Dow Drops Nearly 300 as Jobless Claims Jump

CNBC.com ^ | 05/20/10 | Staff

[OldDeckHand]

Stocks fell sharply Thursday after an unexpected spike in jobless claims and as global jitters pushed the dollar higher.

-snip-

The Dow Jones Industrial Average was down nearly 300 points, or almost 3 percent, and the CBOE volatility index, widely considered the best gauge of fear in the market, spiked more than 20 percent to above 43, its highest level in over a year.

[Gabrial]

Who would have guessed that a guy who had never run as much as a Dairy Queen could run a country?

“Unexpected”

Not.

[Alberta's Child]

I would strongly advise you to be very careful -- and yet not too "cautious" -- in dealing within your 401(k) account. Your retirement assets are no place for highly speculative investing, which is exactly what you are doing when you pile all of your 401(k) money into one asset class or another.

Spread it out among a whole bunch of different types of investments -- including stocks, bonds, perhaps a precious-metals fund for a small portion of your funds, if you have the ability to do so.

Your statement that you are "not allowed to directly invest in stocks, bonds or commodities" tells me that your 401(k) plan is managed by someone who is responsible enough to know what your retirement plan is for -- and what it's not supposed to be for.

[Ev Reeman]

My prediction is the stock market will sink like a stone. There will be in between these times periods of growth as bargains become available in stocks but that will not continue. I predict the dow is on a declination and probably will continue as long as our economy remains sluggish. It may also be that the dow is now reflecting not only what is happening in Europe but also taking into account our national debt and the unsustainability of the government spending more huge amounts of money that they do not have and must instead borrow.

[kevao]

I am terrible at the markets. However my IQ is relatively high. (163+ one one scale) My strength is(was) in pattern recognition.

If you're as strong at pattern recognition as you say, you might investigate candlestick charting. Some people swear by them and the numerous patterns that repeat.

Maybe you already looked into it. If not, get a book on it and do some "simulated" investing for a while. If it works for you, then go with real money -- and PM me when you do! :)

[Constitutionalist Conservative]

It has begun.

Again.

[kevao]

I simply needed to re-allocate my assets to reflect a change in my investment objectives.

As in long-term growth to save-my-a$$?

[TexasFreeper2009]

socialism always fails ... and yet the supposed “experts” always are surprised by the “unexpected” news that it is not working.

[r9etb]

It seems to follow a weird pattern lately of dropping huge and then slowly creeping back up. A few days ago it dropped almost 400 and by close it was at +30.

I suspect that's due to the nature of the trading system.

Most of the market volume is driven by computerized trading, and it's optimized on the principle of quick decisions to make money from local price fluctuations.

I don't know about the mechanisms for avoiding loss, but once the market has gone down by a lot I would imagine there's a tendency for upward corrections based on the idea that a given stock at a given price is a "good buy." The automated traders will begin to pick up those stocks, increasing the demand for them.

Since increased demand generally leads to higher prices, I suspect that the "buy" algorithms will tend to slowly cause the index to go back up.

[Alberta's Child]

Nope. I'm more risk-tolerant in my 401(k) plan because of my longer horizon (hence my move a couple of years into international bonds, which have performed extremely well in the last two years), but I still am heavily diversified there.

My April 2010 transactions involved non-401(k) assets. I had done very well in some stock funds in the last couple of years, and I was just looking to move into less-risky funds so I could protect my gains. I still invest in those stock funds on a monthly basis, but they are now a smaller portion of my overall portfolio than they used to be.

[ChinaThreat]

“Where should someone invest their 401(k) funds? “

I wish i knew the answer to that. Depends on what you have as available options. Unless you have some “guaranteed” options i don’t really have any advice for you. Nothing is safe right now. In fact, at the current moment, cash is probably the best thing to have right now in a financially sound bank. The insanity of the markets (wholly produced by irrational credit lending and sovereign debt) does not lend itself to rational decision making.

As i said to TaxControl, i think that durables, food stocks and ammunition and physical commodities may be the best bet. But then again, if i could see in the future i would have my own island and have left this decaying shithole many years ago.

[Raycpa]

I luckily have a guaranteed annuity through my 403b.

Ultimately, your guarantee is based on how well the insurance company manages its investment risk. In short, there are no guarantees.

[Ev Reeman]

“Where should someone invest their 401(k) funds? “

---

The first thing is to find a trustworthy investment counselor unless you are one yourself.

Second, diversify as much as possible in your portfolio.

I myself watch the FOX BUSINESS NETWORK - and the FOX BUSINESS BLOCK which is on early every Saturday morning looking for good stock picks or stock trends.

But diversifying ones portfolio is always best.

If you can, research stocks on your own. Investigate companies and their sotck histories and current portfolios. Look carefully at who is running the company and look at any past history of them running any other company. Take these things into account when shopping around for stock buys.

[Ev Reeman]

Also, do not trust advice from so called experts such as Warren Buffett as he has lost millions in the past.

[left that other site]

We can only hope.

[2001convSVT]

I like you idea, apple, orange, pecan and cherry!

[NormsRevenge]

Obama joins an eXclusive club of Recession Double Dippers..

[Michael Barnes]

How is it every tom, dick and harry out on the beaten path know instinctively that we are going to lose MORE jobs due to this administrations policies; yet the financial wizards are continually unable to “expect” anything?

[ChinaThreat]

“Ultimately, your guarantee is based on how well the insurance company manages its investment risk. In short, there are no guarantees.”

You are absolutely correct.

[netmilsmom]

>>Been hearing that for over a year now.<<

Thank you.
Every time we get one of these threads someone posts, “So it begins” or “here we go”.

It’s been going for a while.

[jwparkerjr]

re: Pump prices are steady

We are starting to see some reduction at the pump here in West Central Florida. About a dime or so in the last week or two. Here in Tampa it’s about $2.75/gal for regular unleaded. It had been up to $2.89.