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Disasters Can Happen

How to Prepare for Another Market Face Pounding

by MN Gordon

Economic Prism

‘Better than Goldilocks’

“Markets make opinions,” goes the old Wall Street adage.  Indeed, this sounds like a nifty thing to say.  But what does it really mean?

Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on.  Moreover, if the market goes up for long enough, the opinions become so engrained they seek to explain why stock prices will go up forever.

After nine years of near uninterrupted stock market gains, new opinions are being offered to explain why the stock market will be bathed in sunshine indefinitely.  For example, the late-1990s term Goldilocks is again being used to describe why the slow growth, low unemployment, economy is good for stocks.  Apparently, if an economy is not-too-cold, but (Read More....)

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Something’s Gone Horribly Awry

2016by MN Gordon

Economic Prism

Marginal Activities

The S&P 500 has fallen 7.37 percent so far this year.  What to make of it…

Naturally, some people find falling stock prices to be unpleasant.  Others find them distressing.  Another way to look at falling stock prices, however, is like a high-fiber diet.  The effect is necessary to a healthy functioning system.

The simple fact is that stock prices, fueled by speculative liquidity, have long since outrun the real economy.  The disconnect between the two has been widely observable.  The economy’s lagged, incomes have stagnated, yet stocks have soared.

Thus the present, ever so slight reduction in liquidity, and the subsequent lowering of stock prices, is having a cleansing influence.  For it will serve to eliminate marginal businesses, and trim the fat from larger businesses.

Consequently, business owners, managers, and workers of marginal undertakings will have to redirect their efforts into something new…something that’s of greater value.  For example, (Read More....)

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Musical Chairs Investing

Investingby MN Gordon Economic Prism

Markets were closed yesterday in observance of Labor Day. But here at the Economic Prism we labored on. There’s always something to contemplate. Where to begin?

One place, obviously, is this crazy stock market. Day after day, week after week, month after month, year after year…the broad barometer of man’s hopes and dreams keeps going up. Apparently, August was the S&P 500’s best month since February.

“The S&P 500 gained 3.8 percent for the month,” reported MarketWatch, “representing the bench mark’s best August performance since 2000. The S&P also achieved its largest monthly percentage jump since February, when it rose 4.3 percent.”

Something remarkable is going on here, for sure. After bottoming out at 666 on March 6, 2009, the S&P 500 is up over 300 percent. Simply for buying and holding an index of the stock market’s largest 500 companies, investors have tripled their money.

How (Read More....)

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