WatchThe past 3 month gains in the stock market have been pretty sudden.... I guess since there's nowhere else "safe" to invest your money, Bernanke announcing low rates thru 2014.. and QE3 on the horizon.. everyone is piling back into the stock market pushing it back within spitting distance of all-time highs.
I would imagine boomers that didn't touch their 401K.. aside from the pain of 5 years of no gains... are starting to feel some relief. And if they "doubled-down" at 6000 they probably made out quite well over the past 5 years.
If we break through all-time stock market highs.. what effect, if any will this have on the housing market? Considering we are down probably 40% on average from peak bubble prices.
Anyone that doubled-down at DOW 6000 must feel pretty loaded with cash right now... Is this money going to find it's way into the economy or the housing market?
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And if congress increases Capital Gains tax next year ?
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Baltimore, MD
thomas.wong1986 says
I expect this to happen, but I'm not sure if anyone earning under $250,000 will have this though.
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Dan8267 says
We've had this discussion before, I know. But I still don't get how you come to the conclusion that Keynesians don't want to prosecute accounting fraud.
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I always laugh when realtors assume that folks rent because they can't afford to buy. FYI: We are happily renting here in Manhattan Beach for 1/2 what it costs to buy, even though we could easily buy anything we'd like with all cash. Working hard and only investing in markets that are fundamentally sane and sustainable is why we've got the cash, you silly billies! Unless/until this housing adjusts makes sense again, we're keeping our cash safe and sound. Forget about making a killing, just make a living, spend within your means and if you've got extra $, there are more than enough worthwhile causes with which you can share!
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Oakland, CA
I was just looking at the 5yr dow chart and its almost a perfect V
By the time the masses realize were not in a recession the markets will be at a new all time high
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Stocks back to their peak in 2007? Big deal. Call me when they are back to their 1999 levels!
America has lost an entire decade of productivity due to the housing bubble. And we're going to lose another decade, too, just like Japan!
20 years of a crappy economy because the damn Keynesians won't let us prosecute and end the accounting fraud pervasive in our financial industry. As long as the books are cooked, the malinvestments continue, and prosperity will not be achieved.
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I'm still unsold on the stock market "recovery". I think we're headed for another crash like in 2002 or 2009. When everyone is irrationally exuberant about any market (stock or housing) it's usually time for anyone in their right mind to sell. The diminishing returns and increased risk on the way to the peak are not justified and prudent. A better bet is doubling down and getting the best stocks after the crash. You get a much bigger profit spread, and you get relative safety. I don't think we're going to see growth like the 1990s ever again. We're in a bubble crash bubble crash pattern.
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The thing to think about is that there's been a fairly pronounced shift in regards to how a lot of US companies make their money. It used to be that we bought most of our own "stuff" and that was what drove the majority of profits. Now its more along the lines of us selling more stuff overseas. Many brick and mortar companies like automotive, industrial equipment makers, fast food venders, and so on are selling more product- often in China- more than they do in the US. Thus you get profits even if Americans aren't buying their things. This is perhaps one of many reasons the market is doing well.
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Los Angeles Owner says
No, Housing doom on horizon!
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Scottsdale, AZ
bubblesitter says
Neither.
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Los Angeles Owner says
Yeah, but only on the low end only where lenders have minimum risk or where all cash investors can reach.
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i'm glad i ignored all the dumbass housing bulls, i ignored them completely and instead put my money in stocks the last several years. i bought quite a bit during the near lows of 2009.
also s&p 500 has been steadily increasing since 2009 and it hasn't helped housing prices. the index being at 2007 isn't some mystical level that turns on like a switch and causes buyers to buy all of a sudden.
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clambo says
I'm surprised you can't buy a house in cash already! I started investing in Apple in 2003... with shares in the low single digits. Too bad I was fresh out of college and didn't have more invested at such a low cost-basis. Now even if it goes to $1000 a share by 2015.. which i see as entirely possible.. You'd merely double your money.. (far cry from the 100x returns you'd have investing in early 2000s)
Then again, investing in Apple even at these levels might be as safe a money in the bank.
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Hysteresis says
Well, you will hear the media hyping a general economic recovery being in full swing when we do reach 2007 stock levels... which may coax more people into being less terrified of real estate investing.
2011 was a basically a FLAT stock market year.. S&P in Jan 2011 was 1270s.. early Jan 2012 S&P was 1270s... no gains.
The overall market gains have all occurred this past month!
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Corona, CA
Housing in California will decrease by up to 10% this year. The State economy cannot have 20%-25% Unemployed/Underemployed and still have a housing recovery.
BTW, the $25Billion deal reached between the state AG's and the five largest banks will help non other than the banks. Think about it, in return for reducing the principal on a house by $20,000, the banks get their paperwork done correctly and will not have future liability. In the end, $20k principal reduction on a loan will have little to no effect on the foreclosure rate. In fact, it might speed up the foreclosure process because banks will not have to worry about "robo signing" lawsuits.
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Baltimore, MD
kashif313 says
Except I would say that this also applies to a bunch of other states (most of them).
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zzyzzx says
No chance whatsoever. Republicans will watch the country burn before raising the capital gains tax.
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Iwog, if there is total deadlock, by default the cap gains tax will increase at the end of 2012, right? (along with the other tax cuts). So those who want to reduce the deficit through letting the tax cut expire have some leverage, since inaction has this result.
And the Dems could put up a bill to cut middle class tax brackets, but not the top end. When the GOPers filibuster it, then the Dem ad campaigns can focus on the GOP preventing tax cuts.
Unfortunately I doubt that any of this will affect AMT, so those in CA, NY, MA will not see any change.
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The stock market was flat in 2011??? I think it was down 20%. What was the price of gas Jan 2011? Food? Electric? Gold?
Stocks denominated in fiat were flat... purchasing power was down.... and nobody noticed? In the end it matters not how many shares you have if they won't buy anything....
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Los Angeles Owner says
:D