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Thread: Stock market

  1. #1
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    Stock market

    I don't understand for the life of me why the stock market is nearing 12,000, just a bit shy of the overall record. It's ludicrous. Why does Obama have nearly 50 percent approval ratings? Nevermind. Don't answer the last question. I don't want to know.

  2. #2
    Senior Member Mithrandir's Avatar
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    Quote Originally Posted by swamprat View Post
    I don't understand for the life of me why the stock market is nearing 12,000, just a bit shy of the overall record. It's ludicrous. Why does Obama have nearly 50 percent approval ratings? Nevermind. Don't answer the last question. I don't want to know.
    In a nutshell, the Dow Jones (DJ) only involves 30 companies. If theses 30 companies are doing well then the index will go up. The DJ Index does not always reflect what is happening with the country as a whole or even within certain sectors of the economy. What happens to a few (<10) companies could skew the DJ index if they are performing vastly greater of less than the other 20+ companies in the DJ Index.

    I think the media uses the DJ Index since it is a relatively easy number to use for a "soundbite" of the economy, even though this in my opinion is over simplifying the economy.
    ================================================== ====
    http://www.wikinvest.com/index/Dow_J...rage_%28DJI%29
    How does the Dow Jones Index work?

    Calculating the DJIA is not as simple as adding up the prices of the 30 stocks in it and dividing by 30. This is because of stock splits - if, for example, a stock trading at $50 dollars makes a 2-for-1 stock split, its shares would now be priced at $25. This would bring the price of the average down even though there was no fundamental change in the stock's value. To deal with this problem, the DJIA calculation is done using the Dow divisor.[3]
    The Dow Divisor

    To calculate the DJIA, add up the prices of the 30 companies in the index and divide by the Dow divisor. This divisor is constantly changing due to events like stock splits.
    To illustrate how the Dow Divisor is used, let's create our own index of 10 stocks. These 10 stocks total $500 when their stock prices are added together - and to get the value of our new index, we divide the total price ($500) by the divisor (10) to give us an index value of 50 points.
    $500/10 = 50 points
    Now, one of our stocks (Stock A) does a 2-for-1 stock split. For the sake of the example, let's say that nothing else changed in our index - all the stocks remain at the same price, and Stock A that was trading at $50 is now trading at $25 after the split.
    So our index total has changed - $475 - but our divisor must change as well to take the split into account - it becomes 9.5. So we divide $475/9.5 and get 50 points. The point value of our index hasn't changed, which makes sense because the fundamental value of all of our stocks hasn't changed either.
    $475/9.5 = 50 points
    =========================================
    No comment on Obama. Nobama.
    Sincerely,
    Anthony

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  3. #3
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    The falling dollar

    Investors are also looking for protection from the dwindling US dollar (though I'm not sure gambling in stocks in the answer.) Unfortunately it seems very complicated to measure the dollar dillution over time... anyone have a way to measure this drop? Comparing to the Euro isn't helpful since they are also racing for the bottom.

  4. #4
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by swamprat View Post
    I don't understand for the life of me why the stock market is nearing 12,000, just a bit shy of the overall record. It's ludicrous. Why does Obama have nearly 50 percent approval ratings? Nevermind. Don't answer the last question. I don't want to know.
    The stock market is just a reflection of shyster corporate profits - which continue to increase as a result of bailouts, "increasing productivity" (read: paying less for more work) and so on.

    As for O-Bama: He's riding the crest of the Tuscon shootings, among other things.

    Remember: At least half the people of this country are Maggots with a Gibs Muh Dat mentality.

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