Why wasn’t the market correct when it went to 5000? If you were long from 4000 or 4500 you made a good amount of money. I would argue that the market is always correct, if you were not flat or short when the drop started you were just out of sync with the market. I went flat in January of 2000 in every account that I have and can prove it.
My basic point of all of this is not to be a know it all becuase I have taken my fair share of drubbings over the years, believe me. However, the point is that too many people equate economic things that they think determine stock direction with stock prices, and most of those alleged relationships are invalid.
There is very little relationship between the dollar and S&P prices as an example. As a result, analyzing what the dollar will do as a reason to invest or not to invest in stocks is invalid. You can argue that there should be, but in all the studies I have done, I have found no correlation whatsoever, basically a coin flip.
The skit with inflated adjusted dollars strikes me as just people trying to sound smart. There is no way to perfectly hedge dollar risk in terms of currency valuation, and when I buy things, I do it with todays dollars, not today’s inflation adjusted dollars. Am I better of with the 20% gain in the stocks I bought at the beginning of April or if I had been a wise guy and over analyzed and discounted the absolute Dow value rise with the declining dollar, and parked the money in a foreign currency since April?
Gold was at 685.1 when I bought my stocks and it is at 678.1 as of todays close. By my math the small decline is less than the 20% average gain I have in my stocks during the same period.
I will drop this subject in this blog at this point, because of the different view on things that I have versus everyone else. I hope my manner in attempting to educate people did not come across poorly. Sometimes posts have tones that are not intended when they are written.
