Posted by: Marshall Sponder | July 19, 2008

Long Post about the Dow Jones Industrial Average – lousy Metric

Maybe the Dow isn’t a lousy metric – but it doesn’t seem to be telling the real story – or at least, not isolating the fundamentals in a meaningful manor – I wrote a long rant about that today at Oil Demand falls but prices don’t change that much.

I usually write that kind of stuff here, but I want to make sure my stuff is seen by as many people as I can.

As you can tell, I’m into fundamentals – not this garbage stuff I read in Newspapers.

Not that the Dow Jones Industral Average isn’t important – it is – but it’s full of garbage data – it’s the same kind of issue we have as Web Analysts – we pull data – but there’s so much garbage that isn’t important and the real story – is hidden in the haystack of data – the meaninful information that you need to move forward…the mass of data is blinding.

In fact, I concluded the Dow going up this week just confirmed how bad things really are – they’re not improving …. they’re degrading – the World Economy is addicted to OIL – the reason the Dow went up late this week was OIL demand went down (because we’re broke … tell me that’s a good story) and as prices go down a 10 bucks (that is much now ?) the Stock Market goes up by a couple of hundred points.

But doesn’t that kinda tell us how bad things really are?

How Unstable they really are?

What happens if something bad happens in the Middle East – say….October?

I predicted that –  there are a lot of reasons why this could happen, even if Neocon’s did’t try to set it up – there are legit reasons out there).

What about if a storm comes and hits a major Oil Port?  What if an earthquake hits some oil refinery?   What happens to the World Economy ….. everything shoots up.

To me, the story of the Dow going up just shows us how bad things really are –  the World Financial Markets are running on Oil … driven by OIl. We’re addicted to Oil.

That is the Fundamental here – forget what the Dow says – unless we find a way to fix this energy situation – nothing is going to improve much – that’s my belief.

A real metric might be how addicted to oil the World Economy is … and how addicted to OIL each country is … if we can find a metric that measures the progress we’re making in Alternative Energy and tie that to meaningful progress -that would be a meaningful metric.

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