The DOW is going DOWN DOWN DOWN (yet again)

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    Oct 23, 2008 4:36 AM GMT
    So is the FTSE, Dax, Cac, Nasdaq, Nikkei, Sensex.

    In my infinite fiscal wisdom, I chose 2008 to be the year I'd start investing in the market.icon_biggrin.gif
    I've got some fidelity mutual funds and have only seen red recently.
    I read on the MOTLEY FOOL site, that bearish markets such as the one we have now, is the time perfect opportunity to bump up the 401k contributions and buy more with your money, but I cant get myself to do that as yet.

    So my question, are you selling whats left in your portfolio, buying more stock, shuffling things around, sitting put not batting an eyelid?

    When will this madness end?

    http://money.cnn.com/2008/10/22/markets/markets_newyork/index.htm?postversion=2008102218
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    Oct 23, 2008 8:18 AM GMT
    Well if you are already invested I would not sell now. Hopefully you invested for the long-term and do not need the cash. I did put a litttle money into a mutual fund recently. It jumped the day after I invested, but since then? Well I haven't checked yet but I don't think it is pretty.

    When will it end? Who knows. The contagion that started with sub-prime mortgages is likely to spread to credit card debt. Financial markets are finding out the hard way that securitisation of debt (basically packaging debt in tranches of varying degrees of risk then selling it to investors) carried a lot more risk then they thought. As the housing market bubble burst, the homeowners could no longer pay their mortgages, and the debt instruments plummeted in value. Banks then had to start writing down the value of their investments, which meant they no longer had enough capital to lend money, etc., etc., etc.

    I know one thing for sure, 2009 is going to be one ugly baby when it comes to the World Economy, and 2010 may not be pageant winner either.
  • HndsmKansan

    Posts: 16311

    Oct 23, 2008 12:32 PM GMT
    It is a great time to start a long term savings plan, but again thats a generic comment based on the market at this moment. I wouldn't do anything (at any time) unless you have carefully considered your own personal position and goals and with a prospectus in hand.

    Not a good time to become a "reactionary" based on the market at this moment. Long term goals are paramount to success and having a knee jerk reaction based on events doesn't equal success.

    Make investment decisions based on moderate or long term financial goals.
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    Oct 23, 2008 12:42 PM GMT
    Job Losses Accelerate, Signaling Deeper Distress

    By Neil Irwin and Michael S. Rosenwald
    Washington Post Staff Writers
    Thursday, October 23, 2008; Page A01

    Employers are moving to aggressively cut jobs and reduce costs in the face of the nation's economic crisis, preparing for what many fear will be a long and painful recession.
    ....
    In September, there were more mass layoffs -- instances in which employers slashed 50 or more jobs at one time -- than in any month since September 2001, the Labor Department said yesterday. And nearly half a million Americans have filed new claims for unemployment benefits in each of the past four weeks, the highest rate of such claims since just after the terrorist attacks seven years ago.

    Anecdotal reports suggest that the hemorrhaging in the job market has only begun. ...

    http://www.washingtonpost.com/wp-dyn/content/article/2008/10/22/AR2008102203709.html?hpid=topnews


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    Oct 23, 2008 1:57 PM GMT
    Layoffs and increasing unemployment are usually the last things to start happening in a recession, and the last to turnaround once the recession has ended. The unemployment rate is the ultimate "lagging indicator."

    Chrysler will likely be sold off (GM Is supposedly interested) which could result in heavy job losses. I wonder how the Pension Guaranty Fund is doing?
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    Oct 23, 2008 2:12 PM GMT
    Good bargain, right now, as I type this, is Best Buy (symbol: BBY)
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    Oct 23, 2008 2:17 PM GMT
    if i remember correctly, the pbgc premium's are a function of headcount and the funding status of pension plans... so maybe they'll see an influx of $$ next year as i'm certain pension plans are not as well funded as they use to be. Not sure if the pbgc is seeing a spike in taking over pension distributions...
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    Oct 23, 2008 2:22 PM GMT
    I usually play with a couple hundred bucks with big players but since this downtown I've shuffled all my funds to penny stocks...you get more bang for your buck and the returns can be very profitable.
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    Oct 23, 2008 4:38 PM GMT
    Liquidating right now would be foolish. Investing in equities would be doughty at this point in my opinion. Unless you're masterful in investment strategies, such inconsistent and erratic trends among the major market indexes calls for caution.

    I've been tempted to invest because of astonishingly low stock prices but am going to wait until the pattern crystallizes. Meantime, I'm enjoying how incredible strong the American Dollar is against the Looney...guess something fruitful has come from all this speculation.
  • metta

    Posts: 39134

    Oct 23, 2008 5:32 PM GMT
    I don't think that anyone really knows when the economy and/or stock market will improve. But my guess would be when we start to see that the real estate industry has bottomed out and trending back upwards. And I'm guessing that will not happen until well after 2010. The reason why I'm guessing that is because the peak of the craziest loans (the loans where people only have to pay a percentage fo the interest that built up for each month) do not change to regular payments until then. There are hundreds of thousands of these loans out there. I don't see how there wont continue to be even more foreclosures during that period and after.

    I think that 2009 is really just hopeful thinking just as people originally said it would be 2008 and are now saying 2009.

    Saying that, putting money into your retirement plan is still imporant. I'm not an investment expert by any means but I would think that even putting it all into money markets right now would be fine. That way your not risking the turmoil of the markets until things settle more. Use the tax benefits now and move the money into investments when you feel comfortable doing so.

    When you see people who's job is the stock market saying they have taken their money out and will not put it back in until they see some stability, that should be a good enough warning for people.

    I have heard estimates of the DOW hitting bottom at 5500. If you see that, it might be a good time to dive in. But again, that is only one analysts opinion.
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    Oct 24, 2008 3:29 AM GMT
    This is not the time to sell..it is definitely the time to look for opportunities and buy but you have to keep in mind that in a bear market, you most likely will not see any profits. If you are investing long term, it makes sense to buy now but again, you need to look for opportunities. Any fads and trends are more for short-term strategies. I would not advise selling right now unless you are taking a strategic loss for tax purposes.
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    Oct 24, 2008 3:30 AM GMT
    God i get anxiety everytime i hear anything about the market
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    Oct 24, 2008 3:33 AM GMT
    metta8 saidI don't think that anyone really knows when the economy and/or stock market will improve.


    We are expecting the whole thing to bottom in the first 6 months of 2009 and hopefully we will have a correction then. Keep this in mind, the market will always go back to its mean.
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    Oct 24, 2008 3:42 AM GMT
    From Nouriel Roubini (NYU) who predicted the credit meltdown a year ago (in brief--the worst is yet to come):

    http://calculatedrisk.blogspot.com/2008/10/roubini-on-cnbc.html

    We are in uncharted territory right now and nobody really knows what's coming except for a lot of volatility.
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    Oct 24, 2008 4:11 AM GMT
    THE SKY IS FALLING THE SKY IS FALLING!!!!!!!!!!!!!!!!!!!
  • styrgan

    Posts: 2017

    Oct 24, 2008 5:01 AM GMT
    metta8 saidI don't think that anyone really knows when the economy and/or stock market will improve. But my guess would be when we start to see that the real estate industry has bottomed out and trending back upwards. And I'm guessing that will not happen until well after 2010. The reason why I'm guessing that is because the peak of the craziest loans (the loans where people only have to pay a percentage fo the interest that built up for each month) do not change to regular payments until then. There are hundreds of thousands of these loans out there. I don't see how there wont continue to be even more foreclosures during that period and after.

    I think that 2009 is really just hopeful thinking just as people originally said it would be 2008 and are now saying 2009.

    Saying that, putting money into your retirement plan is still imporant. I'm not an investment expert by any means but I would think that even putting it all into money markets right now would be fine. That way your not risking the turmoil of the markets until things settle more. Use the tax benefits now and move the money into investments when you feel comfortable doing so.

    When you see people who's job is the stock market saying they have taken their money out and will not put it back in until they see some stability, that should be a good enough warning for people.

    I have heard estimates of the DOW hitting bottom at 5500. If you see that, it might be a good time to dive in. But again, that is only one analysts opinion.


    The last of the subprime loans will reset by June of next year. There are actually fewer second quarter loans, so we can assume safely that the economy will bottom out or start to improve in the third quarter next year.

    I indicated on a post here a while ago that Moody's and the S&P have for the longest time been putting out loss projections of RMB securities. Nothing should have been unexpected for our leaders or other irrationale analysts about how far this would go, and there should be little doubt now where the light att he end of the tunnell is.

    It is possible for this recession (or whatever you'd like to call it) to continue into 2010. We don't know if this will encourage people to save more and spend less, or if consumer confidence will be so jarred by the instability in the markets that people will not spend much of their disposable cash.

    5500 is kind of outrageous. If the DJ goes that low, the rally will be just more amazing. There are solid companies still with strong balance sheets and good P/E ratios. Even now, plenty of blue-chip companies are undervalued. I'm doubling up.

    I guess I should say that since March or so, I did pull out of some riskier stuff in favor of stable stocks which pay sizable dividends.
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    Oct 24, 2008 7:55 AM GMT
    Oh also bonds..if you're gonna buy..treasuries are the way to go.
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    Oct 24, 2008 10:49 AM GMT
    styrgan said It is possible for this recession (or whatever you'd like to call it) to continue into 2010. We don't know if this will encourage people to save more and spend less, or if consumer confidence will be so jarred by the instability in the markets that people will not spend much of their disposable cash.

    5500 is kind of outrageous. If the DJ goes that low, the rally will be just more amazing. There are solid companies still with strong balance sheets and good P/E ratios. Even now, plenty of blue-chip companies are undervalued. I'm doubling up.


    1. 2010? The Japanese recession, whose blueprint we seem to be following in almost exactly, lasted FOURTEEN YEARS, 1990-2004. I'm not predicting ours will be that long -- it probably won't -- but cheerful predictions that this will be over in 2010 seem to me way off the mark.

    2. 5500 is a little low, but if you look at historical p/e ratios---not for any one company, but for classes of business--the level of 7000-7500 seems about right. I actually predicted this to clients three years ago and I still think so.

    3. Rally? In 1929, when the stock market fell, it took until 1954 to recover the previous high. That's right, 25 years.
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    Oct 24, 2008 2:03 PM GMT
    Well in the spirit of keeping people informed. Here is the link to Bloomberg.com for today. An interesting article about how the CEOs ignored the warnings about the housing bubble.

    http://www.bloomberg.com/apps/news?pid=20601109&sid=a5JnfkstutpI&refer=home

    Stock markets around the world are tumbling.

    The world economy is one butt-ugly baby these days.

  • CuriousJockAZ

    Posts: 19133

    Oct 24, 2008 2:09 PM GMT
    I think in "The Big Picture" this all may turn out to be a really good thing. Not only are there some great opportunities to buy now, but also this whole mess has shaken things up and weeded out some of the crooks and exposed some of the ridiculous policies and regulations (or lack thereof). It's probably going to be painful for many though, and likely get even messier before it turns around.
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    Oct 24, 2008 2:29 PM GMT
    CuriousJockAZ saidI think in "The Big Picture" this all may turn out to be a really good thing. Not only are there some great opportunities to buy now, but also this whole mess has shaken things up and weeded out some of the crooks and exposed some of the ridiculous policies and regulations (or lack thereof). It's probably going to be painful for many though, and likely get even messier before it turns around.


    People have been asking me what are good things to buy. I just hold my tongue because I just don't where this market is going. Due to the complicated inter connection of today's global economy, especially the financial system, it sometimes takes months to unravel the mess.

    When markets go down this much the psychological impact of people seeing their retirement accounts plummeting in value is very negative. Worried consumers don't spend. Hopefully when all this clears up (whenever that is) people will be more conscious of risk and the amount of debt they are taking on. That will probably be the most positive outcome. Although we may never again have charging bull markets, we could have more sustainable ones.
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    Oct 24, 2008 2:31 PM GMT
    This thread is funny because it seems to have been applicable every single day this week...
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    Oct 24, 2008 2:56 PM GMT
    Well, I just bought some cheap stocks. Doing my part to reverse the trend. icon_cool.gif
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    Oct 24, 2008 2:59 PM GMT
    The best i can tell you is selling now is retarded.
    The market will rebound eventually.
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    Oct 24, 2008 3:10 PM GMT
    LGWC saidThis thread is funny because it seems to have been applicable every single day this week...


    Today is especially bad, with Japan down 10% and Europe off 9%. Actually the North American markets have traded up and down this week, it is the rest of the world that is melting.