now's the time to buy stocks

[grapejelly]

Ben Stein has a piece today on Yahoo! finance

Here are two even more amazing facts: Despite this massacre -- which went far beyond where I originally thought it would go -- the stock market is still up for the year by a few percentage points, even though financial stocks are by far the largest sector of the S&P. Even more amazing, the economy is so large and so resilient that the losses will not be enough to cause lasting damage to the nation as a whole. (Some individuals, however, will be ruined.)


The losses of $200 billion or so amount to only about 2 percent of bank credit, and far less than the percentage of total credit available domestically and from foreign investors. The Federal Reserve is available at the flip of a switch to replenish the lost liquidity of banks, and new, wealthy foreigners are still lining up to invest in our financial entities.
There will obviously be an economic slowdown, and possibly even a shallow recession. But we're extremely blessed to have good fiscal stewardship from our government and top-flight guidance at the monetary-policy pentagon (the Fed). Unless they make major mistakes, we'll get through this in halfway decent shape.

the bold is mine.



So:



1. The market is up in nominal dollars.

2. Just hang in there. Your stocks will be fine.

3. The Government knows what it is doing.

Do you agree?

[Jim Nickerson]

Re: now's the time to buy stocks

I think Stein must be on reality-altering drugs.

[Andreuccio]

Re: now's the time to buy stocks

Ben Stein has a piece today on Yahoo! finance



the bold is mine.



So:



1. The market is up in nominal dollars.

2. Just hang in there. Your stocks will be fine.

3. The Government knows what it is doing.

Do you agree?

I'm looking forward to the "Ben Stooge" parody of this week's column.

[Tulpen]

Re: now's the time to buy stocks

Ben Stein is a payed permabull, I do not trust him for one penny.

Read this from the above quoted article:

Get Over It

Still, the lessons for us are keen and cut like a knife. But be brave -- these periods of crisis are inevitably the time to buy, even if you have to wait years for the crisis to sort itself out. It takes guts and counterintuitive thinking, and if you don't have the stomach to do it, no one will blame you.

Every single Yahoo article has been one of "buy stocks now!".

Ignore him.

[Uncle Jack]

Re: now's the time to buy stocks

I printed this yahoo article. It'll end up ranking right up there with Suze Orman telling everyone to keep buying the QQQ back in late-2000 when it was in the 80s. - 50s now, 6 years later.

Be very afraid of these people on the television, kids. be very afraid.

[grapejelly]

Re: now's the time to buy stocks

Since 1982 we've had a permanent bull market in stocks except for a few times when we didn't. What I mean is that the inflation monster is so poorly understood that the average person and the average commentator are completely fooled. I think it even fooled Richard Russell...even Dow Theory is turned on its head when stocks are in a currency-depreciation-caused continous upward trajectory.

So I will give Ben Stein the benefit of the doubt. He is misinformed.

Stocks have produced real returns that are very good over the long haul in general.

BUT, if you bought stocks at the wrong times, you could have 15 - 20 years of below average, zero or even negative returns for quite awhile.

[Mega]

Re: now's the time to buy stocks

He did say "Sorry" to Peter Schiff the other day.
Mega

[FRED]

Re: now's the time to buy stocks

I'm looking forward to the "Ben Stooge" parody of this week's column.

This Ben Stein column was most egregious. Ben Stooge working on a re-write.

We especially liked, "The Federal Reserve is available at the flip of a switch to replenish the lost liquidity of banks."

Reminds us of:

"Now, of course, the crucial weaknesses of such periods -- price inflation, heavy inventories, over-extension of commercial credit -- are totally absent. The security market seems to be suffering only an attack of stock indigestion... There is additional reassurance in the fact that, should business show any further signs of fatigue, the banking system is in a good position now to administer any needed credit tonic from its excellent Reserve supply."

Business Week - Business Outlook - October 19, 1929 (One week before the crash)

[Andreuccio]

Re: now's the time to buy stocks

"Now, of course, the crucial weaknesses of such periods -- price inflation, heavy inventories, over-extension of commercial credit -- are totally absent. The security market seems to be suffering only an attack of stock indigestion... There is additional reassurance in the fact that, should business show any further signs of fatigue, the banking system is in a good position now to administer any needed credit tonic from its excellent Reserve supply."

Business Week - Business Outlook - October 19, 1929 (One week before the crash)

Just imagine how bad things would have been if the banking system hadn't been in a good position to administer credit tonic.

[touchring]

Re: now's the time to buy stocks

The credit tonics can only prevent bank runs, it can't prevent a 20%-30% housing correction.

[FRED]

Re: now's the time to buy stocks

The credit tonics can only prevent bank runs, it can't prevent a 20%-30% housing correction.

What could possibly go wrong?

[Finster]

Re: now's the time to buy stocks

Ben Stein has a piece today on Yahoo! finance



the bold is mine.



So:



1. The market is up in nominal dollars.

2. Just hang in there. Your stocks will be fine.

3. The Government knows what it is doing.

Do you agree?

I have great respect for polymath Ben Stein. Reasonable people can disagree about a stock market going forecast; very smart people get it wrong all the time. But the part about good fiscal and monetary stewardship really has to make you wonder what he's been smoking. According to the US Treasury's figures, the national debt has increased by $2,223,809,447,187.45 in just the last four years. Over 32%.

If that's good fiscal stewardship, I'd hate to see what reckless would look like.

[Tulpen]

Re: now's the time to buy stocks

I have great respect for polymath Ben Stein.

Here is another "quality" article from your respected individual:

http://finance.yahoo.com/expert/arti...1FPgV0UKa7YWsA

"Simply put, the media and the short-sellers on Wall Street are trying to scare us into having a recession. "

[grapejelly]

Re: now's the time to buy stocks

Here is another "quality" article from your respected individual:

http://finance.yahoo.com/expert/arti...1FPgV0UKa7YWsA

"Simply put, the media and the short-sellers on Wall Street are trying to scare us into having a recession. "

That's a major moral problem, and the magnitude of loss because of defaults on the mortgages seems immense. There may have been roughly $80 billion in losses so far (before liquidation of the collateral, which will greatly reduce the losses). There may be another $150 billion of losses out there, and maybe even another $200 billion.


Those numbers seem immense, and to you and me they are. But in the context of the U.S. economy, they're not large enough to do major damage unless the Federal Reserve Board makes serious mistakes. The total bank credit in this country as of October 2007 was about $9 trillion. That doesn't count credit from other sources such as bond issuance or foreign investment, which could easily bring the total to $30 trillion or more.


A loss of $50 billion, while immense to you or me or even Bill Gates, is barely one-half of 1 percent of bank credit in the United States. It's hardly more than one-tenth of 1 percent of total available credit. Even if the loss rose to $250 billion, it wouldn't even be 1 percent of available credit. And, again, this number will be greatly reduced upon sale of the collateral and recovery by the lenders.

What can one say when reading this?

[c1ue]

Re: now's the time to buy stocks

Yep, I greatly hope calling him a 'polymath' was black humor of the highest degree.

Losses go to capital...

And of course Ben Stooge doesn't mention anything about leverage ratios or what not.