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Stocks in nearly all sectors plummeted from stronger-than-expected inflation data that nearly assures a spike in interest rates.
The Dow Jones industrial average closed down a staggering 616.23 points, or 5.4 percent at 10,307.32, according to preliminary calculations. Already deep in bear market territory, the technology-laden Nasdaq composite index shed another 356.76 points, or 10 percent to 3,320.02
Technology stocks had a brutal week. The Nasdaq is down 25.5 percent for the week, its biggest one-week percentage drop ever.
Earlier in the week, the Dow seemed to resist the selling pressure in the tech sector, but as the week progressed, investors sold off the blue chips as well.
The already-shaken market was traumatized after the
Labor Department reported that the core Consumer Price Index for
March hit the highest level in more than five years.
"I wouldn't even try to figure out how low it could go,"
said Larry Rice, chief investment officer at Josephthal Lyon &
Ross of the Nasdaq. "The market got carried away to the extreme
on the upside and now it is going to get carried away to the
extreme on the downside. The Dow coming down does not surprise
me because it has been going up like a rocketship in the past
few weeks."
The Nasdaq, home to many once high-flying computer, Internet and telecommunications shares, has fallen more than 1,000 points this week alone.
"The Nasdaq was rocky to begin with and it didn't take much
to upset the apple cart," said Peter Coolidge, senior equity
trader at Brean Murray & Co.
Among the big losers on the Nasdaq were some of its stalwart
names, such as software makers Microsoft Corp. and Oracle Corp.
Financial services stocks in the Dow suffered the most, with
American Express Corp. and J.P.Morgan both off.
The market volitility has forced several companies to postpone
their initial public stock offerings as well as plans for mergers
and acquisitions. That hurts investment banks and brokerages.
Although traders said Wall Street was not in a panic, they
conceded that selling was fast and furious.
"They're just slapping things," said Doug Myers, vice
president of equity trading at Wachovia Securities. "A trader's
time horizon is about seven minutes. It is always completely
dark before it turns completely black. Just when you thought it
was over, it is going to hurt a little more."
The trouble began early in the day, after the government said the Consumer Price Index rose 0.7 percent in March. The core
rate, which excludes food and energy, rose 0.4 percent, and both
figures were above analysts' forecasts.
The overall increase resulted from a 4.9 percent rise in
energy prices. Higher hotel costs, air fares and medical costs
caused core inflation to post its highest rise since January
1995.
The hike heightened fears the Federal Reserve will boost
short-term interest rates more aggressively when its
policy-setting panel meets on May 16. The central bank has
boosted short-term rates five times, each by 25 basis points,
since last June to slow the booming economy.
Pierre Ellis, senior economist at Primark Decision
Economics, said the CPI report raised the prospect of the Fed
raising interest rates by a 0.50 basis points, instead of the
0.25 basis points Wall Street has expected.
"The serious news is the core figure being so high," he
said.
The inflation news overwhelmed robust earnings from Sun
Microsystems Inc.. Sun, the leading maker of powerful computer
servers used to run Web sites, reported quarterly profits that
beat Wall Street forecasts, along with a 35 percent jump in
revenues.
Before the figures came out, Wall Street had been widely
expected to rally after a week of heavy losses for the Dow and
Nasdaq.
"This was a lot worse than expected. Previously we've only
seen inflation in the headline numbers, but this showed it
coming through in the core, and it's going to put everything on
hold until the FOMC meeting in four week's time," one senior UK
sales trader said in reference to a meeting of the Federal
Reserve's policy makers.
"With Easter coming up, it doesn't look as though we've got
much chance of rallying."
— Reuters and The Associated Press contributed to this report
WASHINGTON, April 14 (Reuters) - The White House said on Friday it would not comment on the huge falls on U.S. stock markets, just before the Dow Jones industrial average marked its biggest one-day point decline ever.
A White House spokesman said there would be no comment, and would say nothing more.
U.S. blue chips dropped to session lows in the final minutes of trading on Friday as investors hammered nearly every equity group and sent major indices diving.
With Easter coming up, it doesn't look as though we've got much chance of rallying."
Sure, sure...blame it on Jesus...
I can almost hear the jet fighters warming up for the next bombing-distraction mission. The question is where?
And the best part of all?
I even heard the "I" word mentioned. Yea. ~Like there's been no inflation all along, huh?
Whadathe creeps up to now; what kinda manipulations is this crap? Gezzzz.
How 'bout 1600 Pennsylvania Ave?
Who was it that said the rise in oil prices was no big deal? It matters .......
This correction is long overdue. Valuations had been driven to insane levels.
"With Easter coming up, it doesn't look as though we've got much chance of rallying."
He'll be eating those words on Good Friday :)
I can almost hear the jet fighters warming up for the next bombing-distraction mission. The question is where?
Miami?
How about him? He and Gore keep themselves away from anything that might hurt their campaign/legacy.
He won't mention this; I can hear him now saying he doesn't want to say anything that might "jog" the market.
Britt Hume ran a piece last night off all the speeches/press conferences with Clinton talking about Elian; he never said the boy's name ONCE.....not one time.
In short, he's a chicksh*t.
I am totally "economically imparied." Is this as bad as 1987? Can you explain it to me in terms a second grader would understand; just tell it to me like Al Gore would.......LOL.
This is all the Republicans' fault!
BUMP...
THIS IMPEACHED CREEP HAS DESTROYED THE TOBACCO AND GUNS INDUSTRIES AND MICROSOFT...HE IS GOING AFTER TAXPAYERS, STOCK OWNERS AND THE HEALTH INDUSTRY...GOD SAVE THE PEOPLE FROM THIS MAN...
At 7 AM tomorrow the big twin helicopters will roar at Bakersfield Airport as our brave felon in chief flies off to the BIG REDWOODS in the mountains N.W. of this city. He seems to think he will be a historical figure if he makes Sequoia a National Monument. It will only put more big gov. in our hair and screw many people out of freedom of access to OUR REDWOODS.
there's no way I'm selling at these prices, so I'm gonna hold on for the long run.. the bulls have gotta return sometime, right? of course, thats assuming the dot-coms i own dont go bankrupt by then...
Has anyone heard from our fearless leader klinton? I wonder who he will point the finger at...I guess Al can't brag about the excellent economy this week...
Black Friday by Steely Dan
When Black Friday comes I'll stand down by the door
And catch all the grey men as they dive from the fourteenth floor.
When Black Friday comes I'll collect everything I'm owed,
And before my friends find out I'll be on the road.
When Black Friday falls you know it's got to be,
Don't let it fall on me.
When Black Friday comes I'll fly down to Muswellbrook,
Gonna strike all the big red words from my little black book.
Gonna do just what I please, gonna wear no socks and shoes,
With nothing to do but feed all the Kangaroos.
When Black Friday comes I'll be on that hill, You know I will
When Black Friday comes I'm gonna dig myself a hole,
Gonna lay down in it till I satisfy my soul
Gonna let the world pass by me,
the Archbishop gonna sanctify me
And if he don't come across I' m gonna let it roll.
When Black Friday comes I'm gonna stake my claim, I guess I'll change my name.
Market is closed on Friday. Look for a brief rally Monday mourning followed by more selling by afternoon.
Not nearly as bad. In 1987, the Dow dropped 508 in 1 day (much greater in percentage terms), and in interday trading in the next day's session, the market went into cardiac arrest, with almost no bids at all, before recovering. This bull market has gotten way, way ahead of itself. There are lots of good companies out there, but why should anybody pay 150 times earnings for Oracle, or 200 times for Cisco? Who is the Greater Fool that they expect will later buy these stocks from them at a profit?
Trees never grow to the sky.
Thanks. I never have understood how a company can be worth so much when it has no profit.
When the selling starts, it is very hard to halt. Brokers start calling in loans to those foolish enough to buy on margin. In order to pay off the brokers, the gamblers must now sell off more stable stocks causing them to also fall.
And the snowball grows. I hope it flattens clinton and gore like bugs.
Today was interesting in that back in October 97 (?) when we had a HUGE ONE DAY DUMP (Asian meltdown that affected us), CNN did non-stop coverage. They covered nothing else.
Today it was Elian! Elian! Elian! and occasionally, as we melted down, down, down, they would do a quick update.
We don't need to bomb any foreign countries...WE HAVE ELIAN!!
Where did the money swing to today? Not treasuries ... not utils, not blue chips ... Where did the money go?
When you are talking with your Democratic colleagues, ask them what Clinton is going to do to help the market. After all, he engineered this economic boom all by himself. So, getting the market back on track shouldn't be too difficult for wonder boy.
One more thing -- in '87, the recovery from the crash was relatively quick and painless (except for those whose deals got derailed -- I should know) because valuations, though high, were not nearly so nutty as they are today. Also, because the '87 crash was triggered by technical factors (such as computerized trading), rather than by fundamentals (such as tax season, scaled back earnings projections, and a bad CPI report). This was a bubble, and it had to burst. I'm sure I dropped some dough today, just like everybody else.
IMHO, valuations are not yet fully corrected, esp. in the NASDAQ. I think the Dow needs to be below 10K and the NASDAQ below 3K. That's where I'd look to buy. Will we get that low? I don't know.
< crossed fingers >Please let it be France, Please let it be France...
Good point......LOL.
Not to worry! "It's the economy, stupid." Bill Clinton WILL do whatever it takes to keep the markets from totally crashing at least through when the California polls close on Election Day in November.
Besides, the 1987 crash was far worse, and recovery happened after a time. Look at the coming months as a buying opportunity.
bvw,
"Where did the money swing to today? Not treasuries ... not utils, not blue chips ... Where did the money go?"
It didn't go anywhere, it evaporated.
And whatever tax money was used in the last 10 min, evaporated in the last 5.
Liquid Capital, Gone.
rt
What money? The value lost today was almost 100% paper value from over priced stocks. So now a portfolio that was worth 100K yesterday is worth about 87K, depending on what you owned.
Buy Buy Buy. Investment opportunities abound. This is the time to buy some good solid bricks and mortar stock as an investment in the stock market. This is an overneeded correction. Now is the time to buy. This is my opinion of what is going on in the stock market. I am going to buy some old company stock and a Glock today.
I dropped some dough today, just like everybody else.
NO like everybody else
Two months ago I wrote, the smart money is in the short position.
That was an answer to somebody who encouraged people to buy high tech stocks. What I can say now is, it is not over yet. It will get much worse before it gets any better. There is an analogy - empty the egg without breaking the shell. We have been playing long in the bond and short on everything else, and vice versa.
69 Posted on 04/12/2000 14:57:22 PDT by Tasha
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Romulus,
"I think the Dow needs to be below 10K and the NASDAQ
below 3K. That's where I'd look to buy. Will we get that low? I don't know"
I don't know either as I haven't been in the biz for a couple of years active, however, switching on some old software and pulling some #s I see next Resistance at around 9730-50. If it breaks that level you will be able to pick up SUV's and Nice boats at decent prices, hell probably even the bubble headed blondes that drive them and support Clinton to boot.
rt
Paper profits, first, today..lots of real money lost..margin calls first..the weekend for folks to add up the pain.....more selling on Monday....
Congratulations on a great market call. Any predictions on where the support is?
No, no, NO!
Monday, there will be 3 times the number of Margin calls as there were today. This is NOT over. People should hold their money until Wednesday at the earliest.
A White House spokesman said there would be no comment, and would say nothing more
Clinton administration shi**y politics and tax increases have caught up to the market???
I wouldnt say that if I were you....
As history repeats itself, war makes prosperity and inflation. The clintonistas created inflation and created wars but not big enough. We need a leader to that can do better than Kosovo, Miami, Waco, Ruby Ridge and some other ridiculous little incidents to get the attention that it takes to make American unite instead of make HATE laws.
Unless you need cash from your stocks, just sit tight. If you sell all you are doing is to lock in your losses. If you are still contributing to your 401k, keep pouring the money in, as much as you can, as you can buy stock at dirt cheap prices. Through the principle of dollar cost averaging, this is very good news for the regular investor. One investment counselor advised me some time ago he expected the DOW to go all the way to 60,000 in the not too distant future. A further benefit is the bear market is not good news for Clinton/Gore but VERY good news for Bush and the Republicans. Clinton has been kept afloat for one reason alone and that has been the high flying stock market.
Since I'm approx. 50% in cash (and have been for close to a year), I sure hope you're right. I couldn't force myself to pay what looked like unreasonable valuations for stocks, and therefore missed the past 6 months' mind-blowing bull market. It sure hurt to be outside the party, looking in. Now it looks like I'll be given another chance. It's sweet, having your intuitions vindicated.
A lot of the money went to clear up margin debt. That money is gone, gone, gone. I don't even practice securities law and I had someone call my office today wanting to know if he could sue his broker for liquidating his positions to meet margin requirements. (Next time read the fine print...and the arbitration clause).
Has anyone heard from our fearless leader klinton? I wonder who he will point the finger at...
A correction was bound to happen, but it couldn't happen at a better time and to a more deserving administration! Slick/Gore deserve any political fallout from this. If they take the credit for the ecomony, then they have to take the credit for this (especially since they are trying to destroy any politically incorrect industry out there).
It is hard to predict casino gambling, but I can give you a couple of clues; Look at the long bond. Today it closed at around 5.80. That is where the money is sitting. If the bond starts moving up, most likely they will be coming out of it making a so-called recovery just to get the fools in it. You can say that the selling is over by looking at the gold stocks, like Newmont Mining (NEM). Most of the time, bears are coming home and you see a huge volume in the stocks without the price increasing significantly. At the same time they will be going, most likely, short on the bond. This has gone on for the last seven years. The money from today's slaughter went to short contract into the Euro. That is pretty interesting. The economy doesn't have anything more to do with Wall Street, it is just pure gambling, and my father hates it. He predicts it will end up in a national tragedy.
But there will be many jumping in Monday trying to catch the cat's bounce ... "just like 1997"!
PT Barnum market on Monday.
"A lot of the money went to clear up margin debt. That money is gone, gone, gone. I don't even practice securities law and I had someone call my office today wanting to know if he could sue his broker for liquidating his positions to meet margin requirements."
This is a harbinger of the next event the newsfakers are waiting for; they're recharging battery packs and reloading cameras hoping to shoot video of that guy at the broker's office walking around with one end of a coat hanger wrapped around the broker's neck and the other end wrapped around a shotgun....
I love hearing all these technical explanations to explain the 'market' for it is , as you suggest, far too much a casino. One wonders how long it will be before Las Vegas has 'wager' analysts to help 'manage' ones investments. Myself I believe this weeks NASDAQ disaster was the result of a small Havana based derivatives operation Castro y Castro who hired a Cuban Curandero to hex the market with 'Evil Eye'!
Impeachment? Waco? selling of military secrets to the Chinese? illigal compaign contribution? who cares, I'm rich, I'm rich!!! clinton is great!!! I approve 100% of what ever he does, as long as my stock is rising!!! I'm a sheeple!!! I'm a sheeple!!! Now I'm poor, I'm poor!! Off with clinton's head!!!!
Isn't that what was the death knell for the presidency of George Bush? "IT'S THE ECONOMY, STUPID!"
I understand that ALGORE refuses to back off his extremist environmental views expressed in his book...which is due to be re-released this week.
Does this mean that GOLD will now...finally...head back up???
Excellant question!
One answer is demonstrated by the bouncing ball. If you let a rubber ball drop to the floor it will bounce and bounce again only each time not quite as high.
This sort of market action has been called a "dead cat bounce."
Where did the $ go? Nowhere! It just disappeared.
A long time ago, in my father's twenties, he used to gamble in Monte Carlo for a year or so. This experience became very helpful for playing Wall Street. I guess it must be helpful because most of the time he's right. He's been playing Wall Street since 1980, but for the first time since then, he is talking about ending this madness. He just doesn't want to be a part of a national tragedy. All of the old timers know how this will all end up, some of them just have a conscience and they don't want to be a part of this madness.
Clinton changed Wall Street from an investment-house to a Casino.
"One investment counselor advised me some time ago he expected the DOW to go all the way to 60,000 in the not too distant future."
This has got to be either a joke or a misprint, right?
In 1987 I believe the DOW bottomed at 37%, currently the NASDAQ is down 35%. Come monday if there are buyers from the get go we could have another powerful short covering rally (ala 4/4/00) but I really dont see it. This weekend there are going to be alot of margin calls go out, so I think we will see another sharp drop Monday and its possible even uglier than today. The buy the dippers got clobbered today and IMO will be gun shy come monday. If monday is up from the get go, it will be due to the market makers letting it (money from their wazoo) all hang out. There by starting a short covering rally, saving the market for a short time. Greenspan is between the old rock and ahard place, if the market continues to fall, it hurts Clinton/Gore, if it recovers come May 15 he may raise rates 1/2 point (todays CPI was not cooked well enough) which would be another sword in the bubble.
I thought the market was overvalued LAST year, and so I cashed out except for positions in gold mining stocks (which I increased) and my own company's shares.
Consequently I missed out on much of the run-up in the fourth and first quarters. I was positioned for today, but, frankly, I got there too soon.
I'm not to anxious to go looking for bargains yet. I think this wound may bleed a lot longer. People have be accustomed to rebounds within a week. If it doesn't happen, it may shake their whole concept of investing. That would have a long-term impact on market dynamics.
"Does this mean that GOLD will now...finally...head back up???"
No.
Gold is dead, and has been, ever since the world's central banks stopped using it for intrabanking currency. It's value is now based upon its industrial (eg, electrical contacts) and cosmetic (eg, jewelry) demand.
Even if an economic crash was to be so severe that central banks no longer existed (and this isn't it), gold would be unlikely to make a comeback. Even at Great Depression levels, people won't trade their food for someone else's gold if they are themselves starving. Food, guns, and ammo will maintain value no matter the world's conditions. Jewelry won't.
Two places- held in cash, and in gold.
I believe we have yet to see a real correction. It won't come until the "buy the dips" and "hold for the long term" groups (almost everyone) feel fear, lose faith, and try to liquidate. We are not there yet, after this week the market is only back to the inflated levels of last December.
You are going to see a rebound when they are going to start closing the short position. It all depends on how greedy they are and how much fools they can catch. It looks approximately like this:
You are sitting in the short position, and when you are closing some of them, not all, you are going into the box. That means they don't close the short position, but they cover around fity percent, which makes the market move up. Then when they decide that they have enough fools, they sell the long, and the shorts automatically start making money. At the same time they go to the long bond, which the fools are escaping to because they are afraid - the greed factor. This has been going on for a long, long time. The reverse is happening, and it is inevitable. The bond is going up, the fools are jumping out, Wall Street is going up, and there we go again.
I wouldn't advise anyone to gamble, but this is one of the hundred of techniques my father has tried to teach me.
I agree. I cannot see any days of +500 in the near future, so I would at least look for a day (or two) of stability before deciding that the bottom has been reached. I would MUCH rather get in after a portion of the recovery has passed, then get in on the way down with the bottom much further away than I had guessed.
Gold hasn't moved that much -- no buying pressure evident in it's price ... its still low, imho.
On the basis of ironic historical balance -- since FDR grabbed gold, it would fit that under Clinton gold would again be unleashed .... ;-)
Time to start looking at that $370 an ounce gold I bought a few years ago, it might break even yet.
Where did the $ go? Nowhere! It just disappeared.That is not quite right. A lot of wealth disappeared. The $$$ did not change in number at all. For every dollar someone got on a sell, someone gave up on a buy.
If the question is- where did all the dollars that ended up in the hands of the sellers go as a result of their sales? Some went to margin calls. Some remain in cash. And a good amount went to precious metals.
OH! As much as this has hurt me financially, I love it.
BYE BYE CLINTONISTAS! GORE IS GOING TO FACE THIS IN NOVEMBER! This isn't over by a long shot. In fact, this is probably just the beginning of an economic downturn. Now maybe all the sheeple will lift their heads up from their grazing, their 401K's, their Grande, Non-Fat, Lattes, SUV's, Soccer Pracitce, and ignorant, naive political views, and realize that Gore and Clinton have had absolutely nothing to do with the economy of the last nine years. In fact, they almost destroyed it early on - but once burned, got smart and decided to back off (Nationalize 1/6 of our economy? It would have devastated our economy).
No, this is great news for us, and I guarantee you that the Gore goons are scrambling like the proverbial chickens with their heads cut off. Oh, yes, don't for one minute think that this hasn't sent them into a panic in Bubba and Gore's collective cabals.
Ironic, isn't it? Bush Sr. was defeated by a slight downturn in the economy in the final months leading up to the '92 election, and Bubba slid in on the economy. Gore is heading into the 2000 elections with a massive downturn in the economy on the horizon right before election time. And Dubbya could slide right in.
Financially I'm hurting today, but I'm tickled, I have to say. BYE BYE BUBBA! BYE BYE ALGORE! IT'S THE PERJURY AND THE ECONOMY STUPIDS!
The short bond was up a bit ... the long end not at all today. What is the open short interest now? How many days trading?
What is the change in shorts?
Yep, there are only two places for your money on Monday, short, or in cash.
The money went into the Euro short contracts. If you don't believe it, check it. That is how most of the traders hedge their positions. Short means it will expire today or Monday, I'm not sure about that, but I am 100% sure it went into the Euro = (European currency). That means that most likely they will be taking deliveries on that currency, which will indicate that the guys who did the slaughter were Europeans.
My advice is sell all your stocks and buy all the firearms and ammunition you can find!
The grand pubah is in N. Cal. tommorrow? I'll be praying for you all.
The bond was two points up during the end of the day. That will explain Wall Street's movement from 700 points to six hundred, plus some short covering, which was happening at the end.
"Clinton changed Wall Street from an investment-house to a Casino."
It was easy after turning the 'White House' into a whore-house, and the Oval Office into the 'Oral Orifice'.
Thanks for all your market insight and analysis, Tasha. It's mostly 'Greek to me'. Nonetheless, I appreciate your thoughts.
I don't know if you can get data on the shorts in the U.S. Treasury; you can definitely get the short information on stocks.
"The grand pubah is in N. Cal. tommorrow? I'll be praying for you all."
Yeah, thanks. He's putting algore's 'elders' into protective custody.(National Monument for the sequoias and the Sierra Club)
i'm a lazy boy until monday!
What I have been trying to say is, don't get scared and don't start gambling. The most important rule of all - don't listen to advisers or talking heads on tv. Just do your own homework, and common sense will prevail. Whatever you do you will have to live with.
Humph...Maybe you're right.
So let's say I bot CMGI (big internet incubator) at oh...say...$200. I held it while many people bot and sld it until it got to $52 at which point I sold and got my $52.
Where did my $148 go? What if the person who sold me the CMGI at $200 bot Yahoo! at $250? Where did his money go?
I say disappeared...that's because I can't find it. The NYSE composite is down, the NASDAQ is down, the S&P is down...
If I'm a market maker and I lower my bid by 1% and each market maker lowers his or hers the $ just disappears...doesn't it?
On the week of October 19, 1987 the NASDAQ declined 19.9%.
This week it declined 24.4%.
My precious metals funds went up a little. Hedging is finally working.
"Whatever you do you will have to live with."
Your parents obviously loved you enough to keep you from going to a liberal, post-modern school, Tasha. Common sense and responsibility, you and your family are to be commended. I have and will continue to take your advice, Tasha.
Clinton and Gore won't take credit for this Market adjustment.
These two sorry scoundrals have claimed credit for the great Economy.
I say that the credit goes to Ronald Reagan.
Thank you. I am trying as hard as I can to be a Christian; that wouldn't allow me to lie to you, and I have no financial motives to advise anyone one way, or another. I hope that people start seeing Wall Street for all it is. When you gamble with money you can afford to lose, that's OK, but it worries me that some people gamble with borrowed money or, worse, their children's college fund. That is what my father calls the "Great American Tragedy", and that is what he means when he says it is going to have a bad ending.
This is clearly a job for Senator Pardek.
God helps those who help themselves!
Regarding your post #45, your Dad is quite correct. The stock market has no more to do with reflecting true economic conditions that the evening news on TV has to do with "news." The market is a greed driven casino where it's rigged so that only a few really ever cash in. The TV network news is an agenda driven propaganda presentation.
The best way to make money at the casino is to either own it or work there...Or do like I did today and pick the correct winners in 3 out of 5 horse races at Laurel.
Perhaps the purpose of the Elian flap is to cover up some sort of deviltry by the wretches who are in the Executive Branch? This administration has one genius. Reading the exact status at any given time of a debauched, decadent and degenerate people. The Elian flap was conceived with some foul goal in mind.
Trigger riots in Miami? An opportunity to declare martial law? Suspend normal constitutional processes? You can be sure it is bad.
Maybe the market is reflecting a somewhat broad based view of the political winds?
Nope,
The market is always a sure thing IF you know what you are doing.
The problem is, there are very few who do. Unfortunetly, most people think that the stock market depends only on the stock market. They dont take bonds into account, much less commodities and their effect.
Very few understand derivatives, where BIG money is made and lost every day.
That is why some people do it for a living, and most just dabble. Anyone willing to take the considerable time to learn real economics and the markets can expect to do quite well over time.
On the other hand, if the market doesn't turn around it's going to be:"Hello, President Bush."
Betting on horse races, at least, is less rigged. Sometimes it seems like you've got higher chances of winning at a casino than winning at Wall Street, in the days when news goes for ten thousand dollars when you want to promote stocks or ideas. That is how much some of my father's friends were paying to make the talking heads say whatever they wanted them to say. If you've got spare money and you feel like gambling, why not just visit Las Vegas? At least in Las Vegas someone will be singing to you when you're losing your chips. I also believe the food is free. There is a huge difference between gambling and investing. And if I were to choose gambling, I would say, Viva Las Vegas.
Thought I heard Cavuto on Fox say gold was up 1.5%
In market terms, short does not mean timeframe.
Shorting is where, instead of buying a stock, you borrow shares of a stock and sell them. Instead of selling shares to cash in your position, you buy shares. In other words, you short something when you are pretty sure it is going down.
Unlike regular (long) buying, where your upside is unlimited and your downside is limited to what you paid for the stock, shorting has unlimited downside and your upside is limited to what you paid for the stock.
We are talking about two different things.
You are talking about wealth, or value, as measured in dollars. THAT definately did vanish.
What I am talking about (and what I took the original question asker to mean) is what happened to the dollars being pulled out. Let's consider a simple example.
Investor A has 10 shares at $12 in something. The price drops to $10, so investor A decides to sell. Investor A now has $100. He lost $20 of value from his original position. But the question being asked was(IMO), of the people pulling out of the market, what are they doing with their money? A lot of time you will see money pulled out of one sector and reinvested in another. Or out of the market and into bonds, or precious metals. Today, finding where it went is difficult.
In a larger account, you short whatever you think will go down. Instead of talking about single stocks, you just go short on two or three hundred NASDAQ or Wall Street stocks. It really doesn't matter which ones, as they say, "The rising tides will lift the boat", and vice versa. The box position takes a little longer to explain, and I think you know what I'm talking about. If not, talk to your broker. Being in the box is good for not paying taxes in a certain year, and it has many advantages for hammering stocks in the long position. But the taxes, when you are in the box, always have to be taken into consideration.
Gore is heading into the 2000 elections with a massive downturn in the economy on the horizon right before election time. And Dubbya could slide right in.
I believe you're right about Gore, but I don't agree that we are the lip of a "massive" economic downturn.
The market is NOT the economy, and vice versa.
I agree that the market is not the economy, but if the CPI just spiked the way it did, and if serious inflation is creeping into the economy, it will have a dramatic effect not too many months off - as in, right before election time.
The market has a lot of impact, especially psychologically, on a lot of the idiot sheeple in this country, and to them it is the economy (even though they know nothing more about the economy than that). So this will influence voting in November.
No, I'm afraid this isn't good news for Alpha Male Wannabe Al. BYE BYE CLINTONISTAS!
Thanks to the Klintoon duo....our investments hit the rocks!
Government regulators can create a overvalued market faster than anything. Butch Reno, keep your hands off the economy!
1987 was much worse. If memory serves, there was a 19% drop in one day, more than triple the percentage loss here. In fact, I believe 1987 was the largest percentage loss ever in a day, eclipsing even that day in Oct, 1929.
The drop in 1987 is of interest to academics, because the loss is too large (in the sense its a one in several million event or higher) to be consistent with a Gaussian or normal bell curve of expected returns for the market, with a random walk of prices.
Isn't this stuff fascinating? :) After my losses this week, and what with the tax checks I have to send out for 1999 taxes and 2000 estimated taxes next Monday, I feel so impoverished that I've decided to become a Democrat. I should fit right in now.
The market is NOT the economy, and vice versa.
hehehe
Thank God there is a minimum wage for all you marketeers. You can all find good paying $7.00 an hr jobs when you all lose your fortunes.
It wouldn't bother me one bit to see that old market come crashing down, down, down. hehehe
Geez, poppa bush went to the middle east to stump for higher oil prices to hurt the economy so his little boy could "SLIDE" right in. Its working and you rino's are whining over it. ROTFLMAO!!!hehehe
GO PAT GO!!!!!!!
The money never existed.
The valuations are based STRICTLY on Supply and Demand, justified by 10-50% margins.
If you and everyone else paid $1 for a stock, but none of you were willing to sell for less than $100, the stock price would be $100, even though it's only worth $1. The "market cap" would be 100 times what it was when you bought it, but nothing has fundamentally changed.
The market is fueled simply by supply and demand.
I even heard the "I" word mentioned. Yea. ~Like there's been no inflation all along, huh?
I would venture to say that inflation is in double digits. Feds are cooking the books. In my world, I see double digit inflation in food, energy, housing, telecommunications. Inflation is far worse than the feds are willing to admit!!!
Yes, but WHERE'S A+BERT??
I feel so impoverished that I've decided to become a Democrat. I should fit right in now.
I can only say, don't worry. There is always another day. Don't listen to the smart explanations of how the stock market operates. There are friends of my father's who are economists with PhDs in economics, and he never listens to their advice. He always says, If they are so smart, how come they advise me instead of getting themselves rich?
One time when my father's best friend told him about a hot stock, my father just sold that stock short. His explanation was, his friend already bought that stock and they had no more money to support the stock, that was why they wanted my father to buy. A month later, the stock price fell 80%, and when his friend called and told my father that he had made a mistake, and the stock was going to collapse, my father bought lots of the stock. The stock, from 2.00$, went up to 17.00$.
You see, my father wouldn't even listen to the advice of his best friend, and they are like brothers.
This is a true story. I really hope that you recover financially, soon.
When you gamble with money you can afford to lose, that's OK, but it worries me that some people gamble with borrowed money or, worse, their children's college fund
Very interesting posts all around...I am learning a lot. Quick story...my story.
I have been on my own since I was 19-didn;t come from a stable family. Now, 12 years later, I have finally got a leg up. I have a good job with good pay in the computer biz--working for a brokerage firm. In my time I have bussed tables, washed dishes, scrubbed toilets, and worse.
My buddies at work all got into this investment craze. I tell you they don;t know anymore than me about what they are buying. Even if they actually know the company, they don't know if it's a bargain or not, what the prospects are, or anything. As far as I could tell, they might as well bet on football.
They have been scoffing at me for being somewhat of a bear. The way I see it, this is a boom time, I should be saving my money. Maybe it comes from struggling for all those years, and maybe they never had to, but it's left me with the notion that nothing comes for free, and that you shouldn't take anything for granted. So I have been socking it away, and it is the best feeling in the world to have savings.
I invest in my 401K pretty briskly, and I take 15% off the top and as my granny used to say "pay myself first", by putting it in savings or a CD. I'm not talking about any fortune here. Eventually I would like some more mutual funds. But it seemed like not only is it better timing right now for me to save, but also the craze was way too far along for me to get in, and I was just gonna have to wait til the next time around. I also fear some of these charts that show 20 year declines following these types of booms. Anyway, I can't help just socking it away in savings, and if I can get 6-7%, I am pretty satisfied for now. Am I crazy?
Remember all of the pundits who kept promising that this economic bubble was different from all of the others, that this time, "prosperity would last." That they try this type of spin doesn't surprise me. That the masses believe it time and time again and cannot learn from history is sad, however. Indeed, it is precisely public credulity that exagerates the economic bubble: they pay more for lower dividends because they've been convinced that the economic bubble will continue growing without end, regardless of a lack of material foundation for it.
You're babbling nonsense, LACUMO.
So, what else is new?
The market is fueled simply by supply and demand.
...and a whole lot of chicanery!
GO PAT GO!!!!!
just tell it to me like Al Gore would.
"Americas economy is still in very good shape."
There, hows that? =)
Volatility (market turbulance) is a good indicator of market health. Current volatility is at about 80-90% oof what it was in 87. Normal volatility runs about 20-25% of the 87 level. All of this is made by my eyeball recollection of the volatility chart, so there.
Other than that, all I can tell you is we are waiting with baited breath to see what happens Monday.
In terms of "badness" I think of this as 'equivilent' to, ummm, say 50 Wacos, or 4 Titanics, or 30 Hurricane Andrews.
To be cliche - 'not good'.
Am I crazy?
No, you are not crazy. You are very smart.
You see, the money which we put in the long bond doesn't matter, really; you always get the interest out, and when the bond matures, you will get your face value out of that bond.
My father is out. He doesn't want that madness anymore, where you're playing a high stakes game, waking up at night and checking the interest rates in fear that the market may go against you. It is better to eat in small chunks and save than trying to get rich quick. You see, according to my father, the guys who are screaming in the pit are smart, and they are waiting for naive people who want to get rich overnight. Most importantly: Once again, do not listen to advice. Do your own homework. Hot stocks, new economy, and all that stuff is nothing but nonsense.
I'm curious as to how our markets went down and the Chinese and Russian market have consistenly gone up over the last few weeks. Could it be that the foreign investors had so much in our market that the dumped their shares and moved it into their own markets thus having a positive impact on their markets? Or are they purposely ruining our markets?
You're babbling nonsense, LACUMO.
I just repeated what Yosemite Scott said in post #65. "Dumbya could slide right in". I didn't hear you tell him that he was babbling nonsense.
A fool and his/her money is soon parted. In this case it is a lot of fools and a grubby greedy fistfull of dollars that are parted.
If ya can't stand to take a hit, don't play the market.
GO PAT GO!!!!!!
. Hot stocks, new economy, and all that stuff is nothing but nonsense.
To me you sound like a voice of reason in the wilderness. The recent craze has been, to a novice observer, counter-intuitive. How hard is it to understand a simple ratio like P/E? I have never taken an economics class in my life, and that ratio sounds like as plain and simple a benchmark as you could find.
And as for the guys in the pit, I don't doubt it. Ever see the movie Rounders? Matt Damon is a poker player--on the circuit--and he and some other pros go down to Atlantic City and take all the tourists money--fair and square.
Funny how things happen. have you heard of that guy Shiller who just put out that book, Irrational Exuberance? I am sure it is good, but all of the substance of what he is saying has been right out there for idiots like me to comprehend. Just read the Wall Street Journal.Why is it given credence only now?
Not to say folks haven't gotten rich off of all this. And hey, more power to them, because it makes no sense to me.
There was a friend of my father's who wrote a book about Wall Street. He never made a penny on Wall Street, but definitely made a couple of millions selling the book. Naive people think it is all about supply and demand; that is not so. If you have a couple of millions, and you put them into two or thre dollar stocks, it doesn't matter if the company is making money or not - the stock will move up. If you short right after that, with the same amount of money, you get the money of the people which tried to get rich on that stock. It is just like a sandwhich.
Then you have the news manipulation, political manipulation. An example: If Putin wants, he can put gold any place which he wants to, he just has to send his people to South Africa and start making revolutions. Then he is the only one which can control the gold. Russia is the main gold producer in the world, as well as South Africa. It sounds brutal, but lots of boys out there on Wall Street do all kinds of crazy stuff to make their stock move up and down. It really has very little to do with supply and demand. If you have the money, you can make the demand. The other side is always more than eager to get you the supply.
Most of the time, it is always about getting innocent, decent folks excited and talk them into putting their savings into something they dont have any idea about. But markets have always been the highest con games in history.
"This has got to be either a joke or a misprint, right?" No, this is what he said. But as I said, he was my "former" investment advisor.
Long bonds have a little problem. While you are assured of getting your money back in nominal dollars, absent a default, if inflation spikes up, you may not be able to buy much with those dollars. You would have been better off in money market funds. You might look into treasury inflation indexed bonds (affectionately known as TIPS), that avoid this inflation risk. Academics love them, and I love them, which may be a reason for you to avoid them. :)
Cheers
While there is plenty of irrational exuberance and casino mentality in the stock market, I do not see it as one big giant con game. The prudent investor looks for companies that are consistently growing earnings 15% or more a year which in turn represents a real growth in the value of the company. The con artists are found hawking IPOs, penny stocks and day trading. Sooner or later earnings will correct the valuation of a security. I have been in the market for many years using fundamental valuation techniques with great success -- even after this week's correction. The key is to invest for the long haul (5+ years) with money you can commit for the long haul.
It is always a good idea to save and you were correct to stay on the sidelines for the last few years. However, in the not too distant future, I would consider cost averaging money into a few good mutual funds. Cost averaging is simply investing money at regular intervals over a period of time -- such as $100 a month for the next year. This is a good technique because it avoids the tendency by many to gamble on timing the market's bottom. At this stage it is hard to see where the bottom of the market is, but I would feel a lot more comfortable putting money into the market now than I did weeks ago.
Finally, some of this weeks sell off could be attributed to the tax season.
I know, you're right. Inflation is pretty dangerous right now and it is being covered. But if you put your money in the bond, you always get more than what you put in it. Plus with the interest rates money from the bond, you can move into some inflation proof stocks, like food stocks, medical stocks, and gold stocks. This way you basically balance, and at the end you will most likely break more than even. You always get your money out of the bonds. At the end you will always be paid the face value, plus interest rates is the gravy.
You aren't going to get rich, but you can sleep well at night. If the treasury is bankrupt, then America is bankrupt, then it is all over. Behind that you have some adjustable interest rates U.S. Treasury bonds. No, I am not going to get rich, but I am going to be able to survive.
I understand that the bonds are going to go up, but if you don't borrow against them, it realy doesn't matter.
The key is not to borrow or use margins. The greed and fear factor always destroys many peoples' lives.
For every person that sells at the top, there is someone that bought at the top.
For every person that buys low and sells high, there is someone that sold low, and someone that bought high.
Only the brokers always make a profit - their "vigorish."
The 500 point loss in 1987 from 2200 to 1700 in 1987 was 22.7%.
The 617 point loss from 10922 to 10305 today was 5.6% - LESS THAN 1/4TH THE 1987 DROP.
Big Deal ....
Big Deal ....
Yeah, it's a big deal to millions of Americans who are losing their savings and, by looking at what is going on, it doesn't look very promising. They were fooled into thinking that Wall Street could only go up. They never understood the relationship between oil and the economy, and many of them lost their entire savings. It is a sad day when people who had been advising them, the brokers, the media, don't want to take any responsibilty. How I see this is that it is not the end, it is just the beginning. Most likely, next week Wall Street and the NASDAQ are going to open a little lower. You see, you need the margin calls, and you don't have to pay much for them; they have to sell them and they only have 24 hours to sell or deliver the cash. Then, we are going to start the con game again- the phenomenal Wall Street recovery, to make them feel like they made some really bad mistake when they sold it, the boys are going to move Wall Street up and the folks, in hope of an instant recovery, are going to be pouring the rest of the money they have in their savings account, and after that there we go down again.
If you don't call that a con game, I don't know what it is. Stories like this are going to be repeated over and over again until the Wall Street boys get the last penny from good, but not very well informed, people.
You bring up plenty of good points. I am always happy to have my fiscal restraint validated. And cost averaging is exactly what I am going to do. Like I say, life imitates baseball. Henry Aaron is the home run king and never hit over 45 dingers in a season. If I can first fortify my position, by establishing savings, then invest consistently over a 25 year period, that ought to do the trick.
Regarding penny stocks, my "expert buddies" at work have been buying penny stocks that they get "tips" on from "friends". Being cynical by nature, I asked them if it bothered them that the person giving the tip had such a clear motive for "selling" them on the stock, regardless of the merits. Fell on deaf ears. In fact, I was treated as a fool for bringing it up. Party crasher, you know?
It has kinda stunk to be on the sidelines, but hey, timing is everything.
"Might have one good ring, baby, you can't tell."
As a life long Cubs fan, I have to be careful in taking the life is like baseball analogy too literally... :-)
I agree with your points about magin calls and misleading information. However, I still do not see it as one giant con game. A few bad apples does not make the whole industy bad.
Oh, thanks for the comforting thoughts to leave me with over the weekend. I'll sleep a LOT better now that you've shared your fears with me.......LOL.
I still do not see it as one giant con game. A few bad apples does not make the whole industy bad.
There was a time when my father was screaming in the pit. And there was a time when he directly moved the chips from his own account. Two months ago, we were already in the short position. The long bond was 6.35. He must know something to do that. When Clinton came to power, the bond was 7.02. We went long in it with full knowledge of how the con game would be played. Since then we have been playing the bond long, and the market short, then the market long, and the bond short, etc., etc.
When I look through old records, he put short on Newmont Mining on 65. His friend told him that the black folks could not have too much money out there in South Africa because they are too dumb and may cause trouble. This guy was a politician. My father was a part of the system, and he was teaching me, and by understanding markets in and out, including the commodity market, I came to the conclusion that it is nothing but the biggest con game in the world.
We are OK, and my father would never advise anyone what to do, and I'm not allowed to do that, either. Believe me, I really know what's going on.
The 500 point loss in 1987 from 2200 to 1700 in 1987 was 22.7%.
The 617 point loss from 10922 to 10305 today was 5.6% - LESS THAN 1/4TH THE 1987 DROP.
Yeah, it's a big deal to millions of Americans who are losing their savings...
I think it is somewhat breathless hyperbole to say that today's 600 point drop is causing millions of Americans to lose their savings.
The point is perspective -
For example, OPEC cut production 14 months ago, in early 1999, but everyone just said THIS year that "all of the sudden" gas prices are rising.
BTW, regular unleaded where I buy it has dropped 13 cents a gallon over the past month, from $1.429 to $1.299.
Some folks are manipulated, some folks think they can market time, some folks dollar cost average, some folks borrow money, leverage their entire holdings and lose it all. This has ALWAYS been true.
Pigs get fat, Hogs get slaughtered, as the old saying goes.
So in the big picture, remember that a 5% loss in market value is less than a 22% loss in market value by a significant amount.
Thank you very much for the nice conversation. I have to go. Good luck to you all.
As a life long Cubs fan, I have to be careful in taking the life is like baseball analogy too literally... :-)
Ouch. I bleed Yankee pinstripes. Always have, always will. Hmmm, now if we could just get Hillary alone, what would she do?
Where?.....MIAMI!
"but if the CPI just spiked the way it did, and if serious inflation is creeping into the economy..."
Remember, "inflation" is the devaluing of a currency. Prices go up so the currency buys less.
Milton Friedman won the Noble Prize in economics for proving that the SOLE cause of inflation was government debt financing.
Since the amount of new debt in the U.S. (for government) has been falling each year, and now, reversing into a surplus even excluding Social Security, it stands to reason that we will be seeing the reverse of inflation: Deflation.
Deflation is the Increase in purchasing power of a currency. Prices get lower and the currency buys more.
"Perhaps the purpose of the Elian flap is to cover up some sort of deviltry..."
I seriously doubt that the Clintons had anything to do with the market drop today, but if they did, the only REMOTE thing that I can think of is that they might try to rig the game such that it APPEARS as though the market drop caused Deflation, in order to maintain FDR's absurd view that deflation is bad for an economy.
Deflation was bound to set in ever since our federal government started buying back its debt with the surplus ($1 Billion in the last Treasury auction, I believe).
But like I said, I doubt that the Clintons had anything to do with it, and it is more likely a natural correction to the day traders' exuberance.
Why did I laugh at that!?
re#18; Steely Dan; yesssss!
{& they talk about this Bono clown (of U2) being some kinda "visionary?" Yea right. Now these guys on the other hand...}
"Inflation is far worse than the feds are willing to admit!!!"
And you are one sharp cookie. Yup.
Let us just file this *event* under "F," for Fruad? Right next to the, projected, "Budget Surplus" and everything else that's happened during this Democratic reign of lunacy, madness; a.ka, the Clintigula administration.
"Cooked the Books, huh?
You ain't-a-sh*TTin' about that, my friend.
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