Phoney GDP

read http://globaleconomicanalysis.blogspot.com/2009/10/market-cheers-over-ugly-gdp-report.html and get more details of how distorted these figures really are

The same example is valid for companies making up their numbers by offering kickbacks to customers, then subsequently registering prepaid revenue as revenue. This is exactly how the US government has distorted the figures recently with their cash for clunkers, and tax credit of 8k for new home owners (defined as one who hasnt buy a home in 3 years). That also means someone who has a home for 4 years and then buy a new home now, he would be eligible for it. Shifting necessary expenses from other areas, distorting the free market with kickbacks, creating malinvemtments and carrying forward future expenses to current inflating the figures.

If you are a new investor to the current market conditions, it definitely is a time where you have to be extremely careful, aware of the hype and news the media create, the false pictures the govt paint to you, and how your financial advisor might want to induce you into making an investment. Times are tough, but the tough will survive.