stock indexes don't really tell us what investors think of the overall economy anymore. They tell us what frantic traders think is going up or down in the chaotic present.
(addendum from one of the links inside the article comparing US to Greece)
Washington's inaction also creates a chorus of disgust among opinion leaders able to influence global investors. "What worries me most is that a $10 trillion debt is unsustainable and the two parties are completely divided," says economist Nouriel Roubini of New York University's Stern School of Business. "It's not like the problems is unresolvable. There are solutions. The problem is political. There's no willingness in Washington to do anything." Business leaders in particular are appalled by elected officials who face a clearly defined problem, and basically stick their fingers in their ears and run away.
http://www.usnews.com/money/blogs/flowchart/2010/05/21/how-the-markets-outran-the-economy
(excerpt)
The stock market is supposed to lead the economy out of recession, according to the old adage. But what if the economy doesn't want to follow?
Gloom has settled over Wall Street, as the huge rally that ran from March 2009 to April 2010 has turned the other way. From bottom to top, stocks rose by about 83 percent, giving hope to battered investors and repairing some of the damage from the brutal recession we all know about. But now the markets are in decline again, crossing the 10 percent threshold that signals a correction. Manic traders now worry about global contagion spreading out from Greece, the demise of the eurozone and the dreaded double-dip recession.
[See what's going right and wrong with the economy.]
Okay, maybe. But it's also possible that the markets simply got too far ahead of the actual recovery and are now adjusting to more realistic expectations.
First, it's worth pointing out that stock market indexes like the Dow, NASDAQ, and S&P 500 may not be as oracular as they once were. Markets these days are dominated by hedge funds and high-volume traders that account for the majority of all trades. These are not long-term investors who buy because they're encouraged about the future prospects of certain companies or the overall economy. These in-and-outers trade on short-term advantages that are often minuscule, but significant if multiplied by millions of shares or leveraged to magnify their value (and risk). Computers make many of the decisions, looking for price differentials in the decimal points. What matters to these traders is the price of something now, compared with the price a few seconds ago or the price a few seconds in the future. The stock indexes don't really tell us what investors think of the overall economy anymore. They tell us what frantic traders think is going up or down in the chaotic present.
(addendum from one of the links inside the article comparing US to Greece)
Washington's inaction also creates a chorus of disgust among opinion leaders able to influence global investors. "What worries me most is that a $10 trillion debt is unsustainable and the two parties are completely divided," says economist Nouriel Roubini of New York University's Stern School of Business. "It's not like the problems is unresolvable. There are solutions. The problem is political. There's no willingness in Washington to do anything." Business leaders in particular are appalled by elected officials who face a clearly defined problem, and basically stick their fingers in their ears and run away.
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I was 2 cents shy of triggering my TNA sell at $50 flat. Not worried. Could get a freebie pop tomorrow pre-market.