Why such irrational complacency in the stock market? (fund, cash, corporation)

[Woof]

Why are stocks staying fairly steady in the face of increasingly bad news? It isn't quite as bad as Greenspan's "irrational exuberance" but it's pretty close, in the face of such grim statistics.


Stock market doesn't flinch despite economic data

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer 49 mins ago
WASHINGTON – Bad news was no news to the battered American economy Tuesday.
The government released a triple dose of discouraging data: The economy shrank over the summer even more than previously believed, and consumers reduced their spending by the largest amount in 28 years. During the same period, home prices fell to levels not seen since early 2004.

[normanguy45]

Probably still hungover on the Citi news. Wait til next week when the November employment numbers come in.

[texdav]

Because there are alot of companies that have alot of cash even with the problems in many. Stock prices are so low peole are trying to search the bottom. Its like houisng many are in trouble but the mass majority are not.

[chet everett]

Originally Posted by texdav

Because there are alot of companies that have alot of cash even with the problems in many. Stock prices are so low peole are trying to search the bottom. Its like houisng many are in trouble but the mass majority are not.

Damn you texdav, I was not working on building my skills as a maker of bone tools. If there more people like you I will never be able to make money selling loin clothes for the winter!

[litlux]

I do not see complacency. I still see extreme caution. And some relief that we are now up to 7 trillion in government support.

I suspect we will have more dips and rises as time goes on. The ride will never end.

[Woof]

Chet, I see you as a somewhat average investor ..... you apparently view this problem as an average ordinary recession, maybe a bit worse than some, but probably not going to last more than a year, correct? And everyone's been told in all the popular books on investing that such recessions and dips in stock prices are a wonderful buying opportunity, everything will soon come back even higher, so that those who buy at the bottom are going to be big winners.

So if most of the investors are Chets, that would explain why there's no panicky sell-off.

Not I've never been a financial doomer .... in fact on doomer boards I used to sneer at financial prediction of the US economy being a house of cards about to collapse. I always thought the really big problem would be nuclear terrorism, or perhaps bird flu a couple of years ago, or possibly even peak oil if we didn't hurry to develop alternatives.

But this particular situation, only at the first stages of descent into a recession .... I've seen several lines of disaster converging to most likely lead to an economic perfect storm.

And I base that on both statistics and the interpretation of those statistics by world-renowned experts. I've seen several of them opine that we may very well see something equal to or worse than the Great Depression.

There are certainly many high-powered intellects trying to work on saving the economy through the bailouts etc, but unfortunately how the money is spent is more a political decision than pure economic. Powerful corporations have the political pull to get what they feel will get them a larger profit, without regard to what's best for the nation. Other groups also have their competing interests.

I don't believe this is just an ordinary recession. I think we've peaked as far as leading lives of great luxury, easy transportation, a wide variety of foods from around the world, etc. Maybe most people won't have to knap flint tools to hunt with, but I think some fundamental things are breaking down for a good long time.

[Nepenthe]

At a certain point, you have to think a lot of really really bad news has already been "factored in." The market may be "numb" to the expected bad news. The Citi bailout is being seen by many as a bailout done right. Obama seems to be making wise choices already and may be much more centrist than originally thought. Stocks are very oversold. There may be hope for the auto industry. Etc. The bright spots tend to bring confidence, because we're coming from a place of extremely low confidence.

In essence, the 2009 recession is already old news.

At least, this is my take on the broad market's moves the past few days.

[Brian.Pearson]

I imagine a lot of people aren't buying because they are stuck with the stock they have.

[chet everett]

Woof:

You seem more reasonable than a lot, but when you've got a list that includes suitcase nukes, Hong Bird Flu, and Peak Oil I have to think you have a slightly pessimistic bias...

Nothing really wrong that, in fact in the right light I have some respect for pessimists. Truth be told, my dad was ridiculously conservative with his money. He was a teen during the Great Depression and remembers how my grandfather moved the whole family from Chicago to Iowa where they farmed for about a decade during the worst of it. They eventually did move back to Chicago and had a nice family business related to construction for many decades until poor health forced my dad to live off his pretty meager, but zero risk, investments...

I know the current situation is a doozy -- one that may very well take quite a while to recover from, but I see nothing to be gained in feeding into the "doom" mindset. It really does not matter to me if I never saw another $100,000+ car sold in the US, but somehow I doubt I'll need a draft horse to get around anytime either.

So while you prepare however you want for "some fundamental things ... breaking down for a good long time" I will try my best to keep plugging away at my ordinary life of prudence and making fun of everything I can...

[Woof]

Hmmph. Downright exuberance today.