My apologies for the blurring of the chart. It is fairly complex but I believe once explained you will see where I am going.
The data on the chart is the DOW JONES closing from 1928 to present. Read the chart from RIGHT TO LEFT. The squiggly blue line is the actual data. The colored straight lines are trend lines for various periods of time. The dark RED & BLUE bars across the top show what President and party was in office at the various times.
OK... so now that you have a basic understanding of the chart and data, let's do a little analysis work.
- The first thing to notice as that from 1928 to 1981 the DOW hardly gained at all... Just a nice steady upward slope (as shown by the RED trend line up to "1000".
- Next you will see a sudden trend (GREEN line) upward to "4000" starting in 1981 which also co-insides with the Republicans (Reagan) came into office.
- Then you see a real steep rise upward to "11000" (BROWN line) starting in 1995 shortly after Clinton (Democrat) took office.
- Now you will observe a severe drop in the DOW, all the way down to "8000" in 2003.
- Then back up again all the way to the all-time high of "14000" in 2008 starting right after Bush (Republican) came into office.
- That did not last long and was back down to "8000" shortly afterward (2009), when Bush gets out and Obama (Democrat) comes in.
- The DOW then proceeds upward to "11000" and then back down again to "10000" in 2010.
Now, if you are like me, I wonder what the heck happened in or around 1981? For the 53 years preceding the DOW just "stayed the course". Then in the next 19 years the DOW goes crazy with the sharp (Rocket Ship) ride all the way to 11000. Then between 2000 and 2010 the DOW starts the Roller Coaster ride like never before seen.
So... my question is "What happened" starting in 1981, that has caused this craziness we currently have?
I'm sure you all can come up with a bunch of your own ideas, but let me just throw out a few of my own. We know that the "Computer" age started in earnest in the early 80's, so that may be some of it. We also know that the "Internet" really got its start in the early 90's. It also appears as if neither President had much to do with the sharp rise, as not much changes when we went from Republican (Reagan & Bush) to Clinton (Democratic), so I rule that one out.
NOW... there is one more event that started around the early 80's. The GREAT "SUB" (Save-U-Butt) program was initiated, more commonly referred to as the 401k savings plan. I'm pretty sure you all know how this works, but just in case not, I will explain (as least the best I can explain this or any other Government plan - oops... sorry... I should have said program as Government doesn't seem to know how to plan anything.)
How I understand it is that I (we) put in lots of our stuff (ugh... money) so that when the great SS (Social Security) system fails we will have all saved up to make up for the SS collapse. Great idea right? Well yes, nothing wrong with saving! Just to make sure that we save it though "BIG" (BIG as in Big Government) in all its wisdom, invokes a HUGE penalty if we decide to take it back earlier than what BIG wants us to.
Now... let me say this... there are a LOT of smart people out there, and there are a lot of "Not So Smart" (NSS) people out there (I started to say stupid but that sounds too mean). Now, the NSS people are the folks just like ME... the ones that took a LOT of our stuff and stashed it into "SUB" program. Heck some of us even got matching stuff from our Employers... kinda like getting "FREE" (RIGHT!!!!) money. Oh... did I forget to mention that "BIG" even allowed us to defer T A X on the donations (sorry, should have said contributions). You see that way when you have to start taking it back when you reach 70.5 (if you are un-fortunate enough to live that long) you can pay tax on it plus tax on what the employer gave you plus tax on the interest you got from the brilliant investments you made. (BIG made a serious mistake regarding the TAX stuff which I will get into shortly)
Now... remember the SMART people I spoke of. Well they are the are the ones who run Wall Street and most probably they are the ones who dreamed up the SUB program in the first place. Oh... By the way these are THE WALL STREET PIRATES.
Let me explain how it worked (remember... these are smart people). They (the Pirates) get together and say. If we can get all the NSS to put their stuff in to our little holding bank (more commonly referred to as the Stock Market), then the more they put in the faster the market will go up and the faster it goes up the more they will put in. So then at a certain point, when the NSS people are off guard, we (the Pirates) will take all their stuff for ourselves. When that happens, of course the market will drop, but that is good for us (the pirates) as when its back down the NSS will put more in (thinking it's cheaper) then it goes up, we take some more, and the cycle goes on and on and we (the pirates) get rich stealing other peoples stuff. And... To top it off we get a double dip because the NSS people have never paid TAX on it in the first place. (This is the TAX mistake BIG made that I referred to earlier).
Now... a little bit about that mistake that BIG made about the TAX stuff. Well BIG realized that since the Pirates stole from the NSS that they would not get as much TAX, where in effect the Pirates would get it. Well BIG fixed that problem in 2006 by enacting the - you guessed it - the ROTH 401k program. What this is is that you pay the TAX before you contribute (sorry... donate), this way BIG doesn't get screwed later on when the Pirates take your stuff. Sure you don't have to pay any TAX on the interest you gain, which sounds great, but let me ask... what is 100% of 0?
So... there you have it. Why did I write this? Well just to warn you of the Wall Street Pirates, and how they operate. They are still out there robbing all the NSS people like you and I. So, just be aware.
Just Say'n
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