Obamanomics

[il Padrino Ute]

Originally Posted by Cali Coug

Mike's "evidence" that Obama is a socialist (why am I bothering with explaining this to you, you definitely don't know what the term "socialist" even means) is an article that claims Obama is harming the Dow. I find that extraordinarily amusing, mostly because I think Mike is falling into the trap of believing that the Dow is a barometer for the economy at large. The Stanford economist who wrote the article is clearly playing on that general misconception by putting "Dow" in the headline, but knows better (as evidenced by the fact that he doesn't reference the Dow a single time in his article's text. Problem is, it seems to me that neither Waters, you nor Tex really understand why the Dow isn't a good indicator of the economy at large, which makes me wonder if any of you actually know what the Dow is.

Still no responses, so I think I have my answer.

We've had this argument before - I do know what a socialst is but you're either too blinded by your messiah's charisma or are a socialist yourself - so you claim I don't know.

If the Dow is not a barometer at large for the economy, why don't you educate us.

[Cali Coug]

Originally Posted by il Padrino Ute

We've had this argument before - I do know what a socialst is but you're either too blinded by your messiah's charisma or are a socialist yourself - so you claim I don't know.

If the Dow is not a barometer at large for the economy, why don't you educate us.

The Dow is an artificial market index. It is comprised of 30 stocks, and when one of the 30 stocks underperforms too much, it is simply removed from the Dow and replaced with a different stock (like AIG was just last year). It is meaningless, especially as a proxy for public opinion polls of investors on their impression of Obama's administration.

Nate Silver has an excellent post on the topic, if you are actually interested in moving beyond the rhetoric and into thoughtful analysis.

http://www.fivethirtyeight.com/2009/...nks-about.html

[il Padrino Ute]

Interesting read, thanks for the link.

But back to the Dow - I think we can say that it's a pretty good barometer for the general confidence that the public has in the economy and the fact is and it seems every time Obama opens his mouth about the economy, the Dow drops. IOW, folks don't think Obama is going to make things better. That's really all that matters, isn't it?

[Tex]

The Dow is an Obama tracking poll. And he's been trending down pretty much since his election.

Someone should let him know what P/E ratio stand for, too.

[tooblue]

Originally Posted by MikeWaters

Chavez = Obama

Ya think! The parallels are uncanny.

[Cali Coug]

Originally Posted by il Padrino Ute

Interesting read, thanks for the link.

But back to the Dow - I think we can say that it's a pretty good barometer for the general confidence that the public has in the economy and the fact is and it seems every time Obama opens his mouth about the economy, the Dow drops. IOW, folks don't think Obama is going to make things better. That's really all that matters, isn't it?

I don't think you will find many economists at all who agree with that sentiment, conservative or liberal. The Dow has never been a good barometer for the general confidence that the public has in the economy, precisely because it is an arbitrary measuring stick.

Example: AIG required a bailout in 2008. AIG was a Dow company. Once their financial troubles became known, AIG was removed from the Dow and replaced with a company whose fortunes were far superior to AIG's. Did the general public confidence grow tremendously in the Dow on the day it improved due to the removal of AIG from the Dow? Or was that just an arbitrary shift?

[il Padrino Ute]

Originally Posted by Cali Coug

I don't think you will find many economists at all who agree with that sentiment, conservative or liberal. The Dow has never been a good barometer for the general confidence that the public has in the economy, precisely because it is an arbitrary measuring stick.

Example: AIG required a bailout in 2008. AIG was a Dow company. Once their financial troubles became known, AIG was removed from the Dow and replaced with a company whose fortunes were far superior to AIG's. Did the general public confidence grow tremendously in the Dow on the day it improved due to the removal of AIG from the Dow? Or was that just an arbitrary shift?

I'm not talking about economists. As I posted, I'm talking about the public in general.

[Tex]

Originally Posted by Cali Coug

I don't think you will find many economists at all who agree with that sentiment, conservative or liberal. The Dow has never been a good barometer for the general confidence that the public has in the economy, precisely because it is an arbitrary measuring stick.

Example: AIG required a bailout in 2008. AIG was a Dow company. Once their financial troubles became known, AIG was removed from the Dow and replaced with a company whose fortunes were far superior to AIG's. Did the general public confidence grow tremendously in the Dow on the day it improved due to the removal of AIG from the Dow? Or was that just an arbitrary shift?

Silly arbitrary example. Of course public confidence doesn't change the day they change it. What a dumb question.

The Dow folks try to keep the Industrial average roughly representative of the American economy, which is why two Nasdaq stocks (Microsoft and Intel) got added a decade or so ago .... to represent growing Tech influence.

A perfect barometer it is not. No such thing exists. But it is one of several decent indicators of economic confidence, and one that Obama's failing badly right now.

[Cali Coug]

Originally Posted by Tex

The Dow is an Obama tracking poll. And he's been trending down pretty much since his election.

Someone should let him know what P/E ratio stand for, too.

I find it tremendously amusing that you equate the "stock market" with the Dow. I also like the fact that you totally misunderstood the quote from Obama. He said, "The stock market is sort of like a tracking poll in politics,” said the president. “It bobs up and down, day to day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.” He didn't say the stock market is a political tracking poll. He said they both bob up and down, day to day, and you shouldn't spend all your time worrying about it with respect to either.

[Cali Coug]

Originally Posted by Tex

Silly arbitrary example. Of course public confidence doesn't change the day they change it. What a dumb question.

The Dow folks try to keep the Industrial average roughly representative of the American economy, which is why two Nasdaq stocks (Microsoft and Intel) got added a decade or so ago .... to represent growing Tech influence.

A perfect barometer it is not. No such thing exists. But it is one of several decent indicators of economic confidence, and one that Obama's failing badly right now.

Ah. So someone is manipulating the Dow, putting in stocks that that person believes to be representative of the market as a whole, and when one of those stocks totally dives, that stock is then removed because, in the opinion of the person choosing the stocks, it is no longer representative of the market as a whole. Nice barometer. At least they have a large sample size... of 30.

The Dow is irrelevant and heavily reliant on cyclical stocks. And the stock market, in general, is one of many indicators of economic confidence, not the sole or primary indicator. Read up on it. I know Wikipedia is your only source of information, so I saved you the trouble:

http://en.wikipedia.org/wiki/Economic_indicator