[Grovenet] Another anti-science Republican screed ? ? ? ?

[Katie Allnutt]

Well said David.
And I would argue that picking arbitrary dates like the 1946 stock  
market was not just random and neither was 7% a year.
If you define the Dow Jones average as the stock market and take its  
value on Nov 13 1929 at 198.6 (the bottom shortly after black Monday)  
and compound it at 7% per year for 79 years you would get a stock  
market value for today of over 41,620.  What does that make 14000?  
Not a bubble.
If you take the Dow Jones two and a half years later at another low  
point then it does make 14000 look like a bubble. And if you take it  
from a few years before that it does not look like a bubble again.

So yes, if you do the math you can prove the point either way  
depending on how you define your starting point. And how you define  
the stock market.
And I've heard that some say the stock market averages 10%  
historically which changes all the numbers more (but still 'proves  
the point' using 1946 S&P 500 and the  1932 Dow Jones) so that is  
probably why they picked that year.

Who says that the economy is measured by the stock market?   
Employment rates might be a more accurate way to gauge how the  
average person is doing or median household income adjusted for  
inflation. The stock market is skewed (hmm that could have an r in it  
and still be the same couldn't it.....) toward measuring the economy  
of the wealthy more than the economy rest of us.

Katie


On Feb 26, 2009, at 6:25 PM, David Morelli wrote:

>
> On Feb 26, 2009, at 5:57 PM, Steven wrote:
>
>> Ever done the math? Some say that the stock market historically
>> goes up 7% a year.
>> 7% per year from 1946 puts the dow at 7400. What was the 14000
>> number? A bubble.
>> Who says the economy had to be that up?
>>
>
> We have the habit of confusing the symptom with the disease.  A
> temperature of 104 indicates a serious problem, lowering the body
> temperature may prevent other damage but it doesn't address the
> cause.  The 50% drop in the stock market indicates a problem,
> restoring the old stock prices may return security to investors but
> it doesn't address the problems in the economy.
>
> David
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