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  • Economic Truth Part 2 [Edit or Delete]3 comments
    Aug 14, 2011 2:25 AM
    this whole timeframe is fascinating. every model and prediction is BROKEN. no one's charts are worth SHIT. no one's technicals are worth SHIT. richard russel, mauldin, buffett, shiller, grantham, whoever....they know as much as an ant in this market. they are literally in the random zone. frankly some batshit blogger like altucher may be crazy enough to be right this time. 

    we all look at dumbass unemployed morons on foodstamps in alabama and declare the world is ending. yet apple still sells $2500 laptops as fast as they can make them. how does that work? i'm starting to think the world doesn't really need american consumers anymore and we're wasting our time trying to find a linkage between ghettos in detroit and google's earnings

    Read more:

    A poster from businessinsider wrote the above quote. He's right on almost all counts. The only economic model that describes how the economy works is dyseconomics and the only blog devoted to it is stock_creeper. Dyseconomics is counterintuitive and paradoxical and evokes negative reactions, but it's the only economic truth on the web today. If you want to know how economics works, why stocks will keep going up despite mainstreet being left behind, why the bifurcated economic system is one that is optimal for growth, why things are the way they are - read the dyseconomics essay. 

    The supposed liberal/libertarians 'experts' like Mauldin, Mish, Koo, Zer0hedge, Schiff, Roubini, and Krugman keep being wrong year after year because they refuse to accept the economic truth of Dyseconomics, and not surprisingly their followers keep losing money and missing out on the great dip buying opportunities like this current dip. Stocks & ETFs like XRT (retail etf) AAPL UGA (gas prices etf) BIDU MA POT GOOG NFLX PCLN will keep going up because the economic impact of 9% unemployment is negligible and easily offset by globalization, exports, falling dollar, productivity and government spending. 

    Booming BRIC growth, speculation, permanently low rates will keep UGA, SLV, GLD, DBA rallying for a long time to come.

    For example, in the context of dyseconomics plunging consumer confidence can be interpreted as a bullish signal because pessimistic consumers will still keep maxing out thier credit cards for gas and foods (benefiting retail sales), buying apple products, netflix etc. The upside is that pessimistic consumers are also more productive at work for fear of losing thier jobs, and plunging consumer confidence gives the fed another excuse to leave rates at zero forever.

    Under dyseconomics stocks, commodities & bonds can surge at the same due to infinite liquidity from sources such as BRIC nations propping up all asset classes, whereas in the 90's this would not have been possible. In the late 90's you had really high PE ratios (30+), cheap commodities, really high interest rates (5-6%), shrinking S&P 500 profits and earnings, high personal savings rate, and the infamous Clinton surplus. Oh yea, and the economy entered a deep, long three year bear market and recession on that surplus. Nowadays, you have blowout record profits & earnings quarter after quarter for S&P 500 companies, permanently low rates and surging living expenses, and near 0% government Reported inflation (forcing lazy pensioners to spend and invest their money). The rich will keep getting richer wealth gap will keep widening.

    High unemployment & falling home prices helps the economy by giving the fed a good excuse to never raise rates again, and job loss is good for profits. No need to hire slow, overpaid American labor when automation and outsourcing is soooo much cheaper.

    Conclusion: in an ultra-competitive, profits & productivity and liquidity driven global economy, the health of so called 'mainstreet' is becoming increasingly irrelevant in the overall economic picture and stock market. Secondly, 'negatives' like falling personal savings rate, plunging consumer confidence, high unemployment, record debt, and surging living expenses can be 'good' for the economy and stock market in the context of dyseconomics. As an investor I have more faith in Dyseconomcis than the liberal/libertarian bellyachers.
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  • How about when "bellyaching" turns into flat out violence? I sincerely hope you are one of the first with your back against the wall. Enjoy your smug decoupling theory while it lasts. When the horde comes for you, I will not lift a finger.
    15 Aug 2011, 05:57 PM Reply Like
  • I agree for the most part, especially the fact that corporations no longer need the American consumer. When companies on the NYSE profit mostly from derivative trading and producing their goods elsewhere cheeply, then selling them here for a larger profit, how can one say that the stock market is any kind of an indicator for the economic strength of America? What anyone with half a brain can realize after reading the blog, however, is that it can't go on forever. You can call it dyseconomics, a black swan, a paradox, or whatever... but it would be best to just call it death thrashes of a broken economic model. Just a way of making the road to hyperinflation seem more scenic.
    15 Aug 2011, 11:42 PM Reply Like
  • XRT down 9% last 3 months
    UGA up 2.5% last 3 months
    AAPL UP 9% last 3 months
    BIDU up 5.5% last 3 months
    POT up 9% last 3 months
    NFLX down 22% last 3

    ETF 's are struggling now and the NFLX pick is a real howler!
    6 Sep 2011, 03:18 AM Reply Like
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