Real DOW Update: Still looking for a bottom? Eric Janszen

[jimmygu3]

Re: Real DOW Update: Still looking for a bottom?

Woohooo!!! Bring it on!!!!!

I am a buyer of stocks and my plan is to dollar cost average the market for the next 20 years. The lower it goes the better as far as I'm concerned.

Imagine you had bought stocks every month between 1930 and 1950 .... or every month between 1968 and 1988.

Assuming you had cash to buy through the depression, 1930-1950 dollar cost averaging would have returned 5.3% annually while CPI averaged 2.9%. 1968-1988, not so good, as your 6.8% return would be largely eaten up by 6.3% CPI. Nothing compares to the 1980-2000 FIRE economy stock boom that we are all still waking up from. You would have had returns of 13.8% with only 3.8% CPI.

But you're right- if your time horizon is long, it's not a bad time to wade in. Certainly less downside than we've had in a long time.

Jimmy

[labasta]

Re: Real DOW Update: Still looking for a bottom?

I'd be interested in the shadow stat inflation figures too.

To be honest (I've said this before), why does it have to be a curve? From 1924 to 1984, it could be a virtually horizontal straight line.

If the shad stats are included, then the curve just might become more of a straight line until 2008.

[Rajiv]

Re: Real DOW Update: Still looking for a bottom?

Actually, if you held the companies that made up the DJI in 1930, and you held the same stock without trading, it would probably be worth very little today

See DJI

The individual components of the DJIA are occasionally changed as market conditions warrant. When companies are replaced, the scale factor used to calculate the index is also adjusted so that the value of the average is not directly affected by the change.

On November 1, 1999, Chevron, Goodyear Tire and Rubber Company, Sears Roebuck, and Union Carbide were removed from the DJIA and replaced by Intel, Microsoft, Home Depot, and SBC Communications. Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA. On April 8, 2004, another change occurred as International Paper, AT&T, and Eastman Kodak were replaced with Pfizer, Verizon, and AIG. On December 1, 2005, AT&T returned to the DJIA as a result of the SBC Communications and AT&T merger. Altria Group and Honeywell were replaced by Chevron and Bank of America on February 19, 2008. On September 22, 2008, Kraft Foods replaced American International Group in the index

[aa]

Re: Real DOW Update: Still looking for a bottom?

Woohooo!!! Bring it on!!!!!

I am a buyer of stocks and my plan is to dollar cost average the market for the next 20 years. The lower it goes the better as far as I'm concerned.

Imagine you had bought stocks every month between 1930 and 1950 .... or every month between 1968 and 1988.

[Rajiv]

Re: Real DOW Update: Still looking for a bottom?

Yes it would be nice to see a inflation adjusted DJI using the shadowstats inflation measure. You are correct in that, then we may not have that far to drop!

The corollary to that is that the Dow was not that far overinflated, and that we were not as welathy as we thought! Or that the 1.64% real growth rate is in fact unsustainable!

[Vinyasa123]

Re: Real DOW Update: Still looking for a bottom?

There are two ways to play this perhaps. Neither is right. Probably more to do with your personal make up and state of paranoia about what others are going to do to you if things really collapse. I believe things get worse before they get better but we have a choice and need to seperate economics and wealth from living.

1. You can join humanity and protect yourself at the same time through well managed investments in gold, silver coins, inflation hedges like Rydex rising rate funds and VERY, VERY select corporate bonds and even some equities. Companies like Cisco will own every significant technology patent because they have the cash (I am in the sector and have never seen such breakthrough's on sale in 20 years). The strong cash rich companies that can withstand massive upheavel come out on the other side and are going to dominate the world economy and they frankly aren't that hard to pick but you need a 10 year horizon for that part. That said I think we will see many of them come down another 25-30% after a potential strong rally on news of a reasonable approach to cleaning out the toxic assets and a somewhat better than socialism outcome of congressional negotiations on the packages. I voted Obama and am stunned, not by the taxes as that was a promise, but the social engineering he is doing already. Man was I a fool. I am always willing to help the weak but not just those that don't have what I have. there is a big difference.

2. You can choose to head for the hills and live in a bunker as a curmudgeon(sp) and teach your children and loved ones that when things look bleak say FU to your neighbors and fellow man. Unless you think we are going the way of Rwanda or real violent tribal war fare versus civil unrest (which I do see) and need to leave (I suppose its possible). living overseas is a wonderful experience for many reasons and now isn't a bad time but if you think we have it bad try the countries that were selling all that crap to us (whether it be lead toys, nasty pharmaceuticals or oil). At least we have a sevice sector. The US is STILL the largest mfg in the world.

I am personally and optomist and have started a couple of companies that sold for a fair amount of money. i have given back 1/3 of it thinking I was conservative and while furious and angry I fight it everyday.

Who wants to live in a world that some of you want to foster. Better to be part of the solution than to leave it to others to fix. Run and hide or help fix it while taking measures to secure your family and loved ones?

Sorry for the non economic tirade here but the guns and fall out shelter are part of the problem in this country. It is just another way of saying I'll get mine. If you have never lived anywhere else, our worst standard of living is still better than 95% of the world. FYI: New idea for fall out shelters: My fall out shelter is my wine cellar with 500 bottles and enough food for two months under the theory if it gets really bad i am going to drink my self so silly on great cabs and pinot noir)

[EasternBelle]

Re: Real DOW Update: Still looking for a bottom?

EJ,

if you used pre-Clinton methodology to calculate inflation adjustment to the Dow (as provided by Shadow Government Statistician Williams) would that alter your chart considerably? Would we be closer to the bottom then?

EasternBelle

[jtabeb]

Re: Real DOW Update: Still looking for a bottom?

In many ways, you are a man after my own heart.

It's not quite the same sentiment, but the spirit of charting your own way is close to what I was trying to express in this motto I wrote in college. Partly I was writing about choosing your own path and values, and partly I was writing about how we are ultimately the only ones who can safeguard what system we live under, and what measure of justice is achieved in life.

A cold universe admits to no purpose, nor does it
pass judgement. Senseless or inspired, noble or profane,
it can draw no distinction. These tasks are for you alone:
to define meaning for your life and values for your soul.
Compromise, yes, and band together when you can. Learn
to trade what is preferable for what is imperative, but do
not hesitate to champion your way amidst this democracy
of ideals. Blood and conflict alone - not gods nor fickle
human decency - stand between all you hold dear and
slavery to monstrous standards.



I've had the same feeling recently -- like all the chips are on the table, and the choices I make now will have far-reaching consequences.

There must be something in that Oregon water!;)

[ASH]

Re: Real DOW Update: Still looking for a bottom?

Not the smartest thing sure, but it is the choice I choose to make because I CHOOSE to live the life I want, not the life that I'm supposed to live or the safe life.

In many ways, you are a man after my own heart.

It's not quite the same sentiment, but the spirit of charting your own way is close to what I was trying to express in this motto I wrote in college. Partly I was writing about choosing your own path and values, and partly I was writing about how we are ultimately the only ones who can safeguard what system we live under, and what measure of justice is achieved in life.

A cold universe admits to no purpose, nor does it
pass judgement. Senseless or inspired, noble or profane,
it can draw no distinction. These tasks are for you alone:
to define meaning for your life and values for your soul.
Compromise, yes, and band together when you can. Learn
to trade what is preferable for what is imperative, but do
not hesitate to champion your way amidst this democracy
of ideals. Blood and conflict alone - not gods nor fickle
human decency - stand between all you hold dear and
slavery to monstrous standards.

It seems so natural, we all make choices everyday, but at this time for the first time in MOST OF OUR LIVES, making a choice now means risking DIRE conscequences that are very real if we screw it up.

I've had the same feeling recently -- like all the chips are on the table, and the choices I make now will have far-reaching consequences.

[jtabeb]

Re: Real DOW Update: Still looking for a bottom?

I did not know you were in the military! :eek:

It's all in my profile.

(and from what I can tell, most of my peers are sick of it too)

V/R

JT

[zoog]

Re: Real DOW Update: Still looking for a bottom?

EJ,

The real Dow curve at 1.64% growth seems very similar to the Real Potential GDP curve you showed in thread (http://www.itulip.com/forums/showthread.php?p=80285#post80285)






From the late 1920 to say 1970 real potential GDP goes up by 3 where DOW goes up by 3.5. So is the Real Dow just a function of GDP growth? I hope I am not asking something blatantly obvious to the more knowledgable. It seems reasonable there should be some correlation but sad that DOW is fairly close so as to say we only get stock growth from population increase?

The source page has a lengthy technical description of how the Real Dow is constructed, including the 1.64%/year curve. From a quick read through, it looks like the 1.64% was calculated from the Dow data itself for curve fitting.

This does not necessarily mean "no" to your question, but the real dow page does not make any mention of GDP or population. There could be some underlying correlation though. Perhaps 1.64%/year is the annual population percentage equivalent of one sucker born every minute.;)

[BadJuju]

Re: Real DOW Update: Still looking for a bottom?

'm going Remote for a year to Iraq so I can Buy A house where I want to and move my family into it while I'm deployed. When I get back, I'm getting out of the military and going back to school.

I did not know you were in the military! :eek:

[jtabeb]

Re: Real DOW Update: Still looking for a bottom?

EJ,

This whole thing is starting to get funny. I have gone from bars on the windows, guns guns guns, and a lot of freeze dried food, while sitting in my front room stroking a gold eagle chanting MY PRECIOUS.

To god damn what's up with that BS - this is not the life I want to live, I like a Foie gras appetizer, bone-in ribeye with a nice chocolate souffle for dessert. There arn't any freeze dried chocolate souffles btw.

Something happened to me not sure what but I decided to kick some ass, U know the old "I'm mad as hell and can't take it anymore" stuff.

Any ideas on how best to do that? I have three daughters 12, 14, and 18, I will do whatever I have to do to protect them, but what can we do as a group to handle this situation? You have connections in government, who do we back? Who should I throw my support behind?

Your forcasting has been second to none, but now for me it is time to act. The old live or die in the attempt - play for blood thing. (I have never lost any big battles this lifetime and this won't be the first - and U can take that to the bank)

Hey Jim sorry for my inappropriate posts - I wish you nothing but good fortune.

your friend
rick

If I may Rick,

Do what EVER the fuck you want to do, what's right for you, what you think is best for you, what makes the most sense for you, but what ever you do, don't do nothing and wait.

We are in one of those times and they are VERY RARE where we actually feel as though we are alive, where we have a genuine fear of the unkown, the only parallels that exist are the explores that (re)-discovered new lands or were the first to do something.

WE ALL GET to be first at DOING something this time, buy only if you choose to do something.

If you've read hemingway, then you know the concept of the hemingway hero. All it means is that you met life head on and lived and made a choice, and lived with the consequences be they good or bad. Nothing is garunteed, and life is much more interesting when we rediscover this little fact. So many have assumed so much for so long that we are now truly in the "undiscovered country". It's all new, every day the world that was dissappears at an exponenetial rate.

So lest you think me a hypocrite, I will share MY CHOICE with you.

My choice is:

I'm sick of living the life that is easy and safe, I'm sick of living where I don't want to, I'm sick of waiting for things to happen before I can do something, a perpetual victem of circumstances.

So,

I'm going Remote for a year to Iraq so I can Buy A house where I want to and move my family into it while I'm deployed. When I get back, I'm getting out of the military and going back to school.

Not the smartest thing sure, but it is the choice I choose to make because I CHOOSE to live the life I want, not the life that I'm supposed to live or the safe life.

It seems so natural, we all make choices everyday, but at this time for the first time in MOST OF OUR LIVES, making a choice now means risking DIRE conscequences that are very real if we screw it up.

So I would say to you choose to live while you can and while you are able. I don't know what comes this way, but IT WILL NOT STOP ME FROM LIVING.

I hope that helps, and no I'm not EJ, but what I bet he will say is that we are past the point of offering prognostications and advice and that we are to the point of FIATH and GUT INSTINCT (at Least I AM). So I'm going with my gut, and if I flail or fail, so be it, BUT I WANT TO FAIL OR FLAIL ON MY TERMS. And success if it comes, will be all the more sweeter.

Peace out bro!

V/R

JT

[santafe2]

Re: Real DOW Update: Still looking for a bottom?

EJ,

...U know the old "I'm mad as hell and can't take it anymore" stuff.

Any ideas on how best to do that? I have three daughters 12, 14, and 18, I will do whatever I have to do to protect them, but what can we do as a group to handle this situation?

Rick, I offered much the same advise here over a year ago, do the following:

• Mitigate expenditures. Ensure you and your family have the financial assets to make it through the next several years.
• Surround yourself with your friends and family. Do your best to make sure everyone you care about makes it through, especially your kids.
• If you have the means, buy a few arable acres. Learn some farming and ranching basics. Be independent.
• Learn or exercise a skill or two that will be appreciated in a scaled down economy.
• Help your local government learn to understand that we're not as likely to return to the old economy as to invent a new economy. Help these people figure out a path.
• Anger is not a scarce commodity and will become less scarce over the next few years. Save yours for a time when it may be more valued.
• Relax and enjoy a smaller life, this downturn will pass at its own pace.

[orion]

Re: Real DOW Update: Still looking for a bottom?

EJ,

The real Dow curve at 1.64% growth seems very similar to the Real Potential GDP curve you showed in thread (http://www.itulip.com/forums/showthread.php?p=80285#post80285)






From the late 1920 to say 1970 real potential GDP goes up by 3 where DOW goes up by 3.5. So is the Real Dow just a function of GDP growth? I hope I am not asking something blatantly obvious to the more knowledgable. It seems reasonable there should be some correlation but sad that DOW is fairly close so as to say we only get stock growth from population increase?