the stock market has dropped below 7000!

  • rnch

    Posts: 11524

    Mar 02, 2009 3:56 PM GMT
    the first time it has been this low since 1997.

    how low will it drop to?

    how low CAN it drop to?

    my early retirement plans are on hold.... icon_sad.gif
  • HndsmKansan

    Posts: 16311

    Mar 02, 2009 4:36 PM GMT
    Well I had a topic on this in the "gay news" section... and it might end the day back up.

    Regardless, I think any changes should be carefully considered based on the amount of time the investor has until he needs to access the money.
    Those who need to supplement their income with their invested funds in the near term may need to consider action, but I would encourage anyone to review and not freak out. Don't make "knee jerk changes".

    icon_mad.gif
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    Mar 02, 2009 5:19 PM GMT
    How low can it go? Who knows. And don't even bother trying to time a bottom. So much right now hinges on getting the world's financial system back to operating normally. My big concern is that the government's around the world are doing things in a piecemeal and uncoordinated fashion. It is like ripping a band-aid off of a cut. The longer you take to do it, the more painful it is.

    I am a long-term investor who is taking the opportunity to buy some cheap stocks or mutual funds. But I am very selective and conservative. Needless to say I am not buying any car companies! There are some very good companies right now whose stocks have been punished too much. You need to do your research and think rationally, not emotionally. Also never invest what you cannot afford to lose.
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    Mar 02, 2009 10:56 PM GMT

    MCH, I'm sorry to hear that your plans for early retirement are being disrupted by the economy's implosion. I doubt it is much comfort, but you have plenty of company. And it is very unlikely that there were any moves you could have made that would have insulated you from the magnitude of trouble the economy is now in.

    I fear the markets have much further to fall before they find robust support. Guessing where that bottom will be is, I think, a fool's game. The Dow is below 7,000 with a set of vast vulnerabilities in the credit markets still unaddressed; and addressing these issues will mean recognizing huge losses, dealing with more disruption in the credit markets and intensifying the fall in economic output, real estate prices, etc.

    The unaddressed vulnerabilities I have in mind are (in no particular order):

    the insolvency and impairment of many of the world's biggest banks;

    the continued opacity of which institutions are exposed significantly to downside from credit default swaps (these exposures will bring down more banks and insurers);

    the looming insolvency of numerous government defined benefit pension plans (not least US Social Security), ditto for other entitlement programs like Medicare and Medicaid;

    similar insolvency of some large companies defined benefit pension plans;

    the bankruptcy of GM and Chrysler;

    the probably default of a number of sovereign states (a la Iceland). Next in line? Take your pick from: Ukraine, Ireland, Latvia, Belgium, The Netherlands, The UK, Greece, Nicaragua. And there are plenty more.

    All of these are known issues that are yet to be resolved. They do not exist in isolation, each of them will exacerbate or accelerate others. There are then the things that could go wrong:

    inability of the US to finance its ballooning deficits;

    a major military or terrorist event that disrupts trade;

    H5N1 becoming pandemic flu in the next year or two;

    large scale civil unrest driven by economic hardship (apparently a number of OECD governments are taking this quite seriously).

    It's a pretty grim picture. Eventually we will find a bottom, probably bump along that bottom for a long time and eventually start growing again. Increasingly I am coming to believe that we are in the early stages of something like the Great Depression. If that is so, then some of what have taken for granted in the past few decades will become relics.

    By way of analogy, a certain sought after type of apartment (i.e. ones with high ceilings, ornate mantles, etc, etc) in New York City is still described by realtors as 'pre-War' (meaning pre-WWII). In fact, very few great apartment buildings were built after the early 1930's. A more accurate name for 'pre-War' buildings would be 'pre-Depression' After the Great Depression grand apartments were hardly built until the latest boom when Trump, etc took off in the 1980's. I believe we too will look back on the past 25 or so years and think of them as a boom time that can not be reproduced - and not just in NYC.
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    Mar 02, 2009 11:00 PM GMT
    How low can it go?


    0

    That's how low
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    Mar 02, 2009 11:25 PM GMT
    flieslikeabeagle said

    By way of analogy, a certain sought after type of apartment (i.e. ones with high ceilings, ornate mantles, etc, etc) in New York City is still described by realtors as 'pre-War' (meaning pre-WWII). In fact, very few great apartment buildings were built after the early 1930's. A more accurate name for 'pre-War' buildings would be 'pre-Depression' After the Great Depression grand apartments were hardly built until the latest boom when Trump, etc took off in the 1980's. I believe we too will look back on the past 25 or so years and think of them as a boom time that can not be reproduced - and not just in NYC.


    Interesting point. It's hard not to notice that all of the larger and nicer buildings in the small towns around here were built between 1890 (fires burned the old wooden buildings) and 1930. Since then, the biggest investments that people have been able to come up with involve partially renovating a few of those old buildings. At least half of them are decaying for lack of maintenance funds, and have been for decades. To the extent that any recent "boom" construction happened here, it's been a few ugly industrial buildings that were lured in by tax-exemptions. I guess all of the money flowed to New York.
  • Webster666

    Posts: 9217

    Mar 03, 2009 4:43 AM GMT
    I'm so glad I got out when I did, back in January of 2008. The Bush economy has sent the market into wild swings followed by a free fall, ever since. My money's in bonds, and mostly in government securities.
  • swimbikerun

    Posts: 2835

    Mar 03, 2009 6:22 AM GMT
    "Call it a depression, but nix the ’30s comparison"--
    “We are in the very early stages of a depression,” said Torras, a professor at Adelphi University in New York. “We know that this is not a mere recession.”
    http://www.metro.us/us/article/2009/03/02/04/2641-72/index.xml
    This is more of a depression than a recession. It's gonna get worse before it gets better. If you can put food in your belly at least once a day, have a relatively safe place to sleep and are fairly disease free, consider yourself lucky.

    There was a violent mugging at gunpoint literally outside my door the other night. The poor man is alright but he had a gun placed to his head. And this is in a nice part of town. Somewhere I recently read that crime goes down during tough economic times.
    I don't believe that.
    If you don't have anything to eat, no place to sleep and have health problems, why no go to jail where all those things are provided by law?

    Crank it up!
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    Mar 03, 2009 6:48 AM GMT
    How low can it go?

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    Mar 03, 2009 7:01 AM GMT
    The US and international economy are tanked. Naturally US Republicans will charge, in the months ahead, that it all happened after President Obama took office, and that he is entirely to blame. I guarantee that is what they will soon claim. Watch it happen, and I'll be happy to take the credit for having predicted it first. And Republican RJers here will chime in with the official Republican line, good little bots that they are.

    The truth is that Republicans destroyed our US economy, and the rest of the world along with it, in their selfish & blind drive to let their campaign contributors have a free hand doing whatever they wanted in the marketplace. No regulations, no controls, no oversight is what they sought, and our financial collapse is what they got.

    And now they say the Obama rescue efforts are socialism, hoping that will scare people into letting big business continue to run amuck. And to elect more Republicans who owe their allegiance not to the voters, but to their rich contributors. I can't wait to see Republican RJers come rushing to parrot the talking points of their ideological leader, Rush Limbaugh.
  • Ritournelle

    Posts: 134

    Mar 03, 2009 8:00 AM GMT
    Red_Vespa saidThe US and international economy are tanked. Naturally US Republicans will charge, in the months ahead, that it all happened after President Obama took office, and that he is entirely to blame. I guarantee that is what they will soon claim. Watch it happen, and I'll be happy to take the credit for having predicted it first. And Republican RJers here will chime in with the official Republican line, good little bots that they are.

    The truth is that Republicans destroyed our US economy, and the rest of the world along with it, in their selfish & blind drive to let their campaign contributors have a free hand doing whatever they wanted in the marketplace. No regulations, no controls, no oversight is what they sought, and our financial collapse is what they got.

    And now they say the Obama rescue efforts are socialism, hoping that will scare people into letting big business continue to run amuck. And to elect more Republicans who owe their allegiance not to the voters, but to their rich contributors. I can't wait to see Republican RJers come rushing to parrot the talking points of their ideological leader, Rush Limbaugh.
    ''

    For the first time in the post-WWII world, the United States is probably not so pivotal as to be able to dictate how the global macroeconomy works. We probably didn't help matters much either, but I think the system was comprised of rotten DNA that never really left 20th century industrial ideology behind. The support for this notion is continuing to grow, I mean look at Michael Lewis for God's sake, and how much Barron's and WSJ have changed their tune [(I personally prefer Condé Nast's Portfolio, which includes Michael Lewis' brilliant analysis) on a side note: Paul Krugman deserves a lot of the praise he has gotten since his Nobel Prize, but remember that he is not the last word on Macroeconomics]. Also, the finance sector is smarter and more easily adaptable than the government can be. They didn't need the support from the Republicans, because no regulatory agency was able to catch up to the ever-growing complexity of bond stripping and reissuance, derivative based tools, and last but not least the overuse of the Gaussian Copula: http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all I
    Good implications article: http://www.theatlantic.com/doc/print/200903/meltdown-geography
    Michael Lewis:http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
    For the more mathematically inclined:http://www.portfolio.com/views/blogs/market-movers/?subtypeChoice=blog&categoryChoice=market-movers&page=2

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    Mar 03, 2009 8:22 AM GMT
    Red_Vespa said

    The truth is that Republicans destroyed our US economy, and the rest of the world along with it, in their selfish & blind drive to let their campaign contributors have a free hand doing whatever they wanted in the marketplace. No regulations, no controls, no oversight is what they sought, and our financial collapse is what they got.

    .


    First off, this is NOT the truth.

    I study political economy, and seek to put blame where blame is due.
    Just to say it, i am NOT a fan of the Republican Party, in fact, i probably dislike them even more than the Democratic Party, and i think Bush II was the worst president in US history without question.

    However, blame him for what he deserves blame for. Making the crisis worse? Sure. But, to say that "Republicans destroyed our US economy" is a complete inaccuracy.

    Firstly, it was not a "political party" that destroyed the economy, it was a political-economic system. This system transcends party lines and administrations.

    In recent decades, known as globalization or neo-liberalism, its center of power and control is not in a "party" - it controls the parties.

    In the US, the center of its power rests in the Federal Reserve. This is the source of the crisis at hand today.

    In the 1990s, the US economy switched away from productive wealth (as in, producing real goods, industry, manufacturing, etc) and became an economy based upon the financialization of markets - essentially, currency and financial speculation.

    It was in this context that the dot-com bubble was built by the Federal Reserve (under Clinton btw). The Fed provided the liquidity and printed the money available for this. Because bubbles burst... it did!

    To delay the inevitable fallacy of an economic system dependent upon financial speculation (money made on money - nothing is produced or created), the Fed (still under Clinton), decided to create a new bubble in the late 1990s. This was called the housing bubble.

    The Bush regime continued this policy. This is because the Fed is NOT answerable to the American public, Congress, or government. It is, in fact, a private entity, profit oriented, printing currency and charging interest on the money it lends to government. It is owned by SHAREholders, in the form of its 12 regional Federal Reserve Banks, whose shares are held by the member banks represented on their boards of directors.

    Go to the website of the New York Fed (the most powerful and influential of all Fed branches), and you will see the CEO of JP Morgan Chase sitting on the board, not appointed by government, but by the region's major banks, and who is there to represent their interests.

    Again, like all bubbles... the housing bubble burst. And here we are.
    Next, we have the debt bubble, also courtesy of the Fed, and also courtesy of countless administrations in the past, both Democratic and Republican, who sat by passively and allowed the Fed to do as it willed, and towed the line.

    There is ONE party, the Money Party.
    Blaming the "Republicans" as if they are some monolithic incantation of all that is wrong with America is misleading and delusional and will not allow progress.

    A doctor must make a diagnosis before writing a prescription. Blaming the Republicans alone is like prescribing a band-aid for an amputated arm.
  • MikemikeMike

    Posts: 6932

    Mar 03, 2009 11:15 AM GMT
    at around .33 cents a share anyone can own AIG!!icon_lol.gif

    Obama will save you...........
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    Mar 03, 2009 11:28 AM GMT
    This crash was predicted by a number of economists. It should not have been a surprise to anyone who actually took the time to read and listen and follow what was going on in the bubble economy. Those who heeded the warnings came out fine, those that ignored them, either through wishful thinking or ignorance, suffered. The sad part is that many people are now victims to something that did not participate in.
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    Mar 03, 2009 12:25 PM GMT
    OutdoorMutt saidThis crash was predicted by a number of economists. It should not have been a surprise to anyone who actually took the time to read and listen and follow what was going on in the bubble economy. Those who heeded the warnings came out fine, those that ignored them, either through wishful thinking or ignorance, suffered. The sad part is that many people are now victims to something that did not participate in.


    True, various economists predicted a crash. The problem is that, collectively, economists have predicted 19 of the last three clashes.

    The problem is that the crisis was being forecast by some economists five years ago. A stopped watch will tell the correct time twice each day: so it is in economic forecasting, which is still little more than guesswork.
  • coolarmydude

    Posts: 9190

    Mar 03, 2009 1:12 PM GMT
    Let's gay it up icon_wink.gif:

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    Mar 03, 2009 1:17 PM GMT
    True to a point, but some economists do have a much better track record on macro economic trends than others. Finding these individuals, listening to their reasoning and making a judgment based on facts and not wishful thinking, makes a difference.
    I guess it all comes down to each person listening to whomever they chose to believe.
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    Mar 03, 2009 1:46 PM GMT
    ...it seems to be, that whenever Obama gives a speech, the market plummets...interesting...
  • Posted by a hidden member.
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    Mar 03, 2009 1:58 PM GMT
    AF24 said...it seems to be, that whenever Obama gives a speech, the market plummets...interesting...


    I think the market is looking for strong and clear direction from the Obama economic team about how they are going to fix the banking crisis. Without that the $787 billion dollar stimulus plan is just a temporary relief for the economy. Banks are similar to oxygen. Without credit modern economies stop functioning, without oxygen the human brain eventually dies.
  • Posted by a hidden member.
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    Mar 03, 2009 2:04 PM GMT
    COLORED TEXT GOES HEREIm not afraid to say the "D" word...I predict Deflation in 6 months and full blown Depression in 7 months, then recovery in 30 months, and Obama out of office in 4 years...The Porkulus Bill passed and the 3,4 trillion dollar Pork laidened budget will do us in! Oh were are the Gay rights promised? Guess the Gay community was duped again...Im glad I didn't vote for that fraud!
    --John

    PS-- I voted for the Libertarian...I AM not a Republican, but would have preferred the Republican over this fraud...
  • PRDGUY

    Posts: 641

    Mar 03, 2009 6:46 PM GMT
    BUY!!!!!!! BUY!!!!!!!!!! BUY!!!!!!!



    you may not buy at the bottom, but there are real values out there! icon_exclaim.gificon_wink.gif



    and how low ????????????icon_question.gificon_question.gificon_question.gif

    the conceptial setup wud be its initial starting point of 100, yet LONG before that trading wud be suspended.