Saturday, September 26, 2009

The Stock Market Casino

I’m not an investment counselor, but I am about to give you the best advise you may ever receive about investing in the stock market.

It’s like going to Las Vegas; the wise gambler never risks more of their money than they can afford to lose. The lesson that should have been learned in the economic “crash” of September 2008 is that all stocks are “high-risk” investments.

Currently the market has been trending up. This trend could last through the end of the year, but the market will “correct” again in the first or second quarter of 2010.

The Complex-Systems Theory of Culture (Gehlsen, 2009) explains economic systems as open systems that are maintained by a flow of money. A river is only a river as long as the flow of water is maintained. Economic systems only remain healthy and robust as long as an adequate flow of money is maintained. The flow of money in the American economic system continues to dwindle.

More than 6.5 million consumers have lost their jobs since the beginning of 2008. Sometime in the first two quarters of 2010 unemployment benefits should begin to run out for these people. This loss of money means that consumer spending will begin to drop, and the stock market will register another “loss of confidence” that will send it spiraling down once again.

Cultural systems are not deterministic, which means that it is impossible to predict exactly when the next “correction” will occur. For example, the government continues to extend unemployment benefits, which extends consumer spending for a while. Benefits can’t be extended indefinitely, but exactly when the extensions will end presents an insurmountable problem for predicting the next “correction”.

Our economy continues to move inexorably toward the next Great Depression, and along the way the stock market will hit another “bump”. On the other hand, it is always possible that the “experts” and the politicians will listen to me and avert the looming economic disaster.

1 comment:

  1. We are now at a 10.2% unemployment rate and the stock market keeps going higher? Do people not realize that even though "big business" is making profits, it's only becuase they've cut back on all there costs? They aren't making near the money they were 2 years ago, yet there stock prices keep climbing higher and higher.

    I think there will be a big reality check when un-employment keeps growing this year and sales durring the holiday season turn up worse than last year. I know our family, not just my family of 4, but our extended family of 30+ has decided to donate time to charity this year as a group instead of buying gifts. We are still getting the kids gifts, but the adults are getting anything for each other... We are all doing this because none of us has any extra money to spend!