[ltokuda]

You might want to try reading the book “Irrational Exuberance” by Robert Schiller. The second edition is out now. It talks about real estate bubbles as well as stock market bubbles. He believes that psychology plays a major role in the formation of bubbles. He supports his views with a lot of historical data and psychological studies. I definitely recommend it.

[ltokuda]

[img_assist|nid=1776|title=Historical DJIA 1960-Present|desc=|link=node|align=left|width=466|height=356]

This is a historical chart of the DJIA from 1960 to the present. The vertical bars indicate recessionary periods. Here’s some observations that I thought would be of some interest.

1) The market generally doesn’t seem to anticipate a recession. In other words, the market goes down when the recession hits, rather than 6 months in advance. In some cases, the market didn’t react until after the recession hit.

2) The market tends to bottom out midway through the recession.

3) The market generally recovers by the time the recession ends. I think this is why some people say that the stock market rises during a recession. This is true in the sense that the market is generally higher at the end of the recession than it was at the beginning.

4) It seems possible to have a recession during a mid-term election cycle rally. Recessions historically have lasted between 6-18 months. If a recession started early in 2007, it would probably end by the middle of 2008. We would expect the stock market to recover by then. The mid-term election cycle started in October of 2006 and ends in October of 2008. Since the cycle would outlast the recession, its possible that the markets could still see a net gain over the 2 year span. In other words, the recession (predicted by the housing bust) and the stock market rally (predicted by the mid-term election cycle) could both turn out to be true.

Although not shown in this chart, I did see a case prior to 1960 where the US was in a recession and stocks continued to rise. This was in the mid/late 1920’s before the stock market collapse. So the market doesn’t always drop during a recession.

[ltokuda]

From my experience, asianautica’s estimates are about right. What you have to realize is that there are many different ways to hire engineers. Because of that the pay scale can vary a lot.

For example, after a few years of experience, I managed to find a contracting job that payed double my hourly rate as a salary worker. As a self employed contractor, however, you don’t get any benefits, pension, etc. Plus, your job is not as stable so it would be pretty risky to stretch yourself on mortgage payments.

Some contractors work for contracting companies, where the company finds work for the contractors and take a cut of the contractors pay. The percent cut can vary, based on the amount of service they provide. sdrealtor’s HR exec friend was probably hiring one of these. Space and Defense doesn’t generally pay that much unless you’re a contractor.

Some high tech companies (sellers) sell software products to other companies (customers). Sometime, the customers need help using the software product so the sellers contract out engineers to help the customer. The engineers are salaried employees of the seller, but they are hired as contractors by the customer. In this scenario, you might see cases where the customer is being charged $100/hour, while the contractor is being payed $30/hour. The customer might be thinking, “Wow, this kid is making $100/hour!”, but the truth is that he’s not.

The point is that there are all kinds of pay scales. This can lead to a lot of misperceptions on how much an engineer is taking home. On top of that, there can be a lot of anecdotal cases which are outside the norm. But when you’re talking about averages, then I agree with asianautica’s: Go look at salary.com.

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