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.”

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.

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: 401K • financial education