Stock Market/ Who Dumped? Who is Staying the Course?

@Phoenix32890,

Quote:

U.S. stocks plunged yet again on Thursday, as a frantic flight from risk on investors' deepening economic fears left the benchmark Standard & Poor's 500 index at its lowest level since 1997 -- completing the erasure of more than a decade of stock market gains.

The Dow Jones industrial average .DJI slid 444.99 points, or 5.56 percent, to close unofficially at 7,552.29.

http://www.reuters.com/article/marketsNews/idCAN2042927920081120?rpc=44

In the words of Chester A. Riley, "What a revoltin' development this is!"

I'm holding on with my fingernails forcing myself not to sell. I feel like I am playing, "chicken"!

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Hanging tight. Sitting with some money that's looking for a home right now. Watching. Considering.

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@ehBeth,

the old investment "foxes" say that it's never possible to tell when the bottom has been reached - you can do that only with hindsight .
at this time it seems difficult to find any "long-term" winners .
it simply seems like a very distorted market , good stocks get dumped along with lousy stocks .
the difficulty is telling with any kind of certainty which ones will eventually come out on top .
a small investor - unless a gambler - can imo not make any moves in the stock market right now . buying small amounts of different shares is generally very expensive : high commissions !
personally i'd wait for a general improvement of the ECONOMY before putting more money into the market . one might miss an the early uptick but also avoids "the dead cat bounce" .
usually it takes some up-and-downs before the economy - and the stock market - starts to recuperate again .
(but who knows what "usually" means in today's market ???) .
hbg

ps. as warren buffett has said often enough : "if you can't understand a business , DO NOT invest in it !" .

pps. of course , one can simply "speculate" , but that's no better than gambling .

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I've stayed in, but I have taken a beating.
My 401k has lost about half of its former value, but since I dont plan to retire for at least 25 years I figure it will come back.

My portfolio was created for dividends, so I am not worried about it.
As a matter of fact, now is actually a good time to buy, because pretty much every stock has declined in value so much.

The gamble of course is that they could go lower, but I do believe that they will come back and go higher then they ever were.

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Yesterday seemed to be the stinker. For the first time, our holdings were below what we had paid for them. (That happened once before, a few years ago, before the bubble began). What the hell, we are still getting the dividends. Today they are up, and we are in the black again. Now I am quite ready for another bubble (Dream on!)

I am glad we did not sell out!

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@Phoenix32890,

I wasn't as astute as Thomas, because I only sold the increase in the market when it hit over 14,000 last year. I bought back 50% of the money of the funds when the market was 8,500 this year with some at 40% reduction in cost, but the over-all effect has been that my funds are now 50% in bonds and 50% in funds. I still haven't looked at today's closing, but I'm sure it's way down from 18 days ago when I left for Thailand, Bhutan, and India. I'm planning on buying back 25% of the money when the market hits below 8,000, and save the final 25% of the money for the future unknown lower prices.

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Staying and buying. There's some bargains out there.

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@Wilso,

"Is Japan's 'lost decade' a window to the future?"

that is a question being tossed around by some economists and business writers .
i guess no one knows . we'll be able to tell in another ten years - that timeframe is a tad too long for me !
hbg

Quote:

November 21, 2008 at 12:00 AM EST

TOKYO " As the worst financial crisis since the Great Depression unfolds around the world, everyone is wondering what the future holds. How bad could this get? For some sobering answers, just ask Kazumi Suzuki.

With a bitter laugh, he recalls how he survived the worst days of Japan's economic crisis, left his job as a banker when head office closed his branch, and went into business selling organic vegetables. He was certain it was a sure thing as Japan recovered from its hard times and an aging, health-conscious population started spending again.

Now, the world's second-biggest economy is in trouble once more and consumers are looking on his vegetables as an unaffordable luxury. Mr. Suzuki and his staff of 10 are hanging on by their fingernails.

“If you had asked me a year ago, I would have said we've hit the bottom and we're looking forward to a gradual recovery, but now everything is grey-looking,” he said over lunch at his health-food café in Osaka. “We are in a long tunnel and we cannot see any sign of light.”

full article :
http://www.theglobeandmail.com/servlet/story/RTGAM.20081121.wrjapan22/BNStory/Front/home

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@hamburger,

My wiji board tells me that this economic downturn is going to last about five years - minimum.

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@cicerone imposter,

Quote:

My wiji board tells me that this economic downturn is going to last about five years - minimum.

thanks for giving me this "optimistic" outlook , c.i. !
i think i'll go into "suspended animation" for the next five years !
hbg

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@cicerone imposter,

c.i.- I happen to agree with you. I think that there are going to be "moments" that look like a rally, but it won't take hold for a long time.

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@cicerone imposter,

That 5 year figure is one that I have heard mentioned by several "experts". It might well be correct. Fifty years ago the market worked quite differently. Stocks were priced so that the dividend would provide a 4-6% yield. Anticipated growth in company earnings would permit a lower yield. Growing giants like Xerox or IBM could get by with lower or no dividends on the assumption that what would be dividends were used to make the company grow, and provide greater earnings in the future. These basic principles haven"t disappeared but they have been overridden by computer programs which try to anticipate public demand for stocks. Unfortunately these programs have been developed without key data which can not be accurately determined. These computer programs by the way are a key element in the huge swings at the end of a trading session.

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@flyboy804,

Quote:

That 5 year figure is one that I have heard mentioned by several "experts".

i enjoy listening to the various experts on CNBC in the morning .
on friday one of them said that the dow ( under normal circumstances ) would not have risen above 7,500 - the rest was just euphoria .
of course , he was strongly denounced by the other "experts " for being such a pessimist !
hbg

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@flyboy804,

Computer models about future demand will not work - ever. Garbage in, garbage out. The variables that makes up the world economy is in constant flux, and nobody can plan future supply or demand.

My guesstimates are based on nothing more than what I "think" about the macro-economics of the world; the current major problems of the financial crisis, job losses, home losses, and the actions most governments are taking to modify the negative impacts of the "current" situation. I personally think they're doing many things wrong such as even contemplating bailing out auto companies with taxpayer money; it ends up paying auto workers their extended benefits from all taxpayers who do not have those "luxuries."

I believe Obama is taking the right first steps by recruiting the best and brightest with the right kind of experience for his cabinet, but there's no magic wand.

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@cicerone imposter,

I agree completely. All one can do is guess (or use the guess of someone you trust) and hope for the best. An example of how crazy the situation is is the fact that yesterdays 3 month T-bill closed at a yield of .01%. That's one step away from you having to pay them to take your money.

1 Reply

@flyboy804,

Quote:

An example of how crazy the situation is is the fact that yesterdays 3 month T-bill closed at a yield of .01%.

that's roughly the interest rate that japanese banks have been paying for the last 10 years , during what they call "the lost decade``- nothing new for the japanese .
some economists suggest that the rest of the world is now entering "the lost decade" - i sure hope they are wrong , but ... ...
hbg

have a look at this ...

http://able2know.org/topic/125857-2#post-3484050

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Last week the DJIA lost about ten percent of its value on Thursday and Friday before regaining a little on Friday. Overall the Dow is down almost 45% from its 14,000+ high and stands at levels not seen since the late '90's.

Pause and consider that: the stock market has lost over a decade's worth of growth (8038.88 on 7/16/97) during the past 16 months (14164.53 on 10/09/07, 8046.42 on a gain of 494.13 last Friday).

Those numbers came from here:

http://www.finfacts.com/Private/curency/djones.htm

My new learning today came when I read that AIG got booted off the index, replaced by Kraft, in September.

So will it come back? Yes. Will you live to see it? Depends on your age and your health. We had some pretty go-go times in the markets over the past decade so my guess is it's going to take a good bit more than ten years for it to get back to 14,000. And more personally, I'm 50 but I've had type II diabetes for five years now, so I'm gambling that I won't. I cashed out in January of this year -- following the premise that the markets always move lower in an election year -- and picked a nice fixed indexed annuity tied to the S&P, with a few other options.

It looks like zero growth for 2008, but at least I didn't lose any money, and it resets in January with the market at low tide, so maybe it will grow some in 2009. Or 2010. Or 2011. *sigh*

My only suggestion is that if your nest egg is an IRA or 401-K and you have children you wish to leave something to, make sure you have investigated the multi-generational options that will let you and your beneficiaries avoid the tax man's biggest bite. There's a big Roth conversion opportunity coming up in 2010.

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@PDiddie,

Hi PDiddie, Good to see you! I've kept track of our (my wife's and mine) retirement investments, and as of last Friday, my wife has lost only 17% this year. Mine is double that! I believe I have planned out our strategy pretty well, considering the simple fact that many of my friends have told me their personal horror stories about how much they have already lost - on paper.

It's my belief that transferring equities into government bonds is a good idea even today, because it's my guess that the market will tank further - especially for us retired folks who do not have the means to make up losses from work and time. The ratio is the big 64-thousand dollar question.

That's my .02c worth.

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@PDiddie,

Thanks for the link, PDiddie. I've been aware of the facts relative to the rapid rise of the Dow in a rather short period of time, but I have never seen it laid out so succinctly.

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@flyboy804,

Those "rapid rise" have benefited those of us who have saved for our retirement during those bulls. Even with the current downturn, we're still substantially ahead - considering we have been withdrawing from it for the past several years.

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Stock Market/ Who Dumped? Who is Staying the Course?

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