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278 comments on DrumBeat: October 28, 2008
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278 comments on DrumBeat: October 28, 2008
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I agree. We are in uncharted waters now, and even the conservative talking heads at CNBC, the WSJ, etc., admit it. That means even the "experts" are in over their heads.
I don't think I'd give the "experts" any more weight than the average Joe, at this point.
TPTB desperately need (disguised) inflation, because that is where the confidence for the continued Ponzi scheme comes from. Few Americans are even aware that their equity losses over the last few weeks are not losses at all in many other currencies, and they don't care-they view the USD as a constant.
The leaders and experts have given it there best shots, and now all they've got left are prayers, and perhaps the shreds of their faith that somehow the Invisable Hand well mysteriously appear and conjure a solution out of thin air. They have effectively lost control, if they ever really had it, of a system they not only don't understand, but more importantly, can no longer control. As Bush said recently, this sucker could go down! He was right.
Average Joe here--
I have noticed that from time to time, companies are replaced by other companies in the makeup of the DOW "average".
Now how can an "average" have any meaning if the elements change? Who could possibly predict anything in a scheme like this?
Keep digging! Who decides which companies are in the DOW and which get booted? And who owns the Wall Street Journal? >;-)
" "We are adding Kraft because the Dow Jones Industrial Average had no representation in food products. Kraft is one of the world's leading food companies," Mr. Thomson said.
John A. Prestbo, editor of Dow Jones Indexes, said, "There are no pre-determined criteria for a stock to be added or deleted, though we intend that all components be established U.S. companies that are leaders in their industries." For the sake of continuity, composition changes are intentionally rare, Mr. Prestbo said, "although this time change was forced by the effective nationalization of AIG and its very low stock price." AIG has been in the Industrial Average since April 1, 2004.
The changes won't cause any disruption in the level of the index. The divisor used to calculate The Dow from its components' prices on their respective home exchanges will be changed prior to the opening on September 22. This procedure prevents any distortion in The Dow's reflection of the U.S. stock market.
For more information, see the web site of Dow Jones Indexes at http://www.djindexes.com."
Agreed, i can't see how there can be a consistency in the DOW average, if they keep changing out companies. which means it's not reliable for a trend. yet, the DOW is constantly used as a trend. the average can have no meaning, if the elements change.
This is one of the devices used to convince the punters that the stock market performs over a period.
Not if you are not an insider it doesn't.
The money is made by parting small investors from it.
The market is can be represented as rising over a period of time if the losers are continually weeded out, and then the remainder are presented by averaging their performance.
This is a fairground scam.
One other notable one was in the idea of managed funds. The grifters then extract money from the marks on the thesis that their expertise allows them to outperform the market, and collect transaction funds for moving their money around.
There is no evidence at all that they outperform a bundle of shares on average, and after taking out the transaction costs you are far better off just putting your money into a fund which buys the market proportionately and leaving it there.
Even this strategy is likely now to fail, as the rules on directors remuneration have been redrawn so that they can extract huge bonuses win or loose, whilst gutting their companies.
The large pension funds etc are complicit in this, as they are on a merry go round where they vote for perks for the Directors, and will be rewarded in turn with plum jobs and cuts.
This is not a rational market, but a giant ponzi scheme.
Fairly accurate summary. You forgot to mention hedge funds, which have borrowed huge sums with little capital through their crony connections at financial institutions.
The whole system is a scam, so examples can be drawn from any point, from the politicians who wave it through and cover for the execs, to the oil industry regulators who have been 'partying on dude' at the expense of the oil industry, but, we are assured by the investigators, without detrimental effect on the public purse - although in that case, why one should have to pay their salaries is perhaps open to question, is not performing their function has no effect.
My favourite though - sorry I did not bother to keep the reference - was the British fund manager, I believe in hedge funds, who was one of the few to get it right on commodity prices, and on the grounds of his genius paid himself some 40% of the profits.
If you set up 10 management accounts, and had no knowledge at all of what would happen, whether prices would go up, down or sideways, you would then be in the fortunate position of just earning your wages on 9 out of ten of them where your guesses were wrong, plus of course guaranteed bonuses 'to attract the calibre of staff needed', the losses would be someone else's.
On the remaining fund where your guess would right, you would make out like the scamming bandit you are, and all without knowing anything at all.
In fact, the managers perform on average no better than chance.
It is exactly the same as if you went into a betting office, and an 'advisor' placed bets on your behalf on all the horses in a race, merely charging you a fee for placing the loosing bets, but took 40% of your winnings on the one horse which won.
The key is you need contacts who can lend you OPM. Really, the hedge fund business is a sales/networking area more than anything else. It is 95% access to capital, maybe 5% investment skill.