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Stock Market Today
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In Striking Shift, Small Investors Flee Stock Market
Sep 3rd
Renewed economic uncertainty is testing Americans' generation-long love affair with the stock market.
Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.
Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.
Read more: 3wa, Investing, Individual Investors, Financial Recovery, Stock Market, Economic Recovery, Small Investors, Business News
Robert Reich: The Stock Market Rally Versus the World’s Economic Fundamentals
Sep 3rd
What passes for business reporting in the United States is too often a series of breathless reports about the stock market. When the Dow rises precipitously, as it did today (Wednesday), the business press predicts an end to the Great Recession. When the stock market plummets, as it did last week, the Great Recession is said to be worsening.
Pay no attention. The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there's no relationship at all. Over time, weather and geology interact but the results aren't evident for many years. The biggest impact of the weather is on peoples' moods, as are the daily ups and downs of the market.
The real economy is jobs and paychecks, what people buy and what they sell. And the real economy -- even viewed from a worldwide perspective -- is as precarious as ever, perhaps more so.
Today's rally was triggered by news that one of China's official measures of its growth -- its Purchasing Managers Index -- rose. The index had been in decline for three straight months.
Why should an obscure measurement on the other side of the world cause stock markets in New York, London, and Frankfurt to rally? Because China is so large and its needs seemingly limitless that its growth has been about the only reliable source of global demand.
Many big American companies have been showing profits because they're doing ever more business in China while cutting payrolls at home. American consumers aren't buying much of anything because they've lost their jobs or are worried about losing them, and are still trying to get out from under a huge debt load (the latest figures show more consumer debt delinquent now than last year and a surge in personal bankruptcies). The U.S. housing market is growing worse, auto and retail sales are dropping, and the ranks of the jobless continue to swell.
Europe is in almost as much a mess. The problem there isn't just or even mainly that Greece and other nations on the "periphery" have too much public debt. A bigger problem is European consumers aren't buying nearly enough to generate more jobs. Unemployment remains high, and the trend is bad. Manufacturing growth there has slowed to its weakest pace in six months. Yet bizarrely, Europe's large economies -- Britain, Germany, and France -- are paring back their public budgets. It's exactly the wrong time, and a recipe for disaster.
Germany's so-called "job miracle" (as Chancellor Angela Merkel calls it) is more mirage than miracle. Most of the gains in employment there have come from part-time jobs, often at low pay. Average annual net income per German employee continues to drop. This explains why domestic demand there is so sluggish and why Germany is desperately dependent on its exports of machinery and manufacturing components to Asia, especially China.
Meanwhile, Japan, now the world's third-largest economy, is a basket case. Japanese consumers aren't buying much of anything, and why would they? The country is still in the grip of a deflationary cycle that shows no end. Japanese consumers reason if they can buy it cheaper next week there's no reason to buy now. Basically the only thing keeping Japan's economy going are its exports of cars and electronic components to China.
Australia is booming, but look closely and you see the same buyer. Australia is making a boatload of money selling its minerals and raw materials to China (Australia is fast becoming one big Chinese mine shaft). The Brazilian economy is soaring. Why? Exports of wheat and cattle to China. Middle East oil producers are getting richer. Why? China's insatiable thirst for oil.
Elsewhere around the globe the picture is as uncertain. Much of Pakistan is under water. Much of the rest of the Middle East is under tyrannical or corrupt regimes. Russia has suffered such a dry spell it's hoarding wheat. Despite its wealthy few, India's masses are still terribly poor.
The stock market could plunge tomorrow or the next day because the world's economic fundamentals are so precarious.
The global economy cannot be sustained by one big, voracious nation -- especially one that's suffering bouts of civil unrest, actively repressing dissent, suffocating under a blanket of pollution and coping with other environmental hazards, and whose biggest companies are run by the state.
This post originally appeared at RobertReich.org.
Pay no attention. The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there's no relationship at all. Over time, weather and geology interact but the results aren't evident for many years. The biggest impact of the weather is on peoples' moods, as are the daily ups and downs of the market.
The real economy is jobs and paychecks, what people buy and what they sell. And the real economy -- even viewed from a worldwide perspective -- is as precarious as ever, perhaps more so.
Today's rally was triggered by news that one of China's official measures of its growth -- its Purchasing Managers Index -- rose. The index had been in decline for three straight months.
Why should an obscure measurement on the other side of the world cause stock markets in New York, London, and Frankfurt to rally? Because China is so large and its needs seemingly limitless that its growth has been about the only reliable source of global demand.
Many big American companies have been showing profits because they're doing ever more business in China while cutting payrolls at home. American consumers aren't buying much of anything because they've lost their jobs or are worried about losing them, and are still trying to get out from under a huge debt load (the latest figures show more consumer debt delinquent now than last year and a surge in personal bankruptcies). The U.S. housing market is growing worse, auto and retail sales are dropping, and the ranks of the jobless continue to swell.
Europe is in almost as much a mess. The problem there isn't just or even mainly that Greece and other nations on the "periphery" have too much public debt. A bigger problem is European consumers aren't buying nearly enough to generate more jobs. Unemployment remains high, and the trend is bad. Manufacturing growth there has slowed to its weakest pace in six months. Yet bizarrely, Europe's large economies -- Britain, Germany, and France -- are paring back their public budgets. It's exactly the wrong time, and a recipe for disaster.
Germany's so-called "job miracle" (as Chancellor Angela Merkel calls it) is more mirage than miracle. Most of the gains in employment there have come from part-time jobs, often at low pay. Average annual net income per German employee continues to drop. This explains why domestic demand there is so sluggish and why Germany is desperately dependent on its exports of machinery and manufacturing components to Asia, especially China.
Meanwhile, Japan, now the world's third-largest economy, is a basket case. Japanese consumers aren't buying much of anything, and why would they? The country is still in the grip of a deflationary cycle that shows no end. Japanese consumers reason if they can buy it cheaper next week there's no reason to buy now. Basically the only thing keeping Japan's economy going are its exports of cars and electronic components to China.
Australia is booming, but look closely and you see the same buyer. Australia is making a boatload of money selling its minerals and raw materials to China (Australia is fast becoming one big Chinese mine shaft). The Brazilian economy is soaring. Why? Exports of wheat and cattle to China. Middle East oil producers are getting richer. Why? China's insatiable thirst for oil.
Elsewhere around the globe the picture is as uncertain. Much of Pakistan is under water. Much of the rest of the Middle East is under tyrannical or corrupt regimes. Russia has suffered such a dry spell it's hoarding wheat. Despite its wealthy few, India's masses are still terribly poor.
The stock market could plunge tomorrow or the next day because the world's economic fundamentals are so precarious.
The global economy cannot be sustained by one big, voracious nation -- especially one that's suffering bouts of civil unrest, actively repressing dissent, suffocating under a blanket of pollution and coping with other environmental hazards, and whose biggest companies are run by the state.
This post originally appeared at RobertReich.org.
Read more: Robert Reich, Stock Market, Economy, Economic Crisis, Economic Recovery, Business News
September Stock Slump Coming? Investors Brace For A Traditionally Bad Month
Sep 1st
CHICAGO — The economy is weakening, home sales are plunging and stocks are on a long slide. Now comes something even scarier for investors – the beginning of what is traditionally the worst month in the market.
Could stocks be headed for another September swoon?
Could stocks be headed for another September swoon?
Read more: Investing, Labor Day, Standard, Stock Investors, Stock Market, September, Federal Reserve, Ben Bernanke, Mutual Fund Managers, Mark Zandi, Stock Trader's Almanac, Economic Recovery, Business News
6 Unusual Investments That Are Beating The Stock Market (PHOTOS)
Aug 31st
Irregular times call for irregular investment strategies.
Jeff Middleswart might be a poster boy for outside-the-box investing during the current downturn. In February, Middleswart took over as manager of a mutual fund that explicitly invests in "sin stocks" like cigarettes, alcohol, gambling and defense. Aptly named the Vice Fund, Middleswart's impious portfolio is up 4.5 percent on the year, compared to the S&P 500's 1.9 percent loss over the same period.
Sin stocks are not the only unusual investments achieving above-average performance in the markets, while the traditional 401(k) has underperformed. Other alternative investments beating the recession include a couple luxurious goods and a foreign market that soared 53 percent in the first half of 2010.
And while we're not advocating for these investments outright, for the sake of comparison, here are six alternative investments that have outperformed the larger U.S. stock market either in the last year or the last few years:
Jeff Middleswart might be a poster boy for outside-the-box investing during the current downturn. In February, Middleswart took over as manager of a mutual fund that explicitly invests in "sin stocks" like cigarettes, alcohol, gambling and defense. Aptly named the Vice Fund, Middleswart's impious portfolio is up 4.5 percent on the year, compared to the S&P 500's 1.9 percent loss over the same period.
Sin stocks are not the only unusual investments achieving above-average performance in the markets, while the traditional 401(k) has underperformed. Other alternative investments beating the recession include a couple luxurious goods and a foreign market that soared 53 percent in the first half of 2010.
And while we're not advocating for these investments outright, for the sake of comparison, here are six alternative investments that have outperformed the larger U.S. stock market either in the last year or the last few years:
Read more: Investments, Investing, Economic Downturn, Pets, Stock Market, Tehran, Wine, Vice Fund, Slidepollajax, Business News
10 Signs Your 401(k) Plan Is Garbage: Dan Solin
Aug 31st
William Bernstein is one of the most respected financial minds of our time. His book, The Intelligent Asset Allocator, should be read by every investor. In an insightful commentary entitled What the Investment Industry Doesn't Want You to Know, Bernstein observes that investors "can only positively impact one aspect of investment performance -- your allocation of assets among broad asset classes." Stock picking, mutual-fund picking and market timing are "irrelevant."
Keep this advice in mind, since it is the primary reason why your 401(k) is probably a "clunker." Here's a checklist of others:
Keep this advice in mind, since it is the primary reason why your 401(k) is probably a "clunker." Here's a checklist of others:
Read more: 401k, Retirement, Stock Market, Daniel Solin, Banks, 401 K Plan, 401 K Plan Fees, Retirement Accounts, Savings, Business News
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