Investment question (Dow Jones)

[Mannix]

Can someone PLEASE explain how the Dow hasn't dropped 30 - 40% given the inflation rate... I am simply someone who has been waiting forever to get back in the market after large dip....how in the hell is it still around 33,000....is it being held together by chewing gum, and its a house of cards? What am I not understanding here??????

 

[Ranching]

Can someone PLEASE explain how the Dow hasn't dropped 30 - 40% given the inflation rate... I am simply someone who has been waiting forever to get back in the market after large dip....how in the hell is it still around 33,000....is it being held together by chewing gum, and its a house of cards? What am I not understanding here??????

I can't, but I sold all of my stock about 4 years ago, paid off my Corvette and bought a few more investment properties.....worked for me....I'm retired so I have time to flip and rent......good luck

 

[Hardline]

I just hope I have a 401k left by 2024.
Things are going to get worse before they get better.

 

[MichaelWinicki]

Keep in mind the market isn't only going to react to inflation–both its news and its affects.

The job market is still very strong.

Also there are industries within the market doing well like oil.

There's also the point of view the market doesn't move up or down based on logic, but instead reacts based on emotion.

Finally say someone pulls their money out of the stock market–Where do you go with it?

A cash holding position is no benefit in an inflationary market.

Invest in housing? Sky-high housing prices. If you're looking to do "flips" the cost to do rehabbing is also sky-high.

The fact is there is no "hiding place" when inflation runs wild and for many simply staying in the market makes the most sense.

 

[ShortRound]

My savings are down so much it's getting ridiculous.

 

[Mannix]

I went WAY to safe years ago in my retirement funds...didn't lose anything, but left an S load on the table....been waiting YEARS for it to crater again, but it just keeps climbing no matter what goes on around us....I just don't understand it. ????

 

[MichaelWinicki]

I went WAY to safe years ago in my retirement funds...didn't lose anything, but left an S load on the table....been waiting YEARS for it to crater again, but it just keeps climbing no matter what goes on around us....I just don't understand it. ????

Again, it's because there's more emotion driving the market than logic.

 

[Longboysfan]

Hmmmm.... 401K's were way up 2 years ago...

 

[nightrain]

Can someone PLEASE explain how the Dow hasn't dropped 30 - 40% given the inflation rate... I am simply someone who has been waiting forever to get back in the market after large dip....how in the hell is it still around 33,000....is it being held together by chewing gum, and its a house of cards? What am I not understanding here??????

Timing the market is like playing the lottery. I like to dollar cost average my investment purchases over time and perhaps take a bigger bite during significant dips. Never sell off after a big downturn. The market always comes back.

 

[Montanalo]

I am not an expert, but can offer a few observations:

The government us still pumping way too much money into the economy; spending money like drunk sailors (apologies to all Navy vets) on shore leave.

While unemployment is low there are something in the neighborhood of 11 million job openings now.

Value stocks are a better investment in periods of high inflation than growth stocks.

Some economists (CEO of Morgan Stanley, notwithstanding), believe the fundamentals are sound and we are not headed for a deep recession...

 

[CyberB0b]

Can someone PLEASE explain how the Dow hasn't dropped 30 - 40% given the inflation rate... I am simply someone who has been waiting forever to get back in the market after large dip....how in the hell is it still around 33,000....is it being held together by chewing gum, and its a house of cards? What am I not understanding here??????

Inflation actually pumps the stock market and other assets like real estate, gold, and cryptocurrencies. The Fed has been using Quantitative Easing for the last 10 years or so, which means they are printing dollars to buy assets like stocks, which pumps up the stock market. Now that the Fed has started Quantitative Tightening, where they are unloading assets off the balance sheet, assets like the stock market and gold should drop. The M2 money supply actually shrunk for the first time in 12 years.

Real estate also pumped due to cheap money and inflation. Since the Fed has been ticking up interest rates, home loans have gone from ~2.5% to around 5.5%, which is a huge difference for someone buying a house. Housing prices should start to come down.

tldr: As the Fed tries to fight inflation, expect the stock market and real estate to feel more pain over the next few years. Thinks like energy and companies that produce things will actually do well. Since the DJI has a lot of companies that produce things, it will do well compared to the SP500.

 

[Creeper]

The market has been the only investment in town since the Fed has been keeping interest rates artificially low. As long as interest rates are low, there will be no other place to go with cash. If bond yields increase as the fed raises rates to curb inflation the market will drop as investors look for higher yields outside of stocks. This is how markets have worked in the past. But there seems to be a disconnect from reality in the markets these days.

Many are predicting a recession is coming, if it is not here already. In the past this would have causes a market correction of maybe 10% to 20%, maybe even more considering where the market is now. But today, the market is shrugging its shoulders.

I think many people are being too dismissive of inflation. Two things drive inflation most - money supply (federal spending) and energy prices. What we are seeing today is more and more federal spending and increasing energy prices. I think these are going to drive inflation even higher over time. For those folks who lived through the 1970s economy, this economy is looking a lot like that. I hope I am wrong. Gird your loins!

 

[VaqueroTD]

Young people have student loans they will never pay off, majority of Americans live paycheck to paycheck and have credit card debt out the yazoo, no such thing as a balanced budget and the national debt continues to skyrocket no matter which party is in charge, inflation out of control, housing is starting to out-price the average American, supply chains can no longer keep up with the world pre-pandemic status quo……. the country is headed for a reckoning. I just hope a global recession is the worse it will become.

 

[terra]

The stock market is half lemming and half naive country boy visiting the city for the first time.

Logic never comes into it.

 

[NorthoftheRedRiver]

The market climbs a wall of worry.

 

[Praxit]

..its still in Bear Market mode. It's hanging in there because of rich influence by hedge funders. We still could see another 2% drop, which I'm hoping not.

Nasdaq and SP500 have had it worse. These are strange and turbulent times for market dwellers. Then Uk/Rus war isnt helping either.

Keep your eye out for the fire sales. Then buy what you can.

 

[terra]

the smart money move right now is to have yours in safe bonds. And then wait and watch.

Sometimes patience is smart.

 

[rags747]

Money invested in the stock mkt over the long term is always the best investment. Trying to time the mkt is never a good investment strategy as it is near impossible.

 

[Reality]

 

[morasp]

the smart money move right now is to have yours in safe bonds. And then wait and watch.

Sometimes patience is smart.

Agree. That's the final resting place for my money until I need it.