Saturday, April 13, 2019

Stock Market Rise


The Dow Average of 30 favored companies finally rose up to 26,000 in 2019, up from 18,000 in 2016.  It is close to its record high of 26,743 it reached in 2018.

But the more relevant measure of stock worth is the S&P 500 index that is now at a record high of 2905, passing the 2853 value it reached in 2018, up from 1853 in 2016. Your 401k is up 1052 from 2016 and that’s up 57%.

The Dow Average is the number that is the most publicized, It does not include the biggest companies. It includes companies from different industries with varying levels of revenue. It is supposed to be “representative” of the US economy.

The US economy includes over 1000 companies with $1 billion or more in reenue. The Dow Average is a sample of 3%.

There is a lot of hype over the Dow and these companies are required to continually increase quarterly earnings. Private companies have more flexibility and don’t have to ride the rollercoaster.

There is a lot of hype and speculation over the effect external events have on high profile companies’ stock prices.

The stock market fluctuates so that stock market wonks can buy low and sell high. The majority of 401k investors take the long view and let their bet ride.

There are a lot of US companies who are overinvesting in projects with limited demand like self-driving vehicles and all electric cars. Boeing is in trouble with their software and sensor systems.

There are other companies who are losing their consumer base because of high prices and low value like TV cable. Others like Apple are experiencing weak demand for smartphones due to saturation.

Too many US companies are imposing their European Socialist Values and have demonstrated complete stupidity in giving away their intellectual property to China.

We have witnessed the failure of US Auto manufacturers to keep US consumers. In the 1970s most US consumers bought GM, Ford and Chrysler cars.  Now in 2019, most US consumers buy foreign cars made by Japan, Germany and South Korea. In the 1970s, most manufactured goods bought by US consumers were US brands.  Now in 2019, US consumers are more likely to buy goods offered by foreign competitors or US brands made overseas.
  
Norb Leahy, Dunwoody GA Tea Party Leader

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