Why is the stock market going gangbusters?

from my perspective, it's a great time for the stock market right now. Several companies are growing and doing great things - the war between Intel and AMD has been dramatically improving chips for the past several years, making high tech devices cheaper, smaller, and use less power, which helps to boost their sales. Additionally, I think Apple and Microsoft and Google have really helped to fuel this new tech age full of gadgets. The iPod, Zune, Apple TV, iPhone, the new Microsoft touch panels, and all the small little software gadgets that Google has come out with are starting to make people think that anything is possible, helping to boost those sales, and to increase investment in tech stocks. Tech startups have also finally gotten out of the shadow of the dot-com bust, fueling growth from the bottom.

Basically, it's an exciting time for tech!

BTW, Jobs just announced YouTube on the Apple TV a few minutes ago...

 

It's a question of confidence in the market... people see these things and read and hear about how great it's all going to be, so they start to have more confidence that things are moving and growing, so they're willing to invest more. it's a sort of bleed over effect... at least, that's my read of it, i don't really have any expertise in the area (although i've had year over year growth of 20% since i started investing in 2001!)

 

IMO: if this market can withstand (& Contribute to) the USA nation building efforts in IRAQ to the tune of $400B, & it can withstand even the huge increase in oil prices, then you can see how really strong this thing is.

Housing needs to still pop up but that will only happen if rates go down.
I don't see that happening because of rising prices & full employment.

In short: the future looks bright short of some catastrophic situation that may arise which like eagle said affects investor confidence.

 

TAX CUTS

The "rich" get to keep more of the profits from investment so they are more willing to invest, therey creating capitol for job creation and growth.

 

I'm not sure it's quite "gangbusters."

Isn't the Dow just now getting back to where it was before 9/11...which was nearly 5,000 off the peak during the 90's...?

 

I've read in some websites that the rise in the Dow is attributable to some degree the merger activity that has taken place recently.

I believe the run-up in the Dow is partly attributable to investors who have pulled their money out of the declining housing market and put it in stocks.

This rise in the Dow reminds me of what the market rise looked like in 1999.

IIRC, the stock market has not had a significant correction since 2002 (?), and is probably overdue for one.

I believe the market will undergo a major correction sometime, when I don't know.

 

<div class='quotetop'>QUOTE(Pinto Girl @ May 30 2007, 01:51 PM) [snapback]452391[/snapback]</div>

http://moneycentral.msn.com/investor/chart...p;DisplayForm=1

 

<div class='quotetop'>QUOTE(koa @ May 30 2007, 10:05 PM) [snapback]452498[/snapback]</div>

Yep! Actually, the S&P 500 is the index that's just getting back to where it was before 9/11......the NASDAQ COMP & 100 still have one heck of a long way to go.

Anyway, I get the impression that the primary reason equities have performed as well as they have is the lackluster performance of other traditional investment vehicles. Investors just haven't seen the returns to which they've grown accustomed lately in anything other than stocks.

For example, long(er) term Treasuries haven't fared well over the past few years; total return has been abysmal (better off buying 6 month CDs these days, for chrissakes!). MMFs don't yield a whole heck of a lot, although better than a few years ago, but still nothing like the 'cash is king' days. The bloom is off the rose for real estate. Munis are somewhat attractive but really only for those in a sufficiently high tax bracket and/or need current, tax-free income. Without significant inflationary concerns on the horizon, TIPS also don't hold much appeal.

So......Geez! What's left? Sell USD/Buy Euros? It seems like the only worthwhile (traditional) investment is stocks, both foreign and domestic, and it's evident in the various indices. Whether that continues to be the case is pretty much anyone's guess, of course.

 

It's 1928 all over again....

 

<div class='quotetop'>QUOTE(1x1 @ May 31 2007, 07:43 AM) [snapback]452563[/snapback]</div>

It follows popular opinion. If everyone thinks things are good, the market will stay strong.

People start saying it is too high, and it will fall.

Heaven forbid someone start a rumor that a recesion is comming, it will be a self fulfilling prophesy.

 

<div class='quotetop'>QUOTE(MickeyA @ May 30 2007, 04:19 PM) [snapback]452281[/snapback]</div>

It is amazing how strong this economy is given:

the tech bubble burst
the housing market burst
Enron disaster, et.al.
oil prices skyrocketting as compared to the 1990's average price of oil
the war on terror
the supposed disappearance of American manufactoring
the supposed negative effects of nafta and other similar open trading systems
globalization and offshoring
9/11
increase in federal and state spending out of proportion to inflation
new federal spending programs like drug coverage for seniors

Amazing:
low inflation
low unemployment
solid economic growth
increasing federal tax receipts (the problem is federal spending)
solid consumer confidence

I still stand by my thought that the Bush administration has steered this economy smartly. I stand by my opinion that his major failing is his lack of control of Federal spending - given the fact that Congress controls those purse strings - he could do more than he has.

I also still believe tax cuts work - there is not one society on earth ever that has taxed its way to greatness.

Interesting that Mayor Bloomberg continues his process of cutting taxes here in Gotham....


<div class='quotetop'>QUOTE(NoMoShocks @ May 31 2007, 10:53 AM) [snapback]452566[/snapback]</div>

???? - you seriously believe that - ????

<div class='quotetop'>QUOTE(burritos @ May 30 2007, 08:02 PM) [snapback]452403[/snapback]</div>

Your point?

And which do you think the proper answer is?

 

<div class='quotetop'>QUOTE(Pinto Girl @ May 30 2007, 07:51 PM) [snapback]452391[/snapback]</div>

On Sept 10, 2001 the Dow Jones was 9,605.51; the S&P was 1,092.54. They both have well passed the mark the day before 9/11.

 

<div class='quotetop'>QUOTE(Devil's Advocate @ May 30 2007, 07:34 PM) [snapback]452381[/snapback]</div>

True - the last place money belongs is with the government. The people always are better trusted with THEIR money than Uncle Sam.

You can just compare the economies and societies of those countries with very high tax rates - although more and more of these countries are turning to conservative governments.

<div class='quotetop'>QUOTE(Tom 6850 @ May 31 2007, 10:59 AM) [snapback]452573[/snapback]</div>

Excellent point, and there is little reason to rehash the state of the economy during the terminus of the Clinton Administration.

No matter, we are doing well now thank you.

 

WASHINGTON - The economy nearly stalled in the first quarter with growth slowing to a pace of just 0.6 percent. That was the worst three-month showing in over four years.

http://news.yahoo.com/s/ap/20070531/ap_on_...yZ61cV3mM0E1vAI

I've been confused by the run of wall street lately too.
Mostly since, the past has usually shown stock prices to fall when crude oil goes up and vice versa. Today, we see record oil prices AND record stock prices.

All I can surmise is that folks switching investment from real estate and/or foreign investment in Wall street is way up. I just don't know. Must be Bush's fault. He may as well get credit for it, since he gets the blame for everything that's not so rosy. Just goes to show, a vote for Republicans is a vote for big business and profit. Global instability can be VERY profitable.

 

Empirical economic evidence and recent studies by the Congressional Budget Office (CBO) shows that every class in America, the poor, the middle class and the rich have made significant gains in income. Of all families with children the poorest fifth had the fastest overall earnings growth over the last 15 years. Most notable are the earnings in the working class poor households with children which show an earnings increase that is 80% higher than in the early 90’s. This earnings increase also out paced the richest 20% of Americans. The data also indicates that the middle-class median family with children also had an 18% increase in earnings over the 15 year period and the richest 20% had approximately 55% increase in earnings.

Does this indicate that the issue isn't Which but When is either method appropriate?

Wildkow

p.s. This new data can only hurt John “Two America’s†Edwards and Hillary “Bush’s tax cuts have been disastrous for working families†Clinton’s campaign.

 

<div class='quotetop'>QUOTE(dbermanmd @ May 31 2007, 09:57 AM) [snapback]452568[/snapback]</div>

Dr Berman, The GDP report clearly shows that your euphoria about the economy is delusional.Have you learned anything ?

 

I think it is innaccurate to say:
“Bush’s tax cuts have been disastrous for working families†.

Those taxes cuts have yet to be paid for, as they are on loan from our children.
It is more accurate to say:
Bush’s tax cuts COULD BE disastrous for working families when the bill comes due. I guess the whole country could just file chapter 11 when the Chinese start demanding payment on their portion of the debt.