The dividend yield is 1.45 on the Dow. The price to book is 4.47. Both are at <i>historical</i> topping levels. end news flash. Maybe when the divyeild moves over the checking account rate, some of that money will come back to work?
vulture, I agree. I read an article in the Economist a while back which mentioned this paradox. That although the Fed had pumped a massive amount of money into the system, it just wasn't finding its way to the right places. They cited something called the Goldman Sachs Liquidity Index which was actually showing a decrease in liquidity in the US economy. I searched in vain for any details re that index but haven't found any so far. Supposedly it is an aggregate of many measures that attempts to measure how much liquidity is sloshing around the economy.
yes, this is a major part of the problem...At what time in the history of financial markets did we have the following combinations: a.) stocks that are returning negative double digit returns year over year, going on 3 years; AND b.) t-bills and other money market instruments returning approx. 2%(which the BLS estimates at less than the pace of inflation, which is bs when u consider all the REAL costs of living like education, housing, prop taxes, insurance rates, prescription drugs, etc... are skyrocketing); AND c.) stocks that have a dividend yield of 1.45%; AND d.) complete lack of credibility and transparency with the ratings agencies which either delay downgrading debt ratings or do not do it at all...currently only 8 companies have AAA credit debt, a small fraction of what it used to be; AND e.) a plunging dollar and large foreign redemptions; AND f.) massive ownership of all of our treasury securities in foreign hands which are all just yield hogs and have no need to be invested in our debt instruments; AND g.) absolutely no accounting standards and no regulations; AND actually, forget it, this is too damn depressing to keep writing...My initial point was just that there has probably never been a time in the history of financial markets in which stocks were plunging yet we did not have "inflation" as defined by the powers that be, and hence, did not have higher interest rates, which, by turn would mean that people would have an alternative to putting their money into a casino which pays no dividends...The more I think about this, the more insane it all appears to me...I would really value someone with more of an economics background to really get to the heart of the matter...
you're right, vulture, it is depressing..horrendous.. When enough people start writing it, we'll be near a bottom.
Maybe, but all I know is Greenspan said irrational exuberance in Dec, 1996 and the market did not peak until March, 2000...So, if the symmetry truly is symmetrical, we might have another 2-3 years
Nice graphs of mutual fund flows. I think the best numbers on the mutual funds are the cash reserves...what they have with to BUY! Right now it is 5.2% (May #). That is historically low compared to about 7-8% in 1995-96 and 13% in 1990. A long term bull market will come around when we see much higher cash levels compared to current values. Does not mean we can't have a nice rally though for a few months
But....each day that we plunge lower, each quarter that all of the retail public get their statements and notice a decline, instead of an increase in portfolio balances, each day another WCOM, XRX, etc blows up and re-states earnings...each and every time this takes place another massive collection of supply overhangs the market with people who are desperate sellers after each and every rally, thereby making any new cash in the market probable food for the old cash that is just waiting to exit...