Stock market highs because of government.. why stop it?



supplyshock said:
So why aren't we doing this more? Why stop it at 2015? Seems like a pretty good idea to me...
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Next you will propose raising the minimum wage to $100/hr so no one in America has a lower class job. "Seems like a pretty good idea..."

Suggestion: Learn economics.
 
OP is referring to QE4 (fourth round of quantitative easing). Bernanke's QE involves the fed purchasing treasury bonds and mortgage backed securities, not stocks. This is nothing out of the ordinary for a central bank in times of hardship. See the 1998 Asian currency crisis and the Hong Kong Monetary Authority's actions to stabilize for an example of pure share-buying. In that instance it was actually quite beneficial and profitable, but that's not what the Federal Reserve is doing at the moment. If anything, the interest rates (and lack of change thereof) are far more concerning than QE itself. Keep in mind I am not justifying or agreeing with anything Bernanke has done, is doing or will ever do, I am just correcting the misconception. There were instances of the Fed purchasing stock in response to the 2008 financial crisis, but that is not part of QE4 and most of that was due to structured bankruptcies and TARP.
 
supplyshock said:
Also, they were saying this is mostly because the government is buying stocks and say they will buy until 2015
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Why don't you take a second and really think about what they are buying it with...


supplyshock said:
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This is what a castle built on sand looks like.
 
supplyshock said:
Gold isnt anything special so why should we base whether our economy is doing well on its price.

and i'm sure the great marketing and constant hyping of gold by fox news and business channels has nothing to do with the price?

why is it so hard for everyone to finally admit the gov. did something right. i know theres a big anti-gov anti-obama sentiment but give credit where it's due.
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Seriously bro, read some basic economic theory books (like that one ^^^) before trying to argue economics on the internet.
 
slayerment said:
The problem is it takes more dollars to buy the same value in the dow that it did in times past due to inflation. At the high in 2007 gold was around $700/oz. Today gold is around $1600/oz. To represent similar purchasing power the dow would really need to be upwards of 28,000. The dow rising through Fed monetization represents a loss in our purchasing power and a less efficient allocation of our capital. If the Fed printing money was the solution then we should have them print the dow to 1,000,000 per share.
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Purchasing power in terms of Au is very different from purchasing power in terms of a basket of goods because gold is subject to heavy speculation. That's not to say we aren't seeing inflation, but gold is an extreme example that doesn't necessarily represent the true inflation rate and purchasing power of the dollar in terms of necessary goods.
 
Define "dollar"

[ame=http://www.youtube.com/watch?v=zX82fsLKFXE]Ron Paul: Currency Devaluation Is `Dangerous' - Bloomberg 2/8/2013 - YouTube[/ame]
 
in b4 page 100

The government doesn't buy stocks, except in rare instances like GM and banks for a short period during the crisis. The FED buys treasuries and mortgage backed securities.
 
Yeah, there's definitely nothing wrong with our government using money taken from the citizenry to purchase stock in order to give investors a false sense of confidence.

Nothing wrong at all.
 
cassius said:
TREASURY BONDS + MBS != STOCKS
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Okay, fine. Mortgage Backed Securities and Treasury Bonds.

We all know that mortgage backed securities are safe, reliable and with no chance of anything bad happening as a result of buying them.

Question is, who's making money off all of this? Is this going to benefit everyone, or just a few people?
 
VinBed said:
Okay, fine. Mortgage Backed Securities and Treasury Bonds.

We all know that mortgage backed securities are safe, reliable and with no chance of anything bad happening as a result of buying them.

Question is, who's making money off all of this? Is this going to benefit everyone, or just a few people?
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I never said MBS were safe. I am just of the seemingly unpopular opinion that one should only chastise the Fed and other government agencies for actions they are actually taking instead of these stupid witch hunts where the complainers have no fucking clue what they're talking about. That type of discussion just removes credibility from the argument against Fed actions which is counterproductive.

The Fed is purchasing MBS and treasury bonds to prop up the respective markets in an attempt to sway sentiment toward the bulls. By buying mortgage backed securities and treasury bonds at a given rate for an extended period of time, major sell offs can be dampened and/or discouraged because there is a guaranteed buyer in the Fed. The point is to inspire confidence in the US treasury bond and mortgage markets to encourage investors to buy. Along with dictating lower rates, these actions bring down interest rates to encourage investment and new mortgages. The Fed makes it's income from interest on U.S. treasury securities, GSE mortgage backed securities as well as GSE debt securities, foreign currency and bond interest/sales and services rendered to national and international banks. The fed has always bought and sold treasury bonds. Action in the MBS market is (relatively) new for the Fed, but it is similar actions are not unheard of and have seen some success in other countries on greater scales (see Asian currency crisis mentioned earlier). Keep in mind that Fed action in the MBS market has an impact on all mortgages it doesn't just manipulate the price of the MBS themselves.

Now, I don't like Bernanke at all. I think he is a boob and not the good kind. I just feel that if you're going to have a discussion like this you need to understand what is happening at least well enough to know the difference between purchasing stock in a publicly traded corporation and purchasing/selling treasury bonds and securities that derive their value from bundled mortgages.
 
Now is a horrible time to buy into the stock market, SELL SELL SELL. If you want to make $ in this game, do the opposite of the crowd: and money is currently flowing into stocks like crazy! Back in 2008 as everything started to crash, people (including my own father) thought I was a complete idiot for buying into the market. I knew I couldn't time the bottom, so I divided my total investment by 24 and bought in every month from May 2008 to May 2010 effectively dollar cost averaging me in around DOW 9500. "When there is blood in the streets, buy!". It seems like a brilliant move now, but at the time I was very concerned this recession might be different and I could in fact be flushing all my affiliate $ down the toilet (being in my early 20s with no house or kids made it a bit easier). Another phrase that goes with the first one is "get out of the market when even a shoe-shine boy is offering stock tips". In the past month there's been a ton of talk about retail investors returning to equities, DOW going to 20k, the worst of the European debt crises being over, the US housing market recovering, China rebounding, etc. I've already sold off 40% of my stocks, and I'm planning on selling the rest this month. Maybe I'll lose out on another 5-15% rally... who knows, but I feel the need to exit before the disconnect between the US stock market and the global economy becomes too painfully obvious.
 
To throw some information out there. My girlfriend works for a company that sets up conferences between those looking to invest their money and hedge funds. Nothing short than $10m, so she gets a good idea on the direction some of these funds are heading. She told me something interesting in this last event that her company held last week, apparently a lot of funds are bracing for a negative Q1.

Considering that the indexes are up 4-6% for the year, that news does come as a surprise and it leaves me to wonder whether or not in the next 2 months we will see a large correction.

I did point out in this thread that I believe this rally is coming to an end. Today was a relatively flat day for the markets but as soon as there is a good sign of weakness, the selling will come in like a tidal wave.
 
Nobody knows where the market is heading. Today's highs will be low in hindsight.

I personally bought a substantial amount of shares yesterday (high $xx,xxx), and plan on buying more this week.

You can never time the market... it's a fool's game.
 
wickedDUDE said:
Nobody knows where the market is heading. Today's highs will be low in hindsight.

I personally bought a substantial amount of shares yesterday (high $xx,xxx), and plan on buying more this week.

You can never time the market... it's a fool's game.
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S&P index is currently forming a rising wedge, which is a bearish pattern.

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