The US Stock Market @ Rock Bottom? Guess Again…

I would love to be able to say it is just my pessimistic side, but you are not really guessing when you see facts. Charts tend to follow a pattern and aren’t random at all.  Beware where you think your money is, and more importantly, where it’ll go if you’re not careful…

This first chart shows only post depression levels.  When things are falling, you have to find the support lines. The only support line I see past 10K is the 1K range. One might be able to say they see something at 4K or 3K but I believe that is wishful thinking.

All I’m saying, is that I have a bad feeling about all this recent market slide stuff. It really doesn’t affect me in a lot of ways. We are talking about making baby boomer 401K so small they can’t retire; not shorting them, but looking at the “glass half full” says, “heck, that is a good thing for America.”image001.png

If they can’t retire, they work. If they work, their company pays their medical bills and they aren’t collecting their benefits yet.

I will be looking for a housing bottom but I have no intention to buy anything anytime soon. Here is why…

That is the Case Schiller numbers. We haven’t even turned the 90 day moving average, that is nuts. So where the heck is the support line? Oh crap, it is around 75-80. I will put that into context of a valued home.

95-100 roughly translates to $375K if the house was $1M at the 250 peak. There is nothing to stop the free fall. There are no support lines outside of the 1990’s. When charts move toward a support line, they almost always blow through them to prove they can before they turn back. The over correction thing. If they don’t go to it and through it, people can safely put money down that it won’t.

They need all bets to be 50/50 in the markets. There are no gimmies out there. If it does go through and get to 60, that $1M home is now $235K.

I do believe this stuff has more to do with baby boomers. They talked about them over and over a few years back. It was almost panic from the government on how to cope. I see no irony in the fact that the very first baby boomer hit the rolls at the beginning of 2007 and the markets rumbled that year and are free falling the next.

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If houses go that far, it will effectively seal the vault on taking money out of houses. If the stocks go that far, it seals that off too. Millions and millions of boomers will be unable to retire and the only thing left for them to do is work.

This is the same reason they say the recession will last for a while. If it is about boomers, you can’t have a small blip and then back to retirement planning. It has to be prolonged so they work long enough to thin the herd and/or when it comes back up to have enough to not need the government at all.

Conclusion

Unfortunately, in times like these, what people need is positive views. It keeps their hopes up and holds on to the long-held belief that the only way to retirement is through a 401k or ROTH IRA.  I’m not saying they are bad investments; in fact, far from it but they aren’t the ONLY options you have.

If your money isn’t doing well, there’s no reason to keep it there just because everyone else is.  In fact, I think a big portion of the market even keeping levels it is today (around 8k) is that people are keeping their cash there meaning, unlike the 1930’s, people aren’t panicking.

Nothing wrong with the stock market, just keep in mind that the stock market isn’t the only place to make money.

Filed Under: 401Kfinancial education

  • Hank: So if, as you say, the stock market is not the only place to make money for retirement, where else are we making money other than by working?

    Mr. ToughMoneyLove’s last blog post..Question Answered: Why Liberals Like Economic Gloom and Doom

  • Yes, I would like to hear the answer to that question as well 🙂

    JonatsGonats’s last blog post..US Market December Rally

  • I agree there is little reason to think the market can’t go lower. I am sure the economy will get worse over the next 6 months. I guess the stock market might be lower 6 months from now but I don’t really know. I believe the stock market will be significantly higher 10 years from now. And I believe the stock market is a good place to put money for the long term, and am putting my money there (not just there, I also have some money going to real estate). I also am investing in international stocks – which is part of the “stock market” but some in the USA think of the “stock market” as just the USA.

    Curious Cat Investing Blog’s last blog post..Dazzling Diversification

  • It really is a tighrope we walk. With corporate propaganda at levels it is today, it is no surprise that people stay in the market. Of COURSE businesses are going to tell you to stay in your 401k. They are getting something out of it as well, especially those that offer stock in their own company through the 401k.

    Good eye-opener post. Gotta love devils-advocate!

  • @MrToughMoneyLove and JonatsGonats – That’s the million dollar question isn’t it? I’ve gotta say that although I’m not bailing on my 401k and ROTH IRA, I’m definitely looking for other places to put my cash. Everyone thinks that they don’t have anything unique to offer the world and that they only have one way to make it happen when, in actuality, the fact that you don’t think you have anything to offer the world could be your ticket. There are a nearly 7 billion people on this planet, some of them are like you. I think the secret is finding that niche that helps you to build and grow yourself is where you need to find your money maker.

    For 1/10th of those people maybe the stock market is it; but I’ve gotta tell you, especially in lieu of this recent swing in the market, there are still people making money – but where? Nobody has a one size fits all answer as to where to put your $, but everyone thinks everyone else has it. Sorry, I don’t have it either, but to tell you that it is out there, there is a LOT of money out there for everyone, finding it is the key I think. Think in “niches”. Where do you fit, and what could you offer that niche that they’d be willing to pay for?

    @CuriousCat – I agree that the market will shoot up 10 years from now, that’s why I’m not pulling my funds out now. They’ll be worth something then. I’m in the same boat (although I don’t have real-estate now) but my overseas funds are doing alright, nothing to write home about though.

    True that many think “stock market” encompasses only the US stock market, but honestly, it carries a big relation to the international world, so I guess they’re not THAT far off. 🙂

    This site along with others is an income I work at now, but honestly as I’m experimenting here, I’m slowing down the post rate to see what it’ll do to the numbers and what I’ve found is “not much if any” change. My goal is to be able to build

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  • This has been a hot debate at work…have we hit the floor, or just a false bottom?

    I’m hoping that the prospect of a new leader in the whitehouse ( regardless of your politics ) drives some optimism, which drives confidence, and ultimately, some consumer spending.

    But, yeah, I’m hedging my bets too…the bottom may have yet to be seen.

    money-saving-tips’s last blog post..Top 10 life insurance buyer’s tips

  • I think we have still a way to go, sure there will be rally, but I think fear has really taken over. I think you can’t go wrong buying blue chip for long term success, while the market is “on sale”