In 1965 one in ten Americans owned stocks. In 1990, one in five Americans owned stocks. Put another way, it took 25 years for stock ownership to double in the US. And most of that growth came between 1983 and 1990 with the introduction of 401(k)s, IRAs and other stock-based retirement plans: suddenly anyone with a large scale employer could invest in stocks without having to open a brokerage account.
Thanks to the Internet and low fee online brokerage accounts, it only took seven more years for stock ownership to double AGAIN. Put another way, the rate at which new participants entered the stock market accelerated four fold between 1990 and 1999. By the end of the 20th century, 48% of US households owned stocks.
This is the one bubble no one talks about.
I’m talking about the bubble in “investing in stocks.” Never before have so many Americans done this. It gave us one of the biggest bull markets in stock history: a mega-18 years run from 1982 to 2000. But it also means that stocks have got a long ways to fall to get back in line with their historic relationships to other asset classes.
Particularly gold.
A lot of commentators talk about how gold is near an all-time high and that stocks have fallen 50%, making them cheap again. However from a long-term perspective, gold and stocks are nowhere near their normal relationship.
According to Dr Marc Faber, editor of the Gloom Boom Doom Report, gold and stocks move in distinctive long-term trends. Over the last 110 years, these trends has staged six major phases:
1900-1929: stocks outperform gold
1929-1932: gold outperforms stocks
1932-1966: stocks outperform gold
1966-1980: gold outperforms stocks
1980-2000: stocks outperform gold
2000-???: gold outperforms stocks
More
Just think of all those meat heads that bought two or more houses, many of them larger than what is needed to sustain an average human being. Think of all those extra vehicles, non-essential toys, and expensive clothes. Do you think a $700 blouse will get you any further through a cropless winter? Now take away all that bling bling and you have what is the bankrupting of states necessary to bring humans back down to the level of reality.
ReplyDeleteIt appears that everyone is talking about the spiders legs. BUT....no-one is talking about the spider who caused all the financial destruction in the United States. The 'spider' is the privately owned 'Fed.' Which is not part of the U.S. Treasury and was created and is owned by 8 Jewish banking families of the earth. Hmmmm.... start talking about this in Public and it get VERY quiet!!
ReplyDeleteNo, because that is far too simplistic. It wasn't the Treasury that forced people to live beyond their means. It wasn't the Treasury that forced Americans, representative of a small fraction of the worlds population, to position itself to consume 25% of the worlds fuel energy and to create an economy based on consumption alone while outsourcing its industry and jobs elsewhere (thank your friend capitalism). Take a look at the last video posted here and others by Peter Schiff.
ReplyDelete"The problem with our deficit is that we import consumer goods we cannot afford to pay for with either exports or foreign earnings. As such we accumulate external liabilities that we will never be able to repay and our nation's future productive capacity continues to deteriorate. We are de-industrializing and are condemning ourselves and future generations to falling standards of living."
"The whole science of economics, as I see it, is how do you satisfy unlimited demand with limited resources?"
"I don't see a way for the U.S. economy to avoid a major retrenchment. There's no way that U.S. assets are not going to be marked down relative to foreign assets. Therefore, I would rather invest in the rest of the world."
“Some people that got stranded on an island, and I think it was 6 or 7 were Asians and there was one American and as soon as they were on the island they had to divide up the jobs. And one Asian was given the job of fishing, the other one was hunting, one of them got the job of gathering fire wood. So they all had jobs, and the American was assigned the job of eating. And so at the end of the day, they would all gather around and prepare this feast and the American would sit there and eat it. But he would´nt eat it all, he´d just leave enough crumbs so he could give to the 6 Asians so they could go on and repeat it again tomorrow, spend all day preparing a meal for the American to eat. Now, the way modern economists would look at it, they would say “Well, this American is vital to the whole island economy. Without him nobody would have to fish, nobody would have to hunt, nobody would have to gather fire wood. He is creating all this employment on the island”. But the reality is, every Asian on that island, his lot in life would be dramatically improved if they kicked the American off the island because now they would have a lot more to eat or maybe they wouldn´t have to spend all day hunting and fishing and they can lay on the beach a little bit”.
Things won't ever be the way they once were. No one's investing in America because of high business taxes, high wages, high evironmental fines, High insureance costs, costs of medical benefits. American companies can't compete against the Chinese. Small businesses are keeping America afloat but I don't know how long it will last. The only wages going up are in government jobs. If you include those on old age pensions, disability pensions, EIU benifits, teachers, police, courts, military and other public servants there's just too many government workers to support. We got away with it in the past because we had manufacturing on a large scale. Those times are now gone. Other things to consider when talking about high unemployment: insourcing of low paying jobs taken by foreign workers, outsourcing of manufacturing and high tech jobs, these two policies have brought alot of damage.
ReplyDelete