Darleen, okay. But, aren't we talking about relative value of stocks? Isn't the only absolute value for stocks at "zero"? Should all companies, then, be priced at their absolute value? This would be a ridiculous measurement to use.
Similarily, if we price most companies at or below their "replacement value", then what long term value does the Fed anticipate relative to allowing this to continue?
'Overpriced' in one book is significantly 'underpriced' in another. Don't you anticipate that the Fed is helping keep stock prices artificially low by drying up the borrowing power (increased broker/bank borrowing requirements)?
They, the Fed, had less strict borrowing requirements with the market above 10,000 than they do now. This still makes little justifiable sense to me. Did they just now wake up, or is there some other deviant reason?
To a common person it looks like we have a bunch of retards running the money supply.
I can see your reasoning, but I believe it may represent faulty thinking on the part of the Fed. Someone, somewhere has decided that stock prices are still too high? High compared to whose predefined measurements?
Why don't we price all stocks at the cash they have in the bank, and give nothing relative to the value of their business? There are a ton of companies in this row...some priced less than their cash in the bank.
We have "zero-sum", "cash", "replacement value"...which dumb ass has decided that stocks should be priced at arbitrary figures that fit nicely into their predefined forumula?
I can have a $20 stock priced at "replacement value" and earn 6%. Or I can own a $30 stock at "replacement value plus earnings power" and still earn 6%.
What is the relative difference between 6% and 6%? They can support the market to keep stock prices sustained. Or they can withdraw their support and keeps prices falling.
It appears the Fed has chosen to support the market at some predefined criteria, none of which makes long term sense relative to generating local support or stability for the US stock market.
It doesn't matter if the rate is 1.75% of .25%. If the Fed closes off all borrowing power, then the relative worth of low rates is meaningful only to the housing market...and this worth dries up eventually too at some point, does it not? We already have people remortgaging their homes twice within the same year as rates have fallen this quickly within a year's time. |
