Stock get higher, but their true value stays the same?

fuzzybuddy

fuzzybuddy

SF VIP
Location
The Sticks, Northeast PA.
I'm no economist, by any means. But the stock market is at incredibly high limits. Yet they aren't. The value of the dollar has gone down. According to the U.S. dollar index the value of the dollar has dropped 10% since Jan. 2017. So while it takes more dollars to buy a share of stock, the real value of the share has remained the same. You're buying that share with devalued money. That doesn't sound so good to me.
 

I suppose it would depend on if you are buying the stocks of US companies or foreign companies.

A weak dollar could also make it attractive for people and businesses from other countries to spend and invest in the United States.

IMO the hurricane in Houston will push stocks higher on the news of the cleanup and recovery.

Then I think we will see a slump or a correction while the market catches it's breath.

My crystal ball is starting to cloud over, I can't really see anymore about the financial markets.

One thing for sure if we predict a correction or a crash long enough we will be right at some point in the future, time will tell.
 
If you're talking about the value of the U.S. dollar relative to other global currencies, it may have dropped but that has no impact on the value of stocks you are buying with your U.S. dollars; unless, as Aunt Bea states, you are buying exclusively foreign equities.

In fact, since the value of the dollar has dropped which helps exports, all the more reason the S&P 500 will do well, since the majority of its companies get a major proportion of their profits from global sales.

I believe one reason the bull market has continued so long is that corporations are awash in cash. Strong balance sheets give impetus to equity valuations. Even a severe correction isn't going to affect that overmuch. It's one reason the GOP wants so badly to work on tax reform. They want to see those enormous overseas reserves held by U.S. companies repatriated so that at least some of it will be taxed - at a rate far lower than your or my tax brackets, LOL.

Apple, for example, has so much cash on hand it outranks the country of Singapore in cash reserves. The top 50 of the S&P 500 have almost $1 Trillion cash banked offshore:
https://www.bloomberg.com/graphics/2017-overseas-profits/
 

our markets here are up nicely . a falling dollar does not matter if you are not converting to other currency . what you are interested here is real return . that is your after inflation return and those real returns are up nicely .
 
Devalued currency does matter in a country. The value of a new car is "X" and it takes 10 quatloubs to but one. Then if your currency is devalued, the value of the new car is still "X", but now it costs 11 quatloubs". So it eventually does matter if you currency is devalued.
 
that would be true if internally we were having an inflation issue but we are not . then it cost more dollars to buy that car from devaluation . but it is really nothing out of the ordinary . we are still pretty much below even the fed goal of 2% over all . the dollar fell 8% so far this year . inflation is not up 8% .stock markets on a real return basis are up nicely and after all that is what this discussion is about .
 
I look for quality stocks that pay a good dividend...the market goes up and down but the dividends keep coming.

I am a long term investor
 
it is only about total return . your investment dollars are reduced by the same amount as the pay out so without share appreciation that value of your investment will just keep dropping .

there is no magic that goes on when a company pays a dividend . how a return is comprised ,whether all dividend , all appreciation or a mix is irrelevant .

high dividend payers , including their dividends like "o" are down 8% the last year , verizon down 5% , exxon lost 13% since january , all at a time markets are doing very well and hitting new highs .

so don't get to wrapped up in to thinking because a stock pays a dividend it is somehow immune to being a stock .

a stock paying a 4% dividend is really no different than just pulling 4% out of a total portfolio . you may differ in transaction costs or a tax difference but mechanically it is the same thing .
 
mathjak107
user-online.png

Posted..there is no magic that goes on when a company pays a dividend . how a return is comprised ,whether all dividend , all appreciation or a mix is irrelevant .

high dividend payers , including their dividends like "o" are down 8% the last year , verizon down 5% , exxon lost 13% since january , all at a time markets are doing very well and hitting new highs .

so don't get to wrapped up in to thinking because a stock pays a dividend it is somehow immune to being a stock .

---------------------------------------------------------------------------------------------------------------------------------

I understand what you are saying and yes there are stocks paying a good div that go down.

But I have found for every stock that I have owned over the years that has gone down there are 10 that have gone up.

One sector that ways good dividends and has gone up is the utility sector.
 
the point is dividend or not all stocks need appreciation , no different than your portfolio . a non dividend paying portfolio that goes up at least 4% can create the same dividend by selling off equal dollars of the amount of the dividend . the balance left will be exactly the same as a 4% dividend . what i am trying to convey is me saying i don't care if my portfolio is down because i am drawing my 4% is no different than when it comes to a dividend paying stock .

that stock is just as down with 4% being drawn out as the portfolio is
 
People I know are moving to gold out of fear of another financial crisis. I also hear silver is very undervalued right now. I'm thinking about moving to precious metals. Am I overly anxious ?
 
stynjar said:
People I know are moving to gold out of fear of another financial crisis. I also hear silver is very undervalued right now. I'm thinking about moving to precious metals. Am I overly anxious ?
Click to expand...

You've posted this or similar (gold/silver) comments on here 5 times and on at least one other forum (Buzz50). What are you selling?
 
fuzzybuddy said:
I'm no economist, by any means. But the stock market is at incredibly high limits. Yet they aren't. The value of the dollar has gone down. According to the U.S. dollar index the value of the dollar has dropped 10% since Jan. 2017. So while it takes more dollars to buy a share of stock, the real value of the share has remained the same. You're buying that share with devalued money. That doesn't sound so good to me.
Click to expand...

Hmmn? If you are buying those shares now with devalued money and then sell it when the dollar value goes up aren't you making money and isn't that what the stock market is all about. Buy low and sell high. The value of a share is what you can sell it for. No more. No less. Market Value.
 
fuzzybuddy said:
Devalued currency does matter in a country. The value of a new car is "X" and it takes 10 quatloubs to but one. Then if your currency is devalued, the value of the new car is still "X", but now it costs 11 quatloubs". So it eventually does matter if you currency is devalued.
Click to expand...

Well no it doesn't.
If a car is on the market for $20,000 and the dollar drops in value against foreign currency it matters not to the price of the car. You can use the same dollars you had in the bank before it dropped to buy that car.

You see the dollar is just like any other commodity. It's traded on the open market.

I live in Canada. If the U.S. dollar drops in value then the Canadian dollar goes up in value.

Canada sells oil to the U.S. If the dollar in the U.S. drops, the cost of a gallon should go up. But and here's the but. Not always. Other market factors come in to the picture like the inventory of oil.
 

You must log in or register to reply here.

Back
Top