Sunday, May 16, 2010

Where I Get Schooled

How are stocks up so much? There's been no serious financial reform; no withdrawal from various wars; no fiscal fix for public employee pensions or private sector pension shortfalls; and still 10%+ unemployment in major cities. The S&P 500 was only 831 when President Obama took office...stocks are up 41% since his inauguration. Are President Obama and the Dems really that good?

In response, one friend mentioned America's 0% interest rates, which help banks but hurt savers. The best answer, however, came from a former high school classmate:

From the corporate side, it seems fairly plain to me. There's been no financial reform to tighten screws on corporations. The government is still spending a lot of money on wars. The debt, while burdensome, hasn't caused any major calamities (so far). High unemployment means lower payroll costs. Add a very low fed rate on top of this and it looks like a very favorable business climate. Even if revenues are sluggish due to low consumer spending, margins are probably up.

Thanks to Andrew N. for schooling me.

Note: when I posted my comment above on Facebook, the S&P 500 was 1171 and the Dow was 10,896.

1 comment:

Slovebunny said...

Hey I think we spoke a little over 6 months ago and you told me you thought the market wouldn't be going up for a long time.
I know on the small amount of trading I've done since July of last year. All but 1 of my stock picks has gone up.
And my hubby's company stock has done down right amazing...
Then again he just says the stock market is legalized gambling for the rich!