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Discussion Starter · #1 ·
Sorry if anyone has explained this already, but I don't read every topic.

How do we know when the stock market has bottomed out? By what criteria is that measured?

And when that happens, are we then in a depression?
 

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Sorry if anyone has explained this already, but I don't read every topic.

How do we know when the stock market has bottomed out? By what criteria is that measured?

And when that happens, are we then in a depression?

...................Probably alot lower , than it is now , say 4,000 , maybe ! You'll know , because whenever "we" reach the bottom the traders will start a sustained buying frenzy and it'll be two steps forward and one back , instead of one forward and Two back .
 

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I know the history books inexplicably linked the stock market crash and the depression of the 1930's and no doubt it contributed, but it was not the main cause of the depression.

There are a lot of theories on being able to tell when the stock market "bottoms out", but I can say this: Similar drops in the Dow Industrials occurred Between September and November of 1929 and September and November of 2008: about 31%. The Dow in November 1929 was at 146 and in March 1933 was at 78. So this may not be the bottom based on past history.

You know, Ladycat, there are people that already think we are in a depression: Automotive Engineers in Michigan, folks in the tourist trade and obviously, people in the finance industry.

I fear we are making a mistake by trying to unfreeze the lending in this country....debt is what got us into this mess. More debt is not the solution. If the Federal Government loses it AAA credit rating, I fear what our economy will look like....it could be worse than the depression.
 
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Discussion Starter · #4 ·
The market has bottomed when it stops going down. No one can know the magic number. When it bottoms, it'll start going back up. As to a depression, its all personal, anybody that has been selling the market short has made a whole lot of money on the way down. Some of the media will say we're in a depression, some will say it's part of life. We've had higher unemployment, we've had runaway inflation, in Oct 1987 we had the dow jones sell off 22% in one day. There is no hard and fast rule as to what defines a depression, except "sustained recession" That is related to GDP, not stock market.
From "The language of money"
A time of low economic activity, distinguished from a recession by being prolonged and sustained, characterised by continuing falls in output, high and rising unemployment and companies burdened with unsold stocks because demand is low. Australia had a severe depression in the 1890s and again, with the rest of the industrialised world, in the 1930s - the period known as the Great Depression, which brought widespread unemployment as demand evaporated and businesses failed. The collapse of Wall Street and the New York stockmarket in 1929 determined the timing of the Great Depression but was not the sole - or even the main - cause of it. Economists still argue about the cause. It is commonly accepted that one factor was the growing imbalance in world trade, brought about by increased levels of primary production in more recently settled economies such as Australia and Canada, in the face of inadequate growth in demand. At the same time, the earlier industrialised nations faced problems selling their increased output of manufactured goods.
 

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Honestly, you only really know it's the bottom in hindsight, when the market has stopped going down. Anything else is just guessing - maybe educated or informed guessing, but still just guessing. Investors are just people and people aren't completely rational, so it's not realistic to expect the market to stictly adhere to the rules of logic.

My personal opinion, pending the next shoe to drop, is that the market is really happy in the low to mid 8000's. Everytime the market bulls try to push it back over 9000, it collapses back down. Right now I stop buying at around DOW 8700.

If you have the stomach and the nerves for it, there are some really good deals out there. You've got to do your homework of course, though to sort out the chaff.
 

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This is such an unprecedented event that its best to hold off on reinvesting until there is a solid, sustained move up for a period that can not be confused with a normal correction. Getting back inwhen things are going up will miss the bottom but it might save you from loosing your shirt. There is a strong possibility that when this thing turns around it will go sideways for a long time. Do not reinvest if you do not have a long time line say over 3 years. My Dad who was in the business for 50 years use to tell me to make sure I knew where things were going and not to just ride the wave. His motto was get inlate and get out early. Dad did well. He is over 90 now and out of touch with this nonsense but his old words echo in my brain.

As for depression its pretty obvious we are in trouble whatever label someone wants to put on it. Seeing as this is new territory best to be conservative and save your money. Most are disappointed on T bill, CD ETC as they are not giving much now days. Do not let that make you make a mistake be patient thats the best plan for now.
 

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A depression is a when GDP is down 10%. During the GD it was like 18% down.

I think that we would be in a non-technical depression before 10% negative GDP because in the 1930's 70% of the population were farmers that were largely self-sufficient and did not actively participate in the economic engine we have today.
 

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The country's depression isn't really going to be called such until it becomes a private and individual depression for the majority of Americans. When your job is gone and there's no hope of another, the sheriff is coming to remove you from the bank's property that used to be your home, and you can't imagine what you may be able to put on the table for supper.

Then we'll be able to say we're in the next great depression. For now, for the most of us, it's still affecting only "some other guy."
 
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Discussion Starter · #10 ·
A depression is a when GDP is down 10%. During the GD it was like 18% down.

I think that we would be in a non-technical depression before 10% negative GDP because in the 1930's 70% of the population were farmers that were largely self-sufficient and did not actively participate in the economic engine we have today.
Question: What is a Depression?

Answer: A depression is a severe economic downturn that lasts several years. Fortunately, the U.S. economy has not experienced a depression since The Great Depression of 1929, which lasted ten years. The GDP growth rates were of a magnitude not seen since:

1. 1930 -8.6%
2. 1931 -6.4%
3. 1932 -13%
4. 1933 -1.3%.

During the Depression, unemployment was 25% and wages (for those who still had jobs) fell 42%. Total U.S. economic output fell from $103 to $55 billion and world trade plummeted 65% as measured in dollars.

The Depression was aggravated by poor monetary policy. Instead of pumping money into the economy, and increasing the money supply, the Fed allowed the money supply to fall 30%. The "New Deal" created many government programs to end the Depression, but government programs alone could not end it. Unemployment remained in the double-digits until 1941, when the U.S. entry into World War II created defense-related jobs.

We probably won't see a depression like that again, simply because the government has learned how to avoid it. Many laws and government agencies were put in place because of The Great Depression with the express purpose of preventing that type of cataclysmic economic pain.

from http://useconomy.about.com/od/grossdomesticproduct/f/Depression.htm
 

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Sorry if anyone has explained this already, but I don't read every topic.

How do we know when the stock market has bottomed out? By what criteria is that measured?

And when that happens, are we then in a depression?
Ladycat,

You will know when the market is done bottoming when these three things happen......

1. No one is investing in the market.
2. No one thinks it will ever come back.
3. When all folks think the last place in the wolrd to store money is the stock market...



Then Buy,Buy,Buy..... Only with total capitulation will the market find it's bottom. If your a sheep that follows the herd you get sheared.
 

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Question: What is a Depression?

Answer: A depression is a severe economic downturn that lasts several years. Fortunately, the U.S. economy has not experienced a depression since The Great Depression of 1929, which lasted ten years. The GDP growth rates were of a magnitude not seen since:

1. 1930 -8.6%
2. 1931 -6.4%
3. 1932 -13%
4. 1933 -1.3%.

During the Depression, unemployment was 25% and wages (for those who still had jobs) fell 42%. Total U.S. economic output fell from $103 to $55 billion and world trade plummeted 65% as measured in dollars.

The Depression was aggravated by poor monetary policy. Instead of pumping money into the economy, and increasing the money supply, the Fed allowed the money supply to fall 30%. The "New Deal" created many government programs to end the Depression, but government programs alone could not end it. Unemployment remained in the double-digits until 1941, when the U.S. entry into World War II created defense-related jobs.

We probably won't see a depression like that again, simply because the government has learned how to avoid it. Many laws and government agencies were put in place because of The Great Depression with the express purpose of preventing that type of cataclysmic economic pain.

from http://useconomy.about.com/od/grossdomesticproduct/f/Depression.htm
"So how can we tell the difference between a recession and a depression? A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.

By this yardstick, the last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent."

From: http://economics.about.com/cs/businesscycles/a/depressions_2.htm

Depressions are generated by the same factors that cause a recession. You can look at depression as an extended recession on the graph of the business cycle wave. Unemployment rises, gross domestic product (GDP) drops off, stock prices fall and the stock market crashes.

In simple terms, depressions are really protracted versions of recessions. In February 2008, the unemployment rate in the U.S. was 4.8 percent [source: Bureau of Labor Statistics]. But it wasn't until March 2008 that economists began to seriously consider that the economy was entering a recession. By contrast, during the Great Depression unemployment grew from 3 percent before the stock market crash of 1929 to 25 percent in 1933 [source: Bernanke]. In that same period, the U. S. gross domestic product fell by nearly half, from $103.8 billion to $55.7 billion [source: National Parks Service].

While no one wants to see the country in a depression, not everyone views a recession as a bad thing. The National Bureau of Economic Research says that expansion -- the opposite of recession, represented by the upward movement of the market wave -- is the normal state of a market [source: NBER]. But some economists take more of a Zen approach, considering recession as neither bad nor good, but part of a natural market cycle. When the Federal Reserve Bank steps in to adjust interest rates, some say this actually tampers with the natural order of the economy. Even worse, some economists believe that changing interest rates to pump up a recessing market can make matters worse by extending the decline. However, few people seem to resist when the Fed adjusts markets during a recession.

http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2007/0702.html

Yep, those patches help when you actually spend some time doing research.
 

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I think you will see worse than a 1930's depression when the bond market dislocates....as I believe it may be showing signs as of yesterday...I am trying my best to figure out what I am seeing and trying to make sense of rumors out there concerning actions of the Fed and the Bond Market....when I make sense of it all, I will share.. If anyone here is a Bond expert and can help us understand..that would be great.
 

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fiugfeurhye7ywuey7wqewyududidue
 
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Discussion Starter · #18 ·
I think you will see worse than a 1930's depression when the bond market dislocates....as I believe it may be showing signs as of yesterday...I am trying my best to figure out what I am seeing and trying to make sense of rumors out there concerning actions of the Fed and the Bond Market....when I make sense of it all, I will share.. If anyone here is a Bond expert and can help us understand..that would be great.
This morning, briefly, T-Bills were trading at 0.00% interest.
ETA: This means that people were willing to put large sums of money up with absolutely no interest.
 
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Discussion Starter · #19 ·
h6hsywqgygtygwqyuwquysasi dfuidhyiuw siuwnwuw9 wyt2w7yxgyrudifrd ier7reurueur634


fiugfeurhye7ywuey7wqewyududidue
Είναι όλα τα ελληνικά σε με. :shrug:
 

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I second that, menagerie momma.

I consider myself something of a Bond expert. I've read a lot of the books and seen all the movies. I think Sean Connery was the best.
Lol... now you see that is why I voted you as the most interesting person on HT.. you just never know what you are gonna say.. lol
 
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