Friday, August 31, 2007

Historical Dow

Here's a chart I made a few years ago. It made me realize that maybe, just maybe, it would be better to buy stocks when they were closer to the green line than they were to the red line. Of course, no financial advisor would ever tell you that. No sir. Stocks only go up over the long-term. Uh huh, okay.

Of course, I have to ask myself why I wasn't making a chart like this in 1999. Oh, I remember. Ignorance was bliss. Fortunately (luckily?) I was a cheapskate. I didn't wish to pay 100 times earnings for a stock, much less pay large sums for a company with no earnings whatsover. Winners of the New World? To quote Jim Cramer, "You can have them."

Assuming there is anything of worth in this chart (big assumption), I can't help but think we're still way too close to the red line for my liking. On the other hand, I wouldn't bet on it though. The long-term trend is up. You have to be very sure of yourself (arrogant) to think you are smarter than the market.

In the spirit of what ifs, what could cause the stock market to head back down to the green line? Where do I start?

1. Near record low unemployment. Bulls love it. I wonder what would happen if it reverts to the mean.
2. Near record profit margins. Bulls love it. I wonder what would happen if it reverts to the mean.
3. Credit crisis. Don't think many people love that, myself included.
4. Housing crisis. Let's see. Rising inventory, falling sales, falling prices, rising foreclosures, rising inventory, falling sales, um, I think I just fell into a feedback loop. Sorry about that.
5. Banks. Need I say more? Just how many do we really need?
6. Payday Loan Centers. Didn't I just cover this one as #5? Just how many do we really need? 20,000+? Seriously?
7. China. Just how many more paper dollars can we ship them in exchange for cheap goods? Let the grand experiment continue!

One of those? All of those? Probably not. It will probably be something I wasn't smart enough to think of. Maybe a butterfly flaps its wings on some ethanol corn field as a hydrogen powered saltwater car drives by. Yeah, that's it. Saltwater is going to solve ALL our problems. It is the best invention since the ash powered train. Never heard of it? You put pre-burned wood (otherwise known as ash) in it and it generates electricity to power the. . . . Oh, wait! Black helicopters are circling my house again. I wasn't supposed to tell you that. Sorry. The oil companies and the government paid me off so that I wouldn't share my invention. I probably wasn't supposed to share that either come to think of it.

(I can't believe you managed to read this much. If time is money, I just ate some of yours for my own selfish purposes. Yeah, baby. American business. That's what I'm talking about! I'm working on the dotcom model, so um, well, I don't actually have any profits to show for it. This is the new economy though. The sooner we all can make do with what we don't really have, the sooner we'll all be less better off. It's a win-win for nobody. Hurray!)

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