trainwreck

you would be correct about hyperinflation, given the circumstances...but, that assumes all variables remain equal.


Please note this graph is the linear and not logarithmic. the log graph is a little more accurate and less extreme, but same idea.

however, we must also note that our short term problems consist of deflation, stemming from deleveraging of the market and a credit crisis. This is due to a low velocity of money which is related to fear, inability to correctly value assets, noise etc.

velocity of money

read the illustration, easiest to understand.

in order to normalize the economy, and hasten the recovery, obama's best bet is to print more money and inject it (stimulus). this monetary inflation will hopefully combat the price deflation of certain goods. Pumping in more money also would increase the velocity of money. Getting the machine going is better than it flatlining for 10 years until consumer confidence returns...(lost decade)...

bottom line. better to have short term movement of money, and deal with hyperinflation later aka next presidency. On paper, GDP should go up from all the stimulus (dems and obama look like heros), this would feed into consumer confidence, easing of credit etc...

next president will need to deal with hyperinflation. the govt will need to figure out a way to take money out of the system...

so wut does this mean for us the lowly common investor...hmmmm... i would think the best thing to do right now if you think inflation is gonna take over, is to... buy real assets... like real estate at a fixed interest rate. remember debt is your friend in an inflationary environment and is your best friend during hyperinflation. problem is, nobody can get credit

bush and greenspan did the exact same thing as obama is doing now. he printed money in the form of lowering interest rates to 0 and handing out free mortgages and credit. his stim package to increase gdp on paper was a war.

both presidents will not solve any problems, rather they will morph it into something else for the next guy.

topdown04

I understand that using debt to purchase real estate is great when inflation is rising. How about holding an index fund? For an individual company it would depend a lot on the balance sheet and exposure to different markets. But across the entire market, is it reasonable to assume that rising inflation pushes the market up?

ekal42o

ive been MIA for a while but who cares and no1 knows me anyway...

im watching CNBC and they point out the fact that this could be the buying opportunity of a lifetime in the longrun financials sector..

with that said, what do you guys consider to be the more stable banks and IB? I mean, thinking on it, I dont really see BAC or WB going bankrupt. Also, I have (will have) about $2,000 in cash and what better place to put that than in stocks. If it matters, I'm 22 years old, a college student still, and after all this terrible downfall my portfolio is still worth about $2500, not too bad of a hit, but bad enough that i wont sell my position

Elistan

Oh, wait - CNBC says its a great time to buy? Yes, we must have hit bottom then.

http://www.youtube.com/watch?v=UGEzYPuJUuM

http://www.eonline.com/uberblog/b103826_jo...udge_match.html

ekal42o

even if it is not the complete bottom, it has to be damn near close to it... and i would say its a good time to buy, its just a matter of picking out the stocks that have the potential both in the financials and leadership to take advantage and recover from this downfall. maybe its solar with Obamas new plan, maybe its the banks with the best leadership, maybe its the IBs who were smart enough in the first place to not heavily invest in such toxic assets

Elistan

I dunno man, I still see some swords hanging over our heads right now. I don't get the impression that the over-leveraged mortgage backed securities situation has been resolved, IIRC there's a new round of option-ARM resets coming up in 09 that'll bump up delinquent mortgages, and I have no idea what's going on with the the CDOs and CDSs.

Yes, of course there will be individual stocks that'll do well. Which stocks? I have no idea. Maybe solar. Maybe biotech. Hell, maybe banking. If you find a company you think has great upside, cool for you! But for my cautious ass, there's way too much risk of further losses to, for example, listen to CNBC, declare a bottom, and put my portfolio into .DJIA, .INX, BAC, C, APPL and the like.

Invest in what you think is right, based on your own research and risk tolerance not because some talking head at CNBC or the Whitehouse gives you a warm and fuzzy feeling.

cthree

ekal42o you are WAY too early man, Don't jump on that grenade. When the market bottoms you'll see it. What you see right now is a short covering rally and little else. It will sink an other 1000 points before too long.

If you want to buy a bank, buy a Canadian bank. At least you'll get a 9-10% dividend and it won't go belly up. RY, TD, BMO, BNS and last and least CM. They are ADRs you can buy in us$ and the CDN $ is quite low right now so you get good bang for your buck.

RY and TD are the worlds largest banks by market cap and rated as the best banks in the world by the IMF. They have more than twice the Tier 1 reserves of the likes of B of A or Citi, both of which could get wiped out entirely if they fail their fitness tests. No Canadian bank has received a single $ of government capital and they don't need any.

http://www.time.com/time/business/article/...1855317,00.html
http://online.wsj.com/article/SB123638040650557467.html
[URL=http://www.contrarianprofits.com/articles/canada-the-world

Mark355

GE nearing $10, up from around 6.60 about two weeks ago. Seriously considering a buy-in...

Thoughts?

chrisjgiuliano

This market is making me sad. I had UYG at $1.45 and sold at $2.30 to take profit before the selloff. Or so I thought. I don't know what's happening. This can't be the bottom? Nothing has changed other than the talking heads mentioning the words "mark to market" and uptick... There is nothing fundamentally different between now and two weeks ago when the market was in the tank. Ugh...

Cyberous

Lets bring this thing back to life or does everyone think this is a bear market bounce, and don't want to play yet?

Had a nice trade, on 3/6 purchased 400 shares of TIN @ 2.50 ($1000) and got out today at $4.80 (92%) return maybe a little early but I don't want to be a pig

Only need to do that 70 more times in my portfolio to be at breakeven :0