Dow as a Tell Tale Sign?
By: Rebecca Figone
The media seems to want us regularly to believe that the Dow is a meter by which we can measure economic success. While they both seem to have a directly related association, as when the economy is really doing well (or when it appears to be), the Dow is also usually doing well, I am not certain that the relationship is exactly directly related. We have though is a situation that does not always read this way. The Dow can look really good, as it had been doing for a good while now, even though the economy is struggling and the unemployment is extremely high. Unemployment numbers for the record are only representative of those people who have applied for or are on unemployment. It fails to reflect those who no longer qualify for benefits, those who are trying to find a job to no avail, or those who have given up on employment.
The Dow, according to a CPA, who I was Staff Accountant for, in Augusta, GA, is representative of one small piece of the larger stock market exchange, as there are many more exchanges….the exchanges persay are simply legalized gambling, he said. It is all about knowing when to get in and when to get out, and ultimately it is taking a chance with your assets on the entity that you purchase stocks from, etc. They are all about hedging risk against gain. How much are you going to be willing to risk losing to gain this much if you win? I do, after 2007 and 2008, see his point. I have seen many people since who have lost much in this whole financial shenanigans.
I heard Mr. Obama say that we needed to create some jobs. I find this interesting, at best. When government creates jobs, they do not assist with the economy, unless they are hiring contractors from the private sector to do the work. The private sector is where true economic benefits of any economy reside. When the private sector is in constant fear of tax cuts they need, continuing to be extended, there is a resounding doubt that looms. This has been the ongoing situation throughout this past 2.5 years. That threat still hangs over the heads of those that it will effect. The over regulation of our businesses, our producers, our factories, etc., has driven our best, most successful out of our country, so that they could produce a bigger, better profit elsewhere. No one can blame them for going, but what we can do is recognize what happens as this occurs. When these businesses leave our shores, they take with them, their profits. Those profits stimulate our economy. Those same profits incur income taxes that now no longer by default pad the pockets of the Federal Government. They sabotage, through their own efforts via another platform, their ability to collect more “revenue/taxes.”
So from Fox Business News we read this:
“The Dow Jones Industrial Average plummeted 266 points, or 2.2%, to 11,867, the S&P 500 slid 32.9 points, or 2.6%, to 1,254 and the Nasdaq Composite tumbled 75.4 points, or 2.8%, to 2,669. The FOX 50 dipped 21 points to 897.
In a sign of the breadth of the selloff on Wall Street, 90% of the volume on the New York Stock Exchange was in declining stocks. Adding to the negative sentiment, the blue chips have ended in the red for the past eight sessions — shedding 858 points — the longest losing streak since the financial crisis three years ago.
A bout of disappointing economic data, including a steep downward revision to first-quarter economic expansion and an unexpectedly sharp decline in U.S. manufacturing, has led market participants to doubt the robustness of the economic recovery in recent sessions.
‘The U.S. economy is very close to stall speed,’ wrote Peter Fisher, head of fixed income at asset-management giant BlackRock. ‘With the weakness of the U.S. economy becoming increasingly apparent, consumption and investment decisions are rising to the forefront.’”
Is the Dow now beginning the tell tale signs that safe investments rarely exist in an unsure economic market? So it may seem. Right now, people are fearful and the uncertainty is the one thing we are all sure of, to a great extent.