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Stock Market taking another dump.

Home ▸ Archive ▸ Serious Business ▸ Stock Market taking another dump.
S

Sonofanump

Aug 8, 2011 10:47 AM
I think we should print more money to pay those who don't want to work for a living. Gotta make sure everyone has a flatscreen TV and DVD player.
Aug 8, 2011 10:47am
dwccrew's avatar

dwccrew

Not Banned

7,817 posts
Aug 8, 2011 11:04 AM
I don't have much in the market except what is in my 401k (and 2/3 of that is what my company has contributed) so the market doesn't really upset me. I think once it finally bottoms out, I may throw some money in play and buy some stock cheaply. I wish I would have put more in the market back in Jan. '09. Hopefully it'll rebound like it did then.
Aug 8, 2011 11:04am
justincredible's avatar

justincredible

Nick Mangold

32,056 posts
Aug 8, 2011 11:28 AM
Sonofanump;854920 wrote:I think we should print more money to pay those who don't want to work for a living. Gotta make sure everyone has a flatscreen TV and DVD player.

Blu-ray.
Aug 8, 2011 11:28am
G

gut

Senior Member

15,058 posts
Aug 8, 2011 11:39 AM
I have some money in cash that has been waiting for a buying opportunity. Looks to be around now. Trying to absolutely time things can miss significant rebound. From my perspective, I've saved over 10% by being in cash.

The market is being hammered largely by a debt overhang (globally, not just the US) and some bad economic news is only exacerbating things. That last part is what should give you pause - if it was just the debt overhang I'd say it's grossly overdone and represents a buying opportunity because eventually fear gives way to rationality. But it's really tough to say how much of this is fundamental based on lousy economic news and how much is overreaction. My perspective is you can have natural corrections triggered by far less disappointing economic news, so this probably still has room to run.

Stay away from bonds/fixed income because rates are going higher. And then I think start buying a diversified portfolio (incl. globally) over the next few weeks so even if the market heads further down you'll dollar cost average lower. If we see some stabilization over the next week or two, coming to the end of August, probably a good time to get in. Looking like a good buy in most commodities, unless you think recession really is heading our way - oil is at $84 and I've been waiting for $80 to buy. GSG is a diversified commodity index trading at a low for the year, but still above the prior 2.5 years - and this is a good place to be if you're bearish on the dollar.
Aug 8, 2011 11:39am
M

Manhattan Buckeye

Senior Member

7,566 posts
Aug 8, 2011 11:47 AM
The DJIA won't make or break anything, we've survived difficult days and recessions in the past with stocks. Heck I can buy a put and hedge a position. Our problem is real estate, in short there is a lack of confidence in owning the real estate and the assets (or non-performing assets) our banks hold. Commercial RE isn't doing great, and if residential RE falls another 20% (which it could) we could be looking at a majority of American houses underwater and owners throwing money at a depreciating asset, what will happen then?
Aug 8, 2011 11:47am
coyotes22's avatar

coyotes22

Go Tigers

11,298 posts
Aug 8, 2011 1:00 PM
Manhattan Buckeye;854969 wrote:The DJIA won't make or break anything, we've survived difficult days and recessions in the past with stocks. Heck I can buy a put and hedge a position. Our problem is real estate, in short there is a lack of confidence in owning the real estate and the assets (or non-performing assets) our banks hold. Commercial RE isn't doing great, and if residential RE falls another 20% (which it could) we could be looking at a majority of American houses underwater and owners throwing money at a depreciating asset, what will happen then?
How will this affect the RE market?
Further Downgrades from S&P Meanwhile, S&P downgraded government-sponsored enterprises Fannie Mae and Freddie Mac to AA+ from triple-A, with S&P citing their reliance on U.S. government.
Ten of the country's 12 Federal Home Loan Banks were also cut to AA-plus. The banks of Chicago and Seattle had already been downgraded earlier to AA+.
Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. As part of a nationalized system, they account for nearly all new mortgage loans. Their downgrade might force anyone looking to buy a home to pay higher mortgage rates.
http://www.cnbc.com/id/44058747
Aug 8, 2011 1:00pm
M

Manhattan Buckeye

Senior Member

7,566 posts
Aug 8, 2011 1:15 PM
"How will this affect the RE market? "

Potentially more bank defaults, and no TARP to save them. They'll be undercapitalized.
Aug 8, 2011 1:15pm
RedRider1's avatar

RedRider1

Senior Member

3,850 posts
Aug 8, 2011 1:19 PM
I dont know how the DJIA got to where it was in the first place.

Not like the last 12 months has seen a boom in jobs and investments. I understand the two aren't tied at the hip, but the economic news over the past year hasn't even been average...let alone optimistic. What exactly was fueling the run up to 12,000?
Aug 8, 2011 1:19pm
LJ's avatar

LJ

Senior Member

16,351 posts
Aug 8, 2011 1:21 PM
RedRider1;855066 wrote:I dont know how the DJIA got to where it was in the first place.

Not like the last 12 months has seen a boom in jobs and investments. I understand the two aren't tied at the hip, but the economic news over the past year hasn't even been average...let alone optimistic. What exactly was fueling the run up to 12,000?

lots of bargain basement shopping
Aug 8, 2011 1:21pm
V

vball10set

paying it forward

24,795 posts
Aug 8, 2011 2:02 PM
[video=youtube;W4hfdaC7eL4][/video]
Aug 8, 2011 2:02pm
GoChiefs's avatar

GoChiefs

Resident Maniac

16,754 posts
Aug 8, 2011 3:00 PM
gut;854960 wrote:I've saved over 10% by being in cash.

I saved 15% by switching to Geico.
Aug 8, 2011 3:00pm
S

Sonofanump

Aug 8, 2011 3:23 PM
GoChiefs;855182 wrote:I saved 15% by switching to Geico.

Until you have claim, then your screwed.
Aug 8, 2011 3:23pm
coyotes22's avatar

coyotes22

Go Tigers

11,298 posts
Aug 8, 2011 4:34 PM
DOW closes down at 634 points:
The Dow Jones industrials closed down 634 points, or 5.5 percent, to 10,809 Monday. It was the first time the Dow fell below 11,000 since November and its biggest one-day point drop since December 2008.
http://news.yahoo.com/wall-st-takes-dive-first-day-downgrade-191937399.html
Aug 8, 2011 4:34pm
I

I Wear Pants

Senior Member

16,223 posts
Aug 8, 2011 5:03 PM
RedRider1;855066 wrote:I dont know how the DJIA got to where it was in the first place.

Not like the last 12 months has seen a boom in jobs and investments. I understand the two aren't tied at the hip, but the economic news over the past year hasn't even been average...let alone optimistic. What exactly was fueling the run up to 12,000?
Record quarterly reports all over the place.
Aug 8, 2011 5:03pm
tk421's avatar

tk421

Senior Member

8,500 posts
Aug 8, 2011 6:06 PM
I Wear Pants;855293 wrote:Record quarterly reports all over the place.

Gained by companies trimming employment and stockpiling cash. I keep hearing that we may be entering another recession, when exactly did we get out of the last one? The DOW going up to 12,000 doesn't mean the average American is doing any better.
Aug 8, 2011 6:06pm
Pick6's avatar

Pick6

A USA American

14,946 posts
Aug 8, 2011 6:12 PM
I dont have too much money in there right now..so doesnt affect me...besides, the only way you lose money is if you sell. Will be looking to put some more in for sure. I expect it to go down some more.
Aug 8, 2011 6:12pm
R

rydawg5

Senior Member

2,639 posts
Aug 8, 2011 6:21 PM
Pick6;855354 wrote:I dont have too much money in there right now..so doesnt affect me...besides, the only way you lose money is if you sell. Will be looking to put some more in for sure. I expect it to go down some more.

The only way you lose money is if you sell?
Aug 8, 2011 6:21pm
iclfan2's avatar

iclfan2

Reppin' the 330/216/843

6,360 posts
Aug 8, 2011 7:24 PM
rydawg5;855363 wrote:The only way you lose money is if you sell?

I think he means because odds are they will go back up to the vale of when you bought them. Long positions usually gain money in the long run. I don't have any money in the market right now, other than 401k, but I think soon would be a great time to get good stocks at a bargain.
Aug 8, 2011 7:24pm
Pick6's avatar

Pick6

A USA American

14,946 posts
Aug 8, 2011 7:26 PM
rydawg5;855363 wrote:The only way you lose money is if you sell?

yup.
Aug 8, 2011 7:26pm
G

gut

Senior Member

15,058 posts
Aug 8, 2011 7:58 PM
iclfan2;855413 wrote:I think he means because odds are they will go back up to the vale of when you bought them. Long positions usually gain money in the long run. I don't have any money in the market right now, other than 401k, but I think soon would be a great time to get good stocks at a bargain.

This is the power of dollar-cost averaging and periodic re-balancing. Very simple concepts that can substantially reduce volatility with little effort on the part of the investor (note: save a few bucks trying to rebalance when adding more principle, avoiding the extra transaction fee buying and selling to rebalance).

I don't buy individual stocks, I invest in countries or sectors, across bonds/equities/commodiities. Simple asset allocation and forget about it, and I tweak it occasionally with where I see risks and opportunities.
Aug 8, 2011 7:58pm
Fab1b's avatar

Fab1b

The Bald A-Hole!!

12,949 posts
Aug 8, 2011 8:05 PM
vball10set;855122 wrote:[video=youtube;W4hfdaC7eL4][/video]

Damn the video was removed thinking this was gonna be funny
Aug 8, 2011 8:05pm
Cleveland Buck's avatar

Cleveland Buck

Troll Hunter

5,126 posts
Aug 8, 2011 8:13 PM
RedRider1;855066 wrote:What exactly was fueling the run up to 12,000?
Nearly unlimited and almost free lending by the Federal Reserve.
Aug 8, 2011 8:13pm
G

gut

Senior Member

15,058 posts
Aug 8, 2011 8:34 PM
Cleveland Buck;855465 wrote:Nearly unlimited and almost free lending by the Federal Reserve.

I wouldn't go that far. The market tends to lead the general economy, and the third leg of the recovery (job and wage growth) never materialized. The downgrade/debt crisis is just providing an excuse to sell right now. There are real fundamentals driving this as growth expectations have not been met and are now being ratcheted down (driving prices) on the heals of more disappointing economic news.

But too be sure, cheap credit certainly helped to prop-up/inflate prices a bit. There's also the reality that higher interest rates portend higher costs of capital/discount rates which is a fundamental driver of lower prices.
Aug 8, 2011 8:34pm
M

Manhattan Buckeye

Senior Member

7,566 posts
Aug 8, 2011 8:51 PM
In addition to the lax monetary policy, a lot of these "record profits" were based off selling excess inventory after the initial slowdown. If I own a lemonade stand and buy all of my ingredients and hire a bunch of second graders to make lemonade in year 1, business slows so I have a poor year and I fire all of the second graders and don't spend more on ingredients........and in year 2 just sell the lemonade already produced, I might have record profits but my business is hardly in good shape to grow.
Aug 8, 2011 8:51pm