used to say that the stock market has predicted 10 of the last 5 rescessions. It is not a prefect guide.

Looking at the bizarre behavior of the stock market (I work in the industry as well...) I have finally come to the conclusion that the market does not 'predict' anything. There is another reason for it's popularity.

Real estate is no longer a good investment. Commodities and currency speculation cannot absorb the massive amount of capital and profits in the system. Even gold, the lead commodity, is in limited supply. Buying fixed income investments does not seemingly generate enought profit. Nor can we stick the cash under our beds - yet.

Wall street, ie the 'markets' for capital and companies, etc. is the only game in town for the amount of profits and capital that have accumulated. The money HAS to go in there. So, it just, generally, goes 'up,' no matter if they hang over the abyss.

Please someone tell me why I'm wrong. Please.

... and Wall Street knows the Republican administration will do just about anything to prevent financial distress in an election year. The market is up because big-ticket bailouts are practically guaranteed.

I asked someone smarter than I was "why is the stock market doing fine when we're in the middle of a recession?"

The answer I got was "The stock market has little to do with the way most people experience the economy."

I'd venture to guess that remains true.

"The stock market is often seen as a leading indicator of economic growth. But there seems to be a disconnect here, because the economic outlook sure doesn't seem bright."

My rule of thumb: the worse the business news is for everyday people (e.g., the majority who aren't rich), the better the Market does (and vice versa), so get ready for fun times ahead. The disconnect is very real, and impacts everybody in the world; I'm imagining a lot of fiddling while Rome burns in the coming months.

I like the idea that the money has got to go some where and with all other investments looking weak, the stock market is still going up.

But there is some other logic to what is happening. The stock market does better under Democratic administrations than under Republicans. Maybe the stock market is predicting a change.

The classic case is the announcement of layoffs by a company, followed by an increase in it's stock price. So what you folks are saying is that if the little guy is taking it in the groin (as he usually does), investing in Index Funds is a sure bet (for the little guy too, I might add?).

We need, I think, a Doug Henwood or some left-wing economist to actually create the 'Bob Jones Index,' as Jim Hightower suggested.

Feed in figures from:

1. Unemployment (adjusted to pick up those actually unemployed, not just registered with the government as unemployed.)

2. Underemployed (see 1.)

3. Overtime worked (mixed signal)

4. CPI (the real consumer price index, including all commodities like college, medical, gas prices, not the government 'fixed' version)

5. Actual Wages

6. Unionization levels

7. Pollution levels

8. Taxes paid for corporate welfare, war, defense and secret police, etc.

9. Tax rates and payments of workers, as opposed to those of the rich and corporations.

10. Health care availability

11. Health care costs for ordinary people

12. Mass transit levels

You get the idea...

I was talking to my brother about this issue yesterday. He is a senior executive in a former US, now global company. His Company's stock is at a record high. However, his company is being carried by revenue from Europe and Asia, not the US. The markets of Asia and Europe are so much bigger than the US market, that a US downturn just doesn't matter so much in the global marketplace anymore.

The falling dollar will not have the positive effect intended. It will not spur manufactuirng because most of that is outsourced to Asia. It will not cause wage inflation because most workers providing services are now competing with couterparts in other countries. Instead, it will spur a "firesale" of everything that isn't nailed down by foreign buyers. I predict that they will buy everything from US farmland to high tech businesses.

I've made enough the last couple years and I don't need more than enough to live, since I live so simply. So, if I miss Dow 15,000 or Dow 16,000, that's okay.

We have a vacant lot we bought for 50K less than ten years ago. We put it on the market last year, for a tad under half a mil, (no improvements) but we pulled it off the market when things got slow, because in five years it will be worth a million. Bernanke sealed the deal. But if the markets were to all simultaneously crash, at least 50%, we would be much richer in real terms.. So the only strategy now is buy and hold, get it?

The markets haven't be coupled to the general economy since Bretton-Wood (1944). We learned this in Grad School in the 80's. That's basically why Warren Buffet is so smart - you need to look at each company on its own not in the context of a bunch of other variables no one else understands either. If I can invest in a company that itself is not linked to the economy than the aggregates of all of that is not linked.

Duh.

The stock market... like the real estate market... is mostly fueled by salespeople. Those sales people, that call themselves 'broker' are supposed to be working as advocates for your investments, when in fact, they are working as advocates for their brokerage company. Their salary is enhanced by sales of more stock, not less. So... the incentive to protect their clients (the public) is, as usual, usurped by the greed and structure of greed that will one day expose the market for the Ponzi scheme that it is.

Then everyone will throw their hands up and cry "How did this happen! Why didn't we see this coming! It's so unfair!" And new demands for new regulations will be asked for...and the dutiful, not so dutiful government will pass some sort of loophole laden legislation that will have a clever title like "Healthy Market Initiative"... and, legislate as close to business as usual as they can get away from.

But this time might be different. The dollar is depreciating, we have no manufacturing base to speak of, the public has maxed out its credit, our various debt to... which ever debt ratio you wish to look at, is historically in.... another dimension... and fuel prices, to which everything is inevitably indexed, continue to rise unabated. There is a wall, and it is made of brick, and we are approaching it very, very fast.

One chapter of the Big Lie, is how the United States prevailed and won the cold war, empowering the people to rise up and 'tear down that wall'.... When in reality, the true demise of the Soviet Union was that they had engaged in a pissing contest of war machines with us, and essentially went bankrupt in the most catastrophic way possible. Their shattered economy pushed their political revolution.

Now, we are in a pissing contest with ourself. One as expensive as a real war, but it is not a real war. It is a very, very inefficient effort that is siphoning off hundreds of billions from the national treasure and its future for a return that thus far has been a slowly sinking and deteriorating scenario.... with no end in sight.

Lies, deceit and the capital crimes that are being committed in the name of whatever ism it is that we claim, can only word to distort the rest of our filters. We cannot see the demise of the Stock Market or the economy, because we have learned to look at things without common sense or logic, and call that normal.

The stock market is disconnected from the rest of the economy. It's like an engine about to blow... it's making a lot more noise right now... is very hot... but it doesn't have an awareness of the rod it is about to throw... or how devastating that is to the rest of the machine.

We will reap what we sow. And it's gettin' near harvest time.