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Stock Market Highs — Plus: Angelina Jolie’s Cancer Decision

All- time highs in the stock market lately.  We ask why, and whether it says recovery or bubble. Plus: Angelina Jolie’s decision to have a double mastectomy.

A board on a trading post on the floor of the New York Stock Exchange shows the Dow Jones industrial average with an intraday number above 15,000, Tuesday, May 7, 2013. (AP)

A board on a trading post on the floor of the New York Stock Exchange shows the Dow Jones industrial average with an intraday number above 15,000, Tuesday, May 7, 2013. (AP)

Last week, the Dow hit numbers we’ve never seen before.  15,000-plus.  The S&P at all-time high stock market numbers, too.

So, what’s going on?  Recovery?  Bubble?  Something else?  Is it all about the Fed?  Millions of Americans have nothing to do with the stock market these days.  But millions do need to save, build a nest egg. So what’s going on on Wall Street?

This hour, On Point:  dissecting the big run-up in stocks, and what it means.

Plus: we will look at superstar actress Angelina Jolie’s decision to have a double mastectomy at 37 to reduce her risk of breast cancer.

- Tom Ashbrook

Guests

Steven Russolillo, covers financial markets for the Wall Street Journal. (@russolillo)

Allen Sinai, chief global economist at Decision Economics.

Michael Pento, president of Pento Portfolio Strategies. Author of “The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market.” (@michaelpento)

Closing Segment on Angelina Jolie’s Preventative Mastectomy

Angelina Jolie looks to the media as she leaves a G8 Foreign Ministers meeting on sexual violence against women in London, Thursday, April, 11, 2013. (AP)

Angelina Jolie.(AP)

Dr. Judy Garber, director of the Center for Cancer Genetics and Prevention at the Dana Farber Cancer Institute. Professor of Medicine at Harvard Medical School.

Angelina Jolie’s op-ed in the New York Times: My Medical Choice.

From Tom’s Reading List

The Associated Press: Dow Has Its First Close Above 15,000 Points – “Just two months after recovering the last of its losses from the financial crisis, the Dow Jones industrial average charged higher Tuesday, closing above 15,000 for the first time.”

The Wall Street Journal: Economic Road Clearing, but the Going is Slow — “After four years of crises, foreign and domestic, that threatened to plunge the U.S. economy back into recession, the road ahead at last looks comparatively free of roadblocks. But progress remains slow, and there is little reason to expect meaningful acceleration in coming months.”

The Washington Post: Why are hedge fund titans so upset about the stock market boom? — “We can argue all day long about whether quantitative easing policies from the world’s central banks are doing much to help the economy. But this much is for darn sure: It is boosting a wide range of financial markets.”

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  • twenty_niner

    What’s fueling the market? This is actually a question? Let the Fed (and the other central banks) remove the crack pipe for even a month and find out the answer; or even simply announce the fact and watch the aftermath. Actually, we have the answer: look at what the market does on non-POMO days.

    Because of central-bank ink fumes, everyone is on the same side of the trade and the shorts are all on stretchers waiting for medivacs. The outcome is that there is no real price discovery in the market, which means everything is going to be rainbows and butterflies right up until the day it won’t be: many leveraged bulls stampeding through very small door = not a good day. 

    Central Banks Load Up on Equities

    http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html

  • 2Gary2

    Given that it is mainly the rich 1% who own the vast majority of stocks the high stock market means little to nothing to the average poor and middle class person.  Like I said I do not have a seat at the table and I will  be darned if I am going to pay for the rich folks party and looses which they keep socializing as they keep the gain to themselves. WTF??

  • Wm_James_from_Missouri

    The markets are up because enough people have enough spare cash to assume they will make more money by buying-in. That’s all. Sure, people are looking at earnings and all the cash corporations are holding. They’re even looking at the alternatives, only to look away because no one seems to want to pay you anything ! My family has been involved in the markets for a very long time and there is one thing that is certain. All prices move ! All prices tend to cycle. “They” (Specialist) have to, to make the deal. It’s not magic, just business.
    -It’s too bad, though, that more people aren’t able to participate directly in algorithmic trading by using very “smart” routines. The little guy looses again. So what’s new !
    -I hope buyers are reviewing their hedging opportunities , with strips, straps, butterfly spreads and all of the rest of the possible option strategies that are out there.

    -I would like to make a plea to all of the good people in media. Please stop using phrase such as, ‘ Investors are worried about Greece’, or Investors are anxious about, this or that. No body, I mean no body, who knows anything about the markets gives a hoot about such vague unsubstantiated relationships. I know announcers have to say something, so some goofball, picks up on some other goofball’s twisted economic reality and decided to ‘lead’ with the, ‘so called’, story.

    -Try relating some truth, will you? The next time the market plunges, why not say, ‘ Boy, what a great day for buyers. They really locked in those long term profit potentials ! And man, some of those fools who bought at the top were able to average down. Boy O Boy, they really tapped into that simple strategy. It is reassuring that they were able to form a good trading strategy early and were holding enough cash.
    —————————————————————-
    My dear NPR threaders, remember ; support a law to force profitable companies to pay dividends. America will be glad you did !

  • Steve__T

    Watch me pull a rabbit out of my hat.

  • ShillerShiller

    Stocks are not at all-time highs:
    1) Corrected for inflation, the S&P is below both the 2007 and 2000 peak.
    2) For the S&P, the price-earnings ratio is below the 2007 and 2000 peaks.

    In short, prices are not too high relative to fundamentals or the overall price level.

  • madnomad554

    I find it interesting that so many have a problem with how much some are making up on Wall Street, but apparently have no problem with an athlete making 20 or 30M per year. Even when that athlete gets a blister on their hand and can’t play. Or when said athlete’s team finishes dead last, but he still gets his 30M per year.

    Two years ago Tom Cruise made 75M that year, a lot more than many make on Wall Street. Why isn’t his salary a problem? Oh, because the poor peon middle class is directly responsible for Tom Cruises paycheck, you bought the movie ticket, so I guess you can’t complain about his salary. The Matt Lauer types who make 24M per year…the sit-com stars that make 1M per episode. Why is this OK? What about Bill Gates , Steve Jobs and that Facebook guy..the 1%.

    How many rock stars are worth 2,3 and 400 million dollars? What about your college football coaches that make 5M per year? Maybe that’s part of why your tuition is so damn high?

    Do any of the above mentioned persons, really do something that justifies their salaries? I think not. They to are the 1% and the mass consumer created them. If one isn’t going to complain about the before mentioned 1%, then it seems out of line to complain about a company CEO or wall street investor making 10, 20 or 30M per year.

    • MadMarkTheCodeWarrior

      From one madman to another ;^) I have been saying this for years. Average folk scrape together a thousand bucks to go live the dream for a few hours at a major stadium while smart money goes to watch a tripleA leagues game for cheap money and lots of fun. Corporate sports have simply done what other corps have done which is drive up the salaries of stars to the limits of the consumer. The consumer never wins…

      One major difference with other businesses is that the CEOs can’t take over a major sports franchise with other people’s money, load it up with debt, raid the pensions, fire all the players and outsource the stardom to China.

      I’ve worked in 4 large corporations and seen about 400,000 middle class jobs be destroyed by CEOs making sweetheart deals… For themselves. When a CEO gets 25m as a bonus for failing… Should not one ask what’s wrong with this picture?

      • hennorama

        MMTCW – one suspects Los Angeles Dodgers fans might dispute the spirit of your statement “the CEOs can’t take over a major sports franchise with other people’s money, load it up with debt, raid the pensions, fire all the players and outsource the stardom to China”.

        Frank McCourt came into L.A. (from Boston) and used other people’s money to buy the Dodgers.  He then added about $600 million in debt.  The debt load significantly impacted the team’s ability to sign players, as the free cash flow of the operation was going almost entirely toward debt service.  Not to mention to finance the McCourts’ lifestyle.  The McCourts borrowed against Dodger-related businesses to the tune of at least $108 million between 2004 and 2009, in large part to finance the purchase and renovation of four separate residences in Southern California.And Guggenheim Baseball Management, the latest LAD owners, used  hundreds of millions of dollars of insurance company money to finance their ownership.  

    • Gregg Smith

      I don’t care how much money anyone makes. It doesn’t affect me at all.

      • madnomad554

         Nor does it affect me. I just try not to spend money in their direction. And considering I don’t own a TV, I don’t watch them sit on the bench nursing a blister, making 200 thousand dollars in one baseball game. I guess if the organic community starts advertising at the ballpark, I’ll have to change my spending habits.

         My point is that if any multi-million dollar salary is going to be questioned, then all of them should be questioned. The entire time the OWS movement was going on, I wondered why they didn’t have an Occupy Hollywood movement or an Occupy the NFL movement and so on. But I guess that would be hypocritical considering they created their salaries. 

      • TomK_in_Boston

        It’s not an individual matter or, as the TP says, “envy”, it’s a question of what kind of a society we have. Extreme inequality, with the rewards overwhelmingly for financial manipulation that doesn’t produce anything, is a bad direction for the USA.

        • Gregg Smith

          Just think how high tuition would be if the Football team didn’t bring in gazillions. Just think of how much millionaire athletes pay in taxes. 

          Inequity means nothing, opportunity is where it’s at. Any attempt to artificially address inequity must involve punishing achievement and rewarding failure. It just does, and that’s not good.

          • TomK_in_Boston

            Tuition at State U was effectively Zero when the states were collecting enough taxes.

            That’s just a TP re inequality, Gregg. Unfortunately, inequality reduces opportunity. Our social mobility has decreased over time as we cut taxes and deregulated. The big winners of our time are not achievers, but those with rich parents and financial manipulators.

    • alsordi

      I see poor whites with Boston Redsox tattoos.  One guy had one on his neck.  An unpaid walking advertisement who still has to pay $50 for a lousy seat at a game and $20 bucks for a hotdog and a beer. 

      Americans do not have a clue.

      • Gregg Smith

        But they have a choice.

    • Don_B1

      @madnomad554:disqus @MadMarkTheCodeWarrior:disqus 

      There are several “reasons”:

      1) The subject is the stock market’s “recovery.”

      2) The wealthy whose wealthy is growing again are back to feeling like the Great Recession was “no big deal.” And it was largely their actions that caused the financial crash.

      3) The wealthy are pressuring the politicians to do nothing for the unemployed. There is little pressure on the VSPs to speed/complete the recovery from the Great Recession and end the Lesser Depression that the country is currently in, which would help everyone who is not benefitting from the stock market growth.

      Whether or not the “entertainers” who earn large amounts of money support measures which would benefit all people, many do feel that the amounts they earn are excessive, but they also see that their gifts do benefit everyone, unlike the work of many traders who design software that senses trades and buys the stock milliseconds before the sensed order is processed. raising the cost of that order, then selling their purchase at a higher value, extracting money from others without any benefit to them. Other wealthy do their “rent-seeking” in other ways that are just as or more profitable but similarly to not add value to the whole economy.

  • adks12020

    I’m so sick of the news constantly reporting on what number the DOW and NASDAQ hit each day. One, the daily numbers of the stock market don’t mean diddly; it’s long term trends that matter. Two, measuring the real economy using the DOW or NASDAQ just doesn’t make sense. These markets aren’t, and have never been, good indicators of the real economy. They are simply measures of how well the largest corporations are doing.  They are certainly raking in the profits right now but what about the every day Joe? Oh yeah, wages have been nearly stagnant for a couple decades and there are still millions unemployed or underemployed.  But wow, look at the DOW soar. Give me a break.

    • AnneDH

      I agree with you. I have a 401K plus two Variable life insurance policies. I only look at the stock performance once a year and make changes to my investment percentages then.
      I wonder if the rampant high blood pressure in this country has to do with daily check on how people’s stocks are doing.

      • adks12020

        Agreed.  I check my 401K only when I receive my quarterly statements and only make changes maybe twice a year.

  • donniethebrasco

    AP wiretaps.

    They came for the tea party groups, and NPR did nothing.
    They came for the AP reporters, and NPR did nothing.
    The Republicans got elected and cut NPR’s tax payer support, and NPR got shut down.

  • donniethebrasco

    Who cares about the Dow?

    I work at a Starbucks for $12/hour.  I eat ramen noodles and have 5 roommates.

    I am a victim and believe that the government should take care of me.

    Why should I save for retirement?  I support government programs that take whatever wealth anyone is able to accumulate, so I don’t accumulate it.

    Maybe I can get a sweet gig working for the government someday.  It would be like winning the lottery.

    • Shag_Wevera

      $12/hr?  Must be the store manager.

      • Shag_Wevera

        “…government programs that take whatever wealth anyone is able to accumulate,”

        Do you know how many millionaires and billionaires there are in this country? 

    • Shag_Wevera

      “Maybe I can get a sweet gig working for the government someday. It would be like winning the lottery”

      Like my wife’s sweet $12/hr librarian gig.  I think my municpality is hiring part-time, non-benefited summer help…

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        Twelve dollars an hour to stack books that are already in numerical order?

        (Seriously, libraries are cool, and an indicator of how a municipality regards its citizens. More power to you and yours for this.)

    • jefe68

      The level of banality in what you post is only outdone by the inanity.

    • Shag_Wevera

      “I am a victim and believe that the government should take care of me.”

      If I’m old, sick, or destitute…  Yeah, absolutely!

  • donniethebrasco

    NPR would do a story on the AP, but they don’t want their phone records scrutinized.

  • ToyYoda

    It’s “easy.”  Find a company with a decent yield, a competitive moat, good management, and at an attractive valuation then factor in a margin of safety and it won’t matter whether the market is in a bubble or not.  You’ll be protected.  Just be disciplined, opportunistic and patient as Warren Buffett.  The market will always offer 1-2 such opportunities each quarter.

    As an example, my best trade so far has been buying Novartis, a Europeran pharmaceutical company during the summer of 2009.  I had to suffer through the Fukushima meltdown, summer stagnation and a never ending series of European crisis.  But since then, my stock has doubled and given me 3% yield throughout those years.

    I bought Maximum Integrated Product around the same time with 5% yield.  I had to suffer through the meltdown and a secularly unfavorable industry.  It too has nearly doubled and it’s dividend payout has increased.

    I bought Nu Skin early this year for the same reason. It became a discount during the Herbal Life Icahn vs Ackman battle and it has climbed 30%.

    I wouldn’t buy these stocks now, I think they are fairly valued or slightly over valued.  It’s not all rosy.  I’ve  been burned, but in every case it’s been a “hot tip” from a friend recommending a gold stock and who hasn’t done any due diligence.  (I bought them because I thought I could trust my friend, not any more.)

    Do your due diligence.  And this is a great time to be an independent investor.  There are so many books right now that explain value investing and the techniques that Warren Buffett has used over the years.

    • TomK_in_Boston

      I agree with all that, Toy. All biotech has been hot and I have a lot of it. I’m always looking for these opportunities and they often work out beautifully but I also kick myself for the ones where I didn’t pull the trigger. I was watching ToyOta (TM) all last year and didn’t buy and now look at it.

      • ToyYoda

        yeah.  Now, I am into speculative biotechnology companies.  I’ve made enough money over the last few years, that I figure I can afford some exposure.  I’m hoping for a 5-10 bagger.  :)

        But, Maximum Integrated Product is a technology company.  I bought it when lots of advisories were saying to stay away from tech.  I’m glad I didn’t listen to them.  There is still a few plays in tech.

        I’m also looking into the shipping industry.  I’ve been eyeing it since 2004!!  (Talk about patience.)  It’s been hammered by a perfect storm of misfortunes.  There was a recent write up on it in the Economist.

        • TomK_in_Boston

          I probably should be doing what you say as I am a biotech type and my wife is VP of a biotech startup. However I’ve just kept accumulating the Fidelity biotech fund – no complaints there :)

          Looking for home runs, I’ve been buying Irobot and Clean Energy Systems for years with no return. Robotics is a no brainer and Irobot just introduced its medical robot and got a huge pop. CLNE provides natural gas fuel for trucks and I see that as a trend.

          I speculate with one pot but am mostly conservative. Utilities have been kicking butt.

  • TomK_in_Boston

    Every day there are 10 reasons for the mkt to go up and 10 to go down. The mkt does what it does, and the media take one of the reasons that works and say “because” :)

    The mkt is not at an inflation-adjusted all time high, and getting to where we are re the 2000 peak after 13 years is not exactly a great return! (said by ShillerShiller below)

    http://www.advisorperspectives.com/dshort/charts/markets/SPX-Dow-Nasdaq-since-2000-real.gif

    The best indicator of valuation is the Schiller P/E. Here’s a very long time perspective with the price above and the Schiller P/E below. In both casee we’re substantially above the very long term trend, indication caution

    http://www.advisorperspectives.com/dshort/charts/valuation/SP-and-PE10.gif

  • wauch

    Proof positive that the stock market has completely decoupled from society and is now the exclusive toy of the 0.1-1.0%.

    • donniethebrasco

      Soon taxes will be the exclusive toy of the 1%.  They already pay 15% of the total federal budget.  If they get tired of paying, they will just move.

      You are more like the 47%.

      You vote Obama because he puts money in your pocket.

      • TomK_in_Boston

        If the1% have all the income, they will pay all of the taxes. How unfair :). Atlas will shrug any day, and give up the burden of all that wealth and income.

  • J__o__h__n

    Is this Oprah?  If On Point decided to have an entire show on breast cancer, great.  I don’t think that On Point should be focused on celebrities for a segment tacked on to an unrelated topic.

  • TomK_in_Boston

    Breaking: from the RNC director of Hispanic Outreach:

    “Friend,Yes, I have changed my political affiliation to the Democratic Party.It doesn’t take much to see the culture of intolerance surrounding the Republican Party today….”

    LOL

    • twenty_niner

      One step closer to banana republic.

  • Shag_Wevera

    Some old American truisms:  Go to college and you’ll have a good job.  Work hard and social security will take care of you in your elder years.  The stock market over time is your best investment.  Your home will only increase in value.

    So much for old American truisms.

    I used to be in the market on a few levels, and no longer am.  I’ve become the caricature that would put his cash in his mattress.  I think the market is profoundly corrupt and maybe even a bit evil.  I’ll work cuz I must, and if God permitting I have a few bucks left after feeding my family and paying bills, I’ll let it sit in a savings account.

    I am not suited to the free market capitalist game.  If you play a game you’re no good at, you’ll likely lose.  If you play a game you’re no good at AND the game is rigged by the house, you’ll definitely lose.

    No thanks, I’ll pass.

  • ToyYoda

    I know it’s too late, but can we skip the Jolie thing?  That deserves its own show.

  • donniethebrasco

    #Obama #Schultz #IKnowNothing

    No one was available from the AP?

    Oh, there is a negative story about Obama.

    #StopTheNegativism

  • toc1234

    psst Tom, there’s kind of a big news story regarding the IRS going on…  oh, what’s that?  your editors are still trying to figure out exactly how to spin it to make Obama look as distant as possible?  keep up the mediocre work!

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      Did you complain when public radio covered voter suppression?

      It took them years to say “voter fraud barely exists” and by the time they separated fantasies of voter fraud from actual voter suppression, all those voter suppression laws were basically passed.

      If they did the same slow-walk, then you and I would be even. For once. On this one case v. another basis.

      That leaves the rest of the mainstream press, taking their cues from the Foxies who Cried Wolf, warping whatever journalism there is out there to be done.

  • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

    “Americans left in droves”.

    Are we talking about 401k Americans, Americans who subscribe to both the FT and WSJ, or both?

    I think it’s time to start graphing things out in quintiles.

  • Jim

    no, i want to warn you. the rally is completely Fed induced. Nothing in the market points to a job recovery. The asset purchase by the the Fed is artificially reducing the interest rate which explains the stock and housing appreciation.

    this is what i call the NEW NORMAL.

  • donniethebrasco

    How is Kim Kardashian doing with her pregnancy?

    How about Princess Catherine’s pregnancy?

    Do you think that another 5 people will listen and double your listeners?

    Good thing you don’t have advertisers.

    • Acnestes

       Such an angry little boy!

  • donniethebrasco

    #IRS #AP #WarrantlessSearches #Obama #EnemiesList

    #BushWasWorse #CheneyJokes #IMiss2009WhenICouldBlameBushforEVERYTHING

    • http://twitter.com/Mithrandir48 Jeff A

      You forgot #Benghazi and #Obamacare (or #Sebelius) there are scandals going on with those issues too…I can understand how you might miss those ones since there are so many within the last week!

  • George_Dedham_MA

    All these expert pretend they can predict, but they cannot. They pretend to explain why what ever happened, but if you don’t tell them what happened they cannot PREDICT.

    • donniethebrasco

       They can look at long term averages of P/E ratios, which is how people determine whether a stock market is “over valued” or not.

      That’s about all they do.  When they try to explain the “why” they are full of BS.

  • Jim

    Watch out… Japan is copying the US on asset purchase… If Europe joins and then CHina? WATCH OUT…

    when this irrational purchase keeps up… and when the spigot stops… just WATCH OUT… not even the fed and Volker can save the world.

  • donniethebrasco

    I’m surprised no one has said that anticipating the end of the Obama Administration, the market will go down.

  • donniethebrasco

    Typo on Michael Pento’s blurb.

    It should read How to Survive the Demise of the U.S. [Debt] Market.” (@michaelpento)

    not How to Survive the Demise of the U.S. [Dept] Market.” (@michaelpento)

  • http://www.openeyesvideo.com/ Glenn C. Koenig

    I see a disconnect between these markets and dwindling world resources, damage to the environment (not just climate change), etc.  If this economy is based on ripping more materials out of nature, out of the earth, then we’re in big trouble.  If we’re shifting more to services (human labor rather than energy or materials) then perhaps there’s hope.
    But as long as I see those oil & gas industry ads on TV during the news, I’m very doubtful!

  • George_Dedham_MA

    you hear on news “the market went up (or down) because of XY or Z.”  But just as often X,Y, and Z happen and stocks go opposite direction.  Buy diversified index, hold em, rebalance from time to time. Also have bonds and some cash.  Read Bernstein.

  • DrewInGeorgia

    Perpetual increases with occasional corrections says your guest. And all businesses are capable of ever widening profit margins with no downside. Occasional corrections…

    I’m with a couple of other commentators here today when it comes to the poor placement of the Jolie C segment. I have to say, however, that it’ll probably be more down to earth than this fairy tale.

  • http://twitter.com/Mithrandir48 Jeff A

    I jumped into the stock market back in 2008/2009 and I’ve had my money double in the last few years.  I’m not sure if this is sustainable since the Fed won’t keep interest rates so low for very long.

    • BHA_in_Vermont

      The question, then, is how do you benefit from the gain?

      If you leave it in the market, you risk losing it in the next crash created by the financially powerful greedy.
       
      If you sell, what do you do with the money? Putting it in the bank is currently equivalent to stuffing it in a mattress, except that you have easier access to it in the mattress.

      • http://twitter.com/Mithrandir48 Jeff A

        You view the market as some sort of rigged game, it’s not.  I can take the money out and invest in a business of my choosing, invest in a friends business or even use it to start up my own company.  The key is to be aware of your surroundings and don’t take things as static, stable and constant.  How many people said: “Housing prices will never go down”?  That was a naive statement but it felt true for about 50 years…keep on top of things and don’t blame rich people for your own inattentiveness.

  • donniethebrasco

    He just said that our economy is growing because we take money from the rich and give it to the lazy poor.

    He just said “transfer payment driven consumption bubble” that is a conservative idea that you morons on NPR don’t understand.

    • Ray in VT

      There seem to be a lot of things that conservative morons like you don’t understand.  History if often one of those things.  How we can’t run a 21st century society on a 19th century economic model seems to be another.  Hold on, I’ve got to answer the call on my Obama Phone.

      • jefe68

        You have to wonder about people like this guy.
        I suppose he thinks he’s being clever or something.

        • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

          I just wonder if DTB would come across better if there were less of him here, in a Chauncey Gardner kind of way.

        • Ray in VT

          Yup.  I don’t see much evidence of too much higher thinking going on with some people. A few people here with whom we are ideologically opposed make some good points, but there’s too much pushing of questionable sources and conspiracy theories.  I especially love it when someone who has an obvious lack of knowledge regarding a particular historical topic tries to call me on something that I do know quite a bit about.  You have to love the self taught experts who don’t know how little they know.

          • JobExperience

            If we had video he’d be arrested for exposing himself.

      • Acnestes

        If he was a grown up we could consider him a moron.  He’s just a snotty kid who craves attention.

      • JobExperience

         It may be possible according to CERN scientists that the Internet is accessible by creatures in a parallel Bizzarro World of Dark Energy. Facts have no gravity there.

    • jpolock

      Hilarious!  I wish we ACTUALLY were redistributing wealth and resources through taxation…and clearly, once again, this is patently and empirically untrue.

      The rich are paying historically low rates.  Corporations are paying historically low rates and % GDP.  The rich are openly and shamelessly pillaging this civilization, have captured the Government, and it will end as ALL previous “once’ great empires have…not well.

      This will remain the case as long as the middle class stands for it, and when the “straw that breaks the back” arrives…well…there are a lot of guns out there

  • Kathy

    You can’t grow this economy without consumers and until the ultra-wealthy are willing to share some of the great wealth of this country with their workers, the economy will never thrive again as it has in the past.

  • Casey Reyner

    This is reflective of what is wrong with our economy in the U.S. and our recovery from the recession.  Wall Street was bailed out, and has recovered, reaching record highs; while the rest of the nation continues to struggle.  

  • creaker

    “the economy” – if you aren’t making or spending money, you are not part of an economy. Which is where the US middle class is trending. And why the economy can do well while you’re not.

  • donniethebrasco

     I’ve got my Obama phone.
    I get my Obama ice cream cone.
    I gonna get an Obama home.

  • donniethebrasco

    You should be able to declare bankruptcy to remove a student loan.

    It shouldn’t be only available to people work for the government or a non-profit

    • MadMarkTheCodeWarrior

      It shouldn’t only be for millionaires and billionaires on wall street who have the money to pay lawyers $1000/hour to represent their interests in court and in the hall of congress.

  • MadMarkTheCodeWarrior

    So the 1% are raking in the dough…
    In every market their are winners and loosers… Small investors are going up against program trading systems: computer systems the size of parking lots.

    The game is rigged for speculators and parasites so how is the market linked to the reality based economy where personal incomes of the 99% (consumers) are still falling on average. While the agregate income of consumers is being driven down, the health of this consumer based economy is in what way tied to the fortunes of the wealthy?

    • BHA_in_Vermont

      The 1% are JOB CREATORS!

      right??

      • MadMarkTheCodeWarrior

        That’s what the 1% neocon randians want us to believe.

        We create jobs when we spend money. No investor will invest a dime in anything that consumers don’t have money for. Demand -> jobs -> supply regardless of any chicken and egg argument. Henry ford a true captain of industry understood this.

        See billionaire nick hanauer’s TED talk about job creation on YouTube… He’s arguing that he and all his 1% brethren like bill gates and warren buffet should be taxed more for the health of the country and it won’t impact job creation at all.

  • Jim

    Look Allen, “running away inflation” has not existed ‘cos it is kept as reserves for banks so that they can make money off of the government.

    did you look at the food and energy price? of course you don’t care… but MILLIONS of working class people do…

    the CPI number is deceiving and created disingenuously… i mean who the !#@$#@%$ would remove energy and food price to measure inflation?

    • donniethebrasco

       The government is cooking the books to keep Social Security raises down.

      They are printing money to buy their own debt.

      • Jim

        Exactly! in fact i would not even be surprise if the Fed and hedge funds are working together to pop up the whole market… i hate to see it ‘cos it means the market is going to lure the average Joes from Main Street… people, who go into this market which is already toppy, will eventually be suckers.

    • BHA_in_Vermont

      Next they can remove health care and college costs. The CPI will look REALLY good.

  • donniethebrasco

    Buy foreign stocks.

    Move out of the US.

    Or get a wheelbarrow to carry the cash to buy your bread.

  • donniethebrasco

    The only people that are dumb enough to buy 10 year bonds are the Federal Reserve.

    They are.

  • donniethebrasco

    Sounds like a low information voter on the phone.

    Obama’s favorite.

    • Ray in VT

      Versus the misinformation voters that the GOP likes?

      • TomK_in_Boston

        Isn’t the earth 6,000 years old?

        • JobExperience

          Yes, even younger after a Lifestyle Lift.
          Pat Boone is 30 again, and Debbie is 15.
          Haiti was just discovered.

        • Ray in VT

          A pretty fair number of the climate deniers seem to think so.

    • TomK_in_Boston

      Is school out already?

  • DianeArbus2

    We all know that the market doesn’t like uncertainty. It sounds like the big guys are trying to lure us regular investors in so that they can play with our money (and lose it) instead. We are staying out. 

    • donniethebrasco

       They aren’t trying to lure you in, they just realize that you will come in, bump up the market, then leave after you buy at the high and sell at the low.

      If you invest a little bit every month, you will beat all of the smartest investors.

  • DrewInGeorgia

    Yes it will pop caller, don’t worry though. Allen Sinai says it will merely be an occasional correction, that doesn’t sound so bad does it? It’s not like it will be a Crash or anything…

  • http://www.facebook.com/profile.php?id=12634131 Andrae Raffield

    No offense to either of your guests, but I see any economic forecasting as a casting of bones or a reading of chicken guts. What makes me terrified of the stock market is not the current economic conditions but the overall structure of it. I’m admittedly not an economist by any stretch of the imagination but from the outside looking in it seems as though it’s completely controlled by the capricious attitudes of investors.

    • donniethebrasco

       If you buy a little bit every month, you will beat the smartest investor every time.

  • creaker

    I guess the economy racing toward a train wreck didn’t warrant an entire hour’s discussion.

    • brettearle

      Why don’t you volunteer to be the prolonged bearer of such Bad News?

      That way, we won’t all have to live in Denial and we can go on to blame you, as the Messenger.

      [Isn't that sometimes the way it works?]

  • BHA_in_Vermont

    There are serious indicators that the company I work for is going to be doing a large “resource action”.

    How much do you want to bet the execs cash in a bunch of their stock (free or very low cost) soon after as the price goes up (temporarily) because the company temporarily looks better on paper?

    How much do you want to bet the execs get big bonuses because they “fixed” things?

    • TomK_in_Boston

      Wow, “resource action”, that is serious corporate language.

  • donniethebrasco

    Does Judy let Tom use her apartment?

    What does he owe her?

    • jefe68

      What is wrong with you?

      • brettearle

        Your question remains one of the greatest puzzles of the 21st century.

  • jpolock

    Can anyone answer these questions? My understanding with bonds, that yes, while the Principle may fall due to inflation, but then doesn’t the dividend payments go way up?  Thus as the speaker says you might lose 25-30% in principle: so $100 at 5% rates vs. $70  at 7-10% rates?

    So if one is investing for income, don’t bonds still make sense? Doesn’t the number of shares you own matter more than just price and rate?

    i.e. if I had 100 shares paying $5 per month, which then dropped to 70 shares paying $7 per month…I don’t see that as “losing my shirt”

    What am I missing?  Right now I am relatively young so I reinvest all dividends, trying to build as many shares as possible so that by retirement time, that monthly payment will be what matters, not necessarily the principle value at the moment…
     
     

    • TomK_in_Boston

      You’re missing that the bond doesn’t pay you more. It pays you the same, but that’s a higher % of its lower value. That helps new buyers, but it doesn’t help you.

      • jpolock

        Maybe I wasn’t clear, but that’s what I meant. So a higher rate on a lower value, could actually add up to a higher dividend in your portfolio.

        So, if ultimately one is trying to get to a position of income generation in retirement, this could actually be beneficial….as long as you have no immediate need to sell, you would actually be getting a monthly raise!

        The only thing that would seem bad would be if BOTH price dropped and rates were frozen or dropped simultaneuosly

        And yes, doesn’t this also re-enforce the beauty of Dollar Cost Averaging?

        • TomK_in_Boston

          What ToyYoda said. If you are holding the bond and nothing changes but it drops in price, your income is the same. It doesn’t matter to you that it’s a higher % of the lower price, does it? I mean, if your bond lost all value, it could pay you 1 cent/yr and that would be an infinite interest rate, but not a happy situation :)

    • twenty_niner

      Your want to buy TIPS, which are pegged to the CPI. In my view, CPI is underestimate of the real rate of inflation, but that’s another discussion.

      http://www.investopedia.com/articles/bonds/07/tips.asp

    • ToyYoda

      What TomK said.  But, to add, unless the borrower defaults, you won’t lose principal.  Your principal will be returned to you.  however, if you sell your bond in the market, then yes, you will lose principal, because your bond won’t be worth as much.

      I won’t get into the math, but here’s what you need to be aware of.
      Suppose you bought a bond for $100.00 with 1% interest.  So you get 1 dollar a year.  Later, new bonds are issued for $100.00 for 2% interest.  No new  buyer would want your bond if you plan on selling it before maturity, because they can get a bond that pays 2% interest.  So in order to sell your bond, you’ll have to sell it cheaper than $100.  You will have to make it cheap enough so that the 1 dollar a year you make on your bond will net a buyer 2% yield.  So you will have to sell it for $50.  That’s the simple idea.  

      But now you have to factor in how long you’ve had the bond too.  Because, suppose you have one more coupon payment on your bond, but you want to get out.  do you really need to sell it for $50 if you want out?  It might be worth more because any potential buyer of your bond may like the fact that they don’t have to tie up their money for as long as you have.  So maybe the new buyer is willing to forego a 2% yield for a little less because they don’t have to hold it as long.

    • hennorama

      jpolock – you should learn more about the differences between individual bonds, and bond funds. There are advantages and disadvantages to both.

      Individual bonds are a form of debt, and are essentially contracts between the bond issuer and the bond purchaser/owner. The purchaser/owner lends money to a borrower (a company, a municipal entity, the state or Federal government, etc.), generally for a fixed length of time. The borrower promises to pay you periodic interest payments, and to return your original principal in full at a future date.

      If the purchaser/owner holds the bond until the maturity date, the borrower pays back the full face value of the bond (assuming the borrower still has the financial resources to do so). If interest rates vary in the interim, the value of the bond to a separate purchaser varies, but this only matters if you need to sell prior to maturity of the bond.

      The two main advantages of individual bonds are fixed yield, and the return of principal at maturity.

      See:http://guides.wsj.com/personal-finance/investing/what-is-a-bond/

      Bond funds are something else entirely. They are large pools of money, managed by professionals, who buy and sell individual bonds on behalf of the fund’s shareholders. Shareholders add and subtract from the pool of money under management when they purchase or sell shares of the fund. The managers make all investment decisions. Only rarely are the securities (bonds and other financial instruments) in the fund both purchased when originally issued, and held to full maturity and redeemed.

      For the reasons listed above, bond funds have significant disadvantages. Unlike a bond, they do not have a fixed yield. Also unlike a bond, the shares of a bond fund have no maturity date, and thus no guarantee of a return of one’s initial investment. One must also consider the fees involved to purchase shares (if applicable), ongoing management fees, the various other management expenses for trading, hedging, marketing, etc. etc. These fees can significantly reduce your total return over time, which is a significant consideration for someone who is “relatively young”.

      The two main advantages of bond funds are professional management, and convenience.

      Let me refer you to some other resources:

      http://www.finra.org/Investors/InvestmentChoices/Bonds/SmartBondInvesting/Introduction/

      http://www.investinginbonds.com/learnmore.asp?catid=46

      http://www.investinginbonds.com/learnmore.asp?catid=3&id=387

  • ToyYoda

    We just had an interesting and vigorous discussion on the market cut short to talk about breast cancer!!Both subjects require (at least) an hour segment show to flesh out the issues.  Now, neither subject will get the time they deserve.  sigh….

  • creaker

    The Avon Walk is starting this Friday here in Boston.

  • jpolock

    Not to mention that donnie is just empirically wrong

  • creaker

    Does health insurance cover preventative surgery?

  • JobExperience

    Aren’t Too Big Fake Boobs and Too Big Fake Equity really the  same problem? That’s why Tom put them together.

  • Trond33

    A large part of the world, and especially the US, has an unhealthy relationship with stock markets.  First of all, stock markets are not a good measure of overall health of the economy.  At its foundation, greed drives stock markets, which is not the stuff of the common person on Main Street who in fact drives the economy.  Wall Street and other stock markets are in essence driven in an endless cycle of boom and bust.  Addicts, much like gamblers and drug addicts, extol its euphoric highs in boom times, and are incapable of seeing their own complicity in the subsequent bust.  

    A large percentage of individuals in the stock market have no business being in the stock markets.  It is criminal that companies have absconded with their responsibilities to their employees in terms of retirement plans and forced individuals to compete in stock markets in the form of 401K’s.  The stock market is inherently biased to favor the large investor, hence coming at a much greater risk to the small investor.

    The oversized stock markets of today are very efficient funnels of capital to major multi-national corporations.  Many of whom would not be in existence without the lifeline of the stock market.  You might say, nothing wrong with that – it makes money.  Consider the hidden cost, such as financing being distorted away from start ups and SMEs.  Companies that are the real drivers of innovation and wealth creation.  Furthermore, large corporations by their nature extoll societies reliance on overuse of finite resources, they in fact keep society from tackling the major issues facing the world.  

    In the past twenty years, stock markets and the financial industry has in fact drawn away the “best and the brightest.”  Individuals who are now a waste to society, they are fully immersed in that industry.  The hidden cost here is that these are individuals who otherwise may have become inventors, scientists, doctors, or otherwise important players in improving society and the world.  The over importance placed on the financial industry and stock markets has in fact robbed society of future talent needed to tackle the fundamental problems facing the world.  

    No, you do not need to be a member of an movement such as Take Back Wall Street, to realize that stock markets serve a purpose, but without oversight, quickly transform into a societal cancer. 

    • TomK_in_Boston

      Exactly right. Sure we need financial services, but at one point it was near 40% of the economy. That’s absurd. Beyond a certain point the business of the USA becomes a giant con game. The best and the brightest should be making things not figuring out how to front run a trade faster. The sucking up of all the wealth by this parasite sector is also a major driver of inequality, a national cancer.

  • http://www.facebook.com/profile.php?id=1623919020 Amecus J England

    The stock market bubble is a shell game artifically created through re-insurance companies. 

  • http://www.facebook.com/profile.php?id=1623919020 Amecus J England
  • tagubajones

    Great. Two guys arguing over whether the market will go up or down.

    If you want to have an interesting discussion on the topic, invite Jeremy Grantham of GMO and Nassim Taleb onto the show, not these garden-variety CNBC-type financial hacks.

  • Regular_Listener

    Russolillo said the housing market is “bouncing off the bottom.”  I wonder – was it that, or a needed correction after years of price inflation brought on by rampant speculation?  Granted, people need places to live and want to own homes.  But what is the right ratio of ownership cost to income?  My hunch is that this number has been going up, and that is not a good thing unless you’re rich.

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