Youth Politics

No, the Stock Market didn’t go 12 years into the future; we’re looking at a US stock market that has lost 12 years of gains in less than 6 months. At this rate I’ll be able to catch up to my parents’ 401Ks pretty quickly.

There have been a lot of items to discuss lately. The economic stimulus package was passed and it seemed like everyone had an opinion on the subject. I’ve seen talks of bipartisanship and how Obama has broken from that. I’ve also heard that Obama hasn’t accomplished what he said he would (although he’s only been in office for a little over a month). None of these items are currently on my mind. However, I have been paying close attention to how the stock market has been performing and, while the stock market is not exactly an accurate indicator of how the economy is doing, it does correspond quite well to the mentality of the American public at this time.

The market has now lost well over 50% of its value since last year. I thought that the market had already hit bottom, but it seems to be able to continue to slide. Now, it hasn’t deepened too significantly, and I’m optimistic that the market wont continue to nosedive. If you wanted to take the value of the market as an indicator of how the economy is performing, you’d be fairly accurate at this point. Looking at the trends in the market you can clearly see how people view the economy and what they predict the economy to be like down the road. It doesn’t look all that hot right now.

There are two factors that are preventing the recovery of the stock market and the overall economy. The number one biggest factor is consumer expectation. Everyone thinks the economy will continue to slump. As such, no one’s investing, and no one’s buying. No buying means no sales. No sales means companies don’t make money. The damage is self-inflicted, and we’ll continue to spiral downwards until expectations meet reality. Until then, expect further declines (but keep investing and buying!). The second factor is that of companies falling into bankruptcy. Now, I admit that this second part is mostly influenced by factor number one, however I feel that a lot of companies with bad business models have been able to stay afloat because the economy was just that good. Now companies with poor business plans are beginning to crumble, and as more and more companies go under, the others with sound business models will obtain bigger market shares and outlast this recession. I predict that once all of the deserving companies that go under do so, the stock market will finally begin stabilizing.

With all that said, how are my stocks doing?

My Google stock has declined 60ish points from last month. I’m still up from when I first bought, but not by over 100 points as had been true a month ago. I don’t see Google actually going away anytime soon, so it’s still safe to hold. It’s still over 40 points what I bought it for, and it wouldn’t be a bad time to put money into the company (it was over 700 a share last year and is now only 300).

Apple has had its ups and downs but for the most part it has been stable in the high 80’s low 90’s dollar range. Even the latest big slumps in the stock market haven’t moved the price of it’s stock too much.

Activision/Blizzard has been my latest gem. It had wobbled for a time to a price well under what I bought it for but it has been actually going UP in value during this entire period of declines in the stock market. The stock actually went up 29 cents today to close at a record high since I bought at $10.33 a share. It goes to show that this company is financially sound, has a great game plan, and produces high quality products. When all is said and done I’m sure that their stock is going to take off.

Those are my thoughts. If you have any questions about my stock picks or about the stock market and the economic recession so far, feel free to leave some in the comments. I’d also love to hear about your current investments in the market. If you haven’t gotten a chance, you may sign up to my RSS feed by clicking the link or subscribe to this site via email in the sidebar. Thanks for reading!

Here’s my source in case that comes into question:

http://www.wtrg.com/daily/crudeoilprice.html

Long time readers of this blog may remember a post I made about the price of gasoline called Three Dollar Gas Is Good!?

I had said that I would never see gas prices under two dollars ever again. Boy was I wrong.

The truth of the matter is, there were a lot of economists predicting that the price of oil would fall significantly. And significantly they did. I can buy gas for $1.59 at the pump today. That’s incredible, and only a few cents short of the prices I grew up with. So yes, I was incorrect in assuming that oil would not fall to those levels again. It’s just a testament of the power of the American people to influence global gas prices. We cut our consumption, and prices fall drastically. This of course is also heavily influenced by the current economic recession.

So what happens when the recession is over? Will gas prices jump back up again? You bet. We absolutely have to make sure that we control our consumption and not let the price of oil get out of control again. This means investing in renewable energy sources such as solar, taking more public transportation, using more fuel-efficient vehicles, and making sure we drive only when absolutely necessary. As a bonus, these measures are good for the environment too.

Have you done anything to cut consumption or have otherwise changed your consumption habits, and do you think they’ll come back to how there were years ago when the recession is over?

I felt it was time to put up an update on how my stocks have been doing. For my earlier update check out Apple and Google Investments – 2 Weeks Later.

The market has been fluctuating pretty heavily on a day-to-day basis, but in the end it looks like the market is going nowhere fast. A lot of the recent fluctuations are due to the government’s decisions regarding the auto-maker’s bailout plan, which as of now has not gone through. However, the market fluctuations are not nearly as important as the fluctuations of the stocks I care about. I did however track how Google and Apple did with relation to the ups and downs of the market. Specifically I wanted to see if they generally went up when the market went up, if they went down when the market went down, or if there was no correlation.

You’ll notice there is a positive trend when looking at the Google stocks, however Apple’s stock has fallen since December 7. Here are further details as to how both stocks are doing:

GOOG has gone up 25.85 points since December 7th, and AAPL has fallen 4.3 points, for a net gain of 21.55 points. Not bad in a struggling market.

In general I found that yes, the stocks are largely influenced by how the market is doing on that day. Both stocks rise significantly on good market days, and they both drop significantly on bad days. When it comes to marginal gains in the market or marginal drops, both stocks react based on news given on that particular day for both companies.

Apple seems to be taking a bit of a hit given the recent lawsuit about false advertisement, and just recently MSN money’s StockScouter changed its rating on Apple from moderate buy to hold. I wasn’t really planning on making any moves, but it doesn’t seem like anyone should be buying any more Apple stock for now.

Currently, Google is trading at $310.17 a share, and Apple is at a flat $90 per share.

I expect a huge bounce in the market on inauguration day with Obama stepping into office. The market really only needs confidence, and Obama being sworn into office can provide just that. In the long run I don’t think it’ll make any difference, but I’m sure day traders are looking forward to that day. Of course we’ll have to see if the auto bailout passes, and then if it makes an impact on the market as well. I expect it to have about as much of an impact as the 700 billion dollar bailout (not much at all).

If you’d like to receive continued updates as to how I’m doing, make sure to sign up to my RSS feed!

I’ve been following several economic blogs for quite some time now, and one that I do check up on regularly is FixThePig. Now, since this is mostly a political blog, I probably don’t touch on many of the economic issues that surface themselves unless they are really making a political impact. I’ve found however that FixThePig really complements this blog well when it comes to economic issues. And, as you all know, the economy and politics is almost always intertwined.

I like the blog. It’s simple, easy to read, and has great information and ideas on current and future economic issues. At times I even use it as a news source, or for a different perspective than mine on the current state of the economy. I always provide my input when I have one to give, even if it may differ from the author’s because of how inviting the blog is to commenting. It’s definitely a plus when it comes to a debatable topic such as economics.

As an avid reader and follower of FixThePig, I noticed a contest that they are currently holding for a chance to win $50 in cold hard cash simply for commenting. How cool is that? All you have to do is leave some good feedback on posts and you’ll maybe make yourself a bit of money! Seems like a good deal to me!

You can also get even more chances to win by writing up a full post on your own blog about the FixThePig contest. Now you’re all probably saying to yourself right now that it’s really the only reason I’m writing this post. I’ll be honest, it’s a very powerful incentive, but I would have eventually given a shout-out to FixThePig anyway, and am considering adding them to my “Awesome Political Blogs” section, which I am of course planning to rename.

If you want in on a potential $50 in your wallet, check out FixThePig’s Contest Page. Just comment or make a blog post about the contest and you’re all set for a chance to win!

There is a fine line that the government has to draw when it comes to the mortgage crisis. But before we even begin to discuss that, we need to determine whether or not this is even the government’s problem.

Here are the sides of the story as I see it. One side says let irresponsible borrowers lose their mortgages and may they have their properties foreclosed because they were not making wise decisions. The other side says that people were misled by companies like Fannie Mae, or that there is too much red tape and other loopholes that prevent people from making correct decisions. Of course, I’ll definitely say that it’s both, and that’s a problem. How can anyone distinguish the responsible, misled borrowers from the irresponsible borrowers?

I’m all for regulating the housing market when it comes to how business is conducted. Persuading home buyers from getting a home using shrewd business tactics that hide the truth about refinancing options etc. should be frowned upon and should be controlled to some degree I think. However, we cannot be bailing out whoever we please. In the end, the responsibility goes to, well, the home buyer. No one should lean on the government for any sort of financial help, as that’s not really its function.

I agree that we are in both a credit and mortgage crisis, however it’s really the American people that got us here if you think about it. That’s not to say that the big credit and mortgage companies aren’t at fault, but in the end the combination of some irresponsibility as well as loose regulation at these big companies has taken a turn for the worst, all at once. I’m glad that at least we’ll see a tightening up of credit as I think people really need to prove that they deserve to have credit.

Of course I’m no expert, but this is how I see things as they are now. Are more innocent people hurt by this than non-innocent? Should the credit and mortgage companies have stricter controls? Was regulation to blame? I’ll definitely look into this of course, but I’d like to know your thoughts as well.