Wow! Lots of doom and gloomers. If it is going to be that bad, then your money in your cookie jar ain’t worth squat either (the Road Warrior/Mad Max). Buying COP for under $70 a share a week ago was a beautiful thing. I guess I gotta thank all of you pesimists for my recent gains. Keep on riding the negatives, I need your sell offs $$$$$$$$
Personally I don’t like Microsoft taking Yahoo – as Yahoo services are far superior than MS and MS will definitely make that website a nightmare, as it is done with hotmail. Is anybody using hotmail nowadays – apart from MS employees and friends????
Love the new stuff, Paul!
Looks like a lot of hand-wringing out there. If I recall Investing 101, it’s Buy Low, Sell High, right? So why do so many people think the time to get out is after a correction has taken place? Then they want to sit on the sidelines until they’re sure of a turnaround to get back in? Hmm, these experts apparently know the exact moment the bottom will arrive and when to get “back in.” Of course, timing the market is a fool’s mission, and these folks will simply miss out on the gains that historically occur in the early stages of a turnaround. By then, they’re right back to buying high and selling low.
I love the talk about gold. Lemme know when your survivalist compound in Idaho is up and running. For those who are all cash or never been in the market, I’m curious to know how you have any realistic expectations of a cozy retirement. Unless there’s a juicy pension or sugar daddy/sugar mommy, who ironically all probably have some skin in the market.
I work in finance and everyday hear neophytes rant about the “impending doom” of the stock market. Most people react out of emotion when they should be intelligently evaluating the current market in terms of their own particular situation.
If you have large, discretionary income, and already have emergency savings and other cash assets, now may be a great time for you to buy, provided you make a careful evaluation and careful decision about what you are buying. If you know what you are doing and can make educated decisions, and have the assets and timeframe to withstand the market volatility, go for it.
In contrast, now is not the time to invest your meager grocery money or emergency savings into the latest IPO in hopes of making a quick buck. If you don’t know what you are doing, cannot absorb a loss or do not have the time to wait out the market volatility, stay in your cash equivalent safe-haven.
Don’t react out of panic or fear and exchange 100% your S&P 500 index fund in your IRA for a money market fund when you have 30 years until you expect to draw on the assets. Talk to a financial professional, evaluate if your investments are suitable for your goals, time horizon, and risk tolerance, and wait things out if you have the time to do so.
I don’t know anything about the stock market. Just wondering if someone can suggest any good books I can read.
The only reason the stock market ever got so high is because corporate profits have been growing at better than twice their historic rate for the past fifteen years. The reason for this is that buzzword “productivity” which means companies are extracting more profit per employee. The largest reason for this has not been advances in technology as pundits would have you believe, but the skimpy wage increases and the cutting of benefits. This can only continue for so long until the American worker is a peer to those workers in China and India. So corporate profits cannot grow like investors have been accustomed to and so p/e multiples MUST contract. The stock market is still about 30% overvalued by any historic standard that does not include the last fifteen years. Greenspan had recognized this in December 1996! Well, the market even after all its ups and downs is about as overvalued now as it was then. So yeah, dollar cost average all the way down. Eventually the market will rise and bail you out of your mistake. AVOIDING losses is the key to investment success. Buying low only works when you admit your mistake quickly and sell if it goes down more. Taking lots of little losses is a lot better than averaging down.
The media sucks.
This housing debacle has a ways to go…look at home value and google “regression to mean”, personally I’m holding out for a few more months.
When you do get in, don’t try to go for an “A”, go for a solid “B” and win every time. Pick low cost index funds and you will win in the long haul.
For those who mentioned Buffet, his BB is at 26% over the last 6 months. Not bad considering he aims to GO LONG!!!
Now is NOT the time to buy shares in the stock market…not even in big and trusted companies. You can’t say now is the time to buy because prices are low because that’s how it happened before.
How many times have you heard “past performance is not an indication of future results.”
We are headed for an economic crisis, the likes of which we’ve never encountered before. The value of any shares you buy are going to drop, no matter what company or sector. And so what if you earn 15% returns on the stock market? Your BUYING POWER is being decreased every day! And the feds aren’t doing anything to stop that!
Where are your 15% gains going? Into your gas tank, heating bills, and at the grocery store.
So what should you do? Secure your assets with foreign interests? No…any crisis in the US will case a world-wide recession or depression. This isn’t going to be just a US problem…
And for those that are holding cash…the US dollar is losing value more and more everyday. If the feds keep dropping the interest rate, we’re going to end up like Weimar Germany. For everyone that’s holding cash…what good will that do when it costs US $5,000.00 for a cup of coffee?
Honestly, the way I see it, precious metals seem like the only logical solution. The only problem is, like other investments, you have to know when to get out. And prices of PM’s are really high right now.
But this is how you need to look at it: do you see your dollar buying more anytime soon? Do you see gas prices coming down anytime soon?
As long as these conditions exist, PMs will do very well in protecting your BUYING POWER. When (if) the economy starts to recover, then it’s time to sell your PMs for a potentially better investment.
But only after our dollar’s buying power comes back to reality, but I don’t see that ever happening.
Good luck, everybody!
The volatility is going to get worse and the market is going to continue it’s free fall for some time. The fed is trying to stop something that needs to happen naturally in the market and these recent cuts will appear to help the economy in the near term but eventually we’ll see that panicking wasn’t the right move. It would be a good time to start moving money into other growth sectors and cash.
Classic market correction. You’ll see the chart in future college textbooks.
Buy the S&P 500 (SPY, SSO, a mutual fund) and hold on. The market will retrace this correction’s downward movement and surpass its previous highs by the end of the year.
I love this country!
Think about it, why would someone post BUY BUY BUY on this forum unless they already had bought themselves — and were hoping that by the actions of others, they could make a profit?
Whereas those people who are saying no, it’s not a good time — they would seem to not be out to make a profit (at the moment) from others, and thus have less a of reason to be biased.
Yes, there is fear. But if this many people are saying no, it’s not a good time, I think there’s a large amount of wisdom to this.
As for the investors saying it’s time to buy, well again, that’s just them trying to get others to buy-in to what they’re buying make a profit? Why else say it?
Doggie—Looked over the comments today, and was not surprised. Doom–Gloom! ‘Preserve capital’, ’stay in cash’, etc, etc. One pundit from my area did have the right idea: buy, buy, buy. Most of these posters with their piss-ant $5k-$10k investments (what I’ve been making or losing on a typical day)and their ‘Stock Market For Dummies’ books carry on with their pronouncements as if they have a clue about investing—but they didn’t. Their $10k gained nothing today–a $10k of mine made $2500. Anyone in these forums writing a novella about how smart they are—aren’t. It’s all about making themselves feel smarter; not unlike the NRA folks talk about their guns to make up for their personal doubts about their masculinity. Want to make money?—BUY, and buy smart.
I’m not an expert, but I think it is obviously true that the media over reacts and over reacts the more people are interested, really a self-feeding frenzy. I mean, after all, that is what sells news.
I guess the question is the effect of people speculating or being foolish in the housing market. I have seen that before. It corrects itself after a while. There is no very good reason why is would effect most of the economy, so I think we may head into a mild recession over the next year or so at worst and at best pick up steam after things settle down.
The old traders saying for January “so goes the month, so goes the year” seems to prove true.
We are in for a serious recession thanks to the Federal Reserve. We were due for a mild to moderate recession but with the easing of rates by the Fed I see the Dow at 9,000 by the end of the second quarter followed by a couple of years of stagflation.
Heaven’s no! The market has only dropped about 15% from October highs. A recession will bring a drop of 25-35% or more from that high, say DJI at 10,000 or less.. Wait for it!!
To sell, now! Why? USA GDP is slowing, consumer spendig is down, inflation is increasing, people believe the recession! Dont forget! FED cut the rate 75 bps last week and the market down (Dow Jones fell 425 points), FED cut the rate 50 bps and the market stop. What happened? It is 125 bps!!!
It is beginning…. I will staying in cash
The market will not tank but will go lower for the following reasons:
1. The traders will get the Fed to lower rates to 0% before this is over. The only way they can do this is have the market go down. TRADERS NOT INVESTORS MAKE THE MARKET.
2. TRADERS who own all the media time will tell the world what should be done so they can make money trading not investing.
3. TRADERS NOT INVESTORS will make money as the market goes down, they get the Fed to take rates to 0% (the Fed would go lower to appease the Traders if they could). The market will then start up and the Traders will have made money and will make money as the market rises. At that point the investor will have made about 5%to 7% while the traders got rich.
4. All the FED board sees how Greenspan got hired by those he made rich and they plan to do the same. Get a clue they only care about themselves not the economy or the nation. If they did they would not lower rates to let the dollar sink into the sunset.
Your second language better be something other than spainish maybe chinese.
Get the picture.
I find it amazing that anyone researched picks by Warren Buffet made less than a couple of months ago and based any sort of long term decisions on his portfolio, but then again it takes all kinds of folks to make the market what it is, and thanks for the buying opportuny for real long term investors.
For those of us who are ordinary Joes with 401Ks, the bad news is that there’s no other game in town. The good news, however, is that there is no other game in town. A fool could panic right now and hoard gold at, well, gold rush prices, but a smart fellow knows that every week the US 14 Trillion Dollar economy generates revenue and that revenue has to go somewhere. The stock downturn hasn’t discouraged me in the least.
yes, for those who have the ability to do average down or monthly saving types of investors, forcus on the top 5 markets share leader of the worse perform industry.
adv : u will not missed the bottom of the wave. disadv: u might find that ur buying cheaper n cheaper
no, for those single shot types or one off lump sum types of investors, technically we might see DJIA 11,000 or 20% off peak, foundamentally we need to wait for a positive cash flow from operation adv : we might get the real bottom. disadv: we might over/under estimate the impact of subprime leakage as it is not easy to estimate the damage of ”day after tomorrow” kind of climate damage to the economy in china
BYE, BYE, BYE US stocks and $-based securities.
Low Fed Rate gives faling $ and rising
Gold and EURO.
This is the short to mid term notion of foreign investors, even more of speculators.
It means sell of US stocks and bonds asap, if not done already.
I’m just curious how all these homes that are being forclosed on will be financed in the future. I mean if you bought a $500K home with a teaser rate and now that home is worth $400K – who will refinance this – and if some would refinance it – will the owners be able to qualify? I think no one will refinance a $500K loan on a place worth $400K and I’m pretty sure all those who got a ” no qualifying ” loan did so because they couldn’t qualify. If our economy runs on 65-70% of consumer spending – the well is drying up more and more each day.
Mitch Ford is right….Invest for the long term. It is always the time to buy carefully chosen equities and even bonds (unless you are drawing no more than 4%, annually, in retirement or financial independence). It is always the time to rebalance out of equities/bonds that have no future within the chosen time horizon. Have a well-managed diversified, global portfolio and enjoy returns averaging 15% or more, annually, if you can psychologically acept the volatility during any given year. Cash is only for monthly bills, seasonal expenses and temporary periods of indecision of where to invest. If you are really that indecisive, be sensible enough to hire a broker to help you decide.
Remember the FED are BANKERS. They are trying to save thier banker friends and the HELL with the rest of us.
Insiders know what we don’t. Why have all the big investment houses sold off so much stock and bought into safer grounds the past 3 months? Why would anyone want to go against this trend?
I just researched Jan.30 prices of 15 stock picks by Buffett and 4 other top investors in a financial publication. With only 4 exceptions these stocks were either down, down or seriously erratic; the 4 were up this month, but not by much. If they can’t pick right at this time, who can?
In my opinion, the market would have to show at least a 7% turnaround over a week’s time before I would get back in.
A yo-yo market ruled by fear, bad news and rumors here and abroad can’t and won’t perform, “expert” opinions notwithstanding. Buyer beware!
I’m not an economist, but here is how I look at the market in a big picture: Your asset/cash is like your car, it is meant to be spent/consumed/running, the flow of one’s asset/cash is just like the flow of traffic on the highway. People don’t park their cars on the highway, they drive them and keep them running EVERYDAY. Yes, there are times and weather conditions when one has to park his car at the garage, or got his car stuck on the road due to accidents of others, but that is NOT REAL LIFE, real life is – GET OUT THERE AND MOVE, you don’t hide at home and keep your cash under the bed, those cash serves no purpose, yes you own the cash and it is on the safe side, but before long we will all lose and devalue everything we once all owned, although it is true that by doing so, one eliminates all risk of any kinds of accident, but the car is totally useless other than sitting in the garage, rusting while pleasing or satisfying one’s eye only…..so wake up and get back to the market, if you own a “car”, drive it, don’t exhibit it in the garage, show it on the highway, others may like it and want to buy it from you, that’s how the world has agreed to conduct our business together, at least for now…
Mr. Buffet is buying, so what are you waiting for, the exact bottom is anyones guess, as it the exact top, surely you’ve heard of dollar cost averaging. It’s time to by wisely, good quality is always the way to go, if you sit out, you’ll be kicking your assets later.
Are you crazy, the economy is in on the outset of outwrite collapse and you are just seeing the beginning of it. Stocks are priced wonderfully looking at it from last year’s prices. Wait until next year, if you want some really good prices. Can you say DOW @ 8000, hyperinflation (thanks to the fed) and a protracted downturn due to forestalling the recession we should have had years ago.
I took a third of my money out of the market at 14,100 and it’s still to early to buy. Why buy now when the market will be lower in six months (after the REAL recession hits)? This is not your normal correction and things will get much worse before they get better. I’ll stay in cash, thank-you very much.
I find this interesting. Many people are saying get out of the market. Reminds me of chicken little too. The market is reacting badly to all the people trying to get out because the media is telling them the market is reacting badly. To me, that music to my ears. I have long way to go for retirement (about 10 – 15 years) and all the chicken littles are leaving the market forcing prices down so my dollar cost averaged method of buying is buying me a larger and larger share of the market each month. Great reporting media. You guys are making me rich! The losses I’m sustaining because of the falling market are only temporary.
The subprime market is but a very small part of the market yet it dominates the headlines with its connection with the stock market being brought up again and again.
Think about people. If you heard Bank of America was loosing their stuff and was on shaky ground financially, you’d be looking to pull your money out of BofA. Whether it really is having problems or not, it will start having those problems soon because everyone tried to pull their money out. The stock market is no different.
Look at what’s going on in the world and in the USA. In the world, all those people who have jobs because of outsourcing thanks to NAFTA are looking at their big paychecks and wondering why they are living in a cardboard box and eating crap when they have the money for better. Well, better living requires power plants, power grids, oil, coal, natural gas, roads, sewer systems, shopping malls, etc., etc. All that takes money to get it built. Those companies that build all that are seeing incredible backlogs of work. Then there’s the industrialized nations such as the USA and most of the European nations as well as a number of nations in Asia. Most of them have those systems but they are aging and need to be replaced. Translation: more backlog. As a person who works for a heavy construction company, I can tell you that backlog is music to the ears of the executives which means profits, dividends, and higher stock prices.
All that backlog also means jobs and a lot of them too with big paychecks. You guys are claiming gloom and doom and predicting the end of the USA and possibly the world. I’m looking around and thinking what gloom and doom. I wish I had more money to invest.
Warren Buffet has it right – to paraphrase – When people are greedy, be fearful. When people are fearful, be greedy.
we have lots of stocks of AAPL which we got for $17 and for sure we are keeping it as the company has $18billion as Cash and of course it will come up .We are here for long term and we won’t sell it now.
Briliant Article!
Yes, buy now! It’s a great time!!!
BWAHAHAHAHA!!!
You’re either stupid or trying to scam your readers…
Media and a lot of “analysts” are sending these “ideeas” on the air…. I wonder if you could send some good “impressions” or other type “articles”
We bought a lot of AAPL when it was only $7 a share and still have a lot of shares now. If we had sold every time it went down, we would not have made as much as we did last year when we sold some while it was in the $180s. We’re in the market for the long term and as long as a company is financially sound and has good management we will stick with it.
There is no sign that the market has bottomed yet, and rather then desiding for yourself that it’s time to buy, it is best wait and let the major indexes put in a bottom which any technician knows they have not. Let the market confirm a new rally before taking what is a big risk right now.
Until we see the bottom any stock investment is risky, and some stoks that seem like a bargin and have maybe 10 to 15% upside may have 30 to 40% downside a bad bet in my book. I always go for atleast a possibility of 100% return, and accept no more then about a 7% loss. I recently sold out with a 40% gain over two years right before things tanked and I do not feel comfortable going back in now. Who cares if a panic is irrational [altough this is rational frankly because there are so many things which are a mess right now, if I had profits on open positions I would be selling agressively into strength and you should too].
The only way were at a bottom now is if the economy is too which is highly unlikely. Now if you are a great trader bear markets which we maybe heading into can be better for trading then bulls so still money to be made, but only by good and pro traders, everyone else may lose their shirts as always.
But for amatuers who are looking to invest in stocks I advise stay out for now. One or two pieces of bad news and guess what your bargins getting allot cheaper!! And most people do not have the stomach to sell when down 7% so allot of great deals can quickly turn into 20% losses.
Also who cares if tech says they are not effected yet, consumers are already closing the wallets more, and it will take a little longer for that to trickle down to companies and then the techs.
The Stimulas package will not really do that much, and dems will probably repeal the tax breaks too, so tell me exactly where all this spending power is coming from inless we continue to sell our country to others which might not be a bad idea because they might be more responsable then the bankers here.
Some small tech companies are already seeing more caution corprate buying, and I am in tech, you guys just don’t hear about on Fortune/CNN until it’s big, but you will soon.
Guys this is not an environment for the average joe investor to try to make allot of money, more a market to try to not lose your bankroll as so many banks, and supposed experts financial institutions have done with disasterious effects for the average american.
Godo luck to all.
A 10 year credit binge that has pervaded, and influenced, almost every level/aspect of society throughout main street USA has been followed by a 30 day correction of equity values on Wall street…and suddenly its right to buy equites, thats just madness.
While the cut in interest rates might allow the Banks to rebuild their balance sheets over time (years), the cuts certainly wont bring a return to the same economic circumstances that a ten year build up of cheap credit created.
The real problem, which nobody wants to talk about…’its the savings ratio stupid’ or the total lack of it throughout western societies. No individuals save money anymore. No western governments save money …incidently thats why western countries dont have any “soverign funds”. In the West we spent our money on welfare, national health services and pointless wars. In short the western economies are addicted to debt and so when an asset bubble bursts (that has financed the consumer boom) then there is nothing to fall back on.
The only good buy right now is goodbye.
Finally dont underestimated the Chinese they saw how the USA and West won the cold war with russia (by massively out spending it) . They know their time will come while they keep on saving and we,in west, just keep spending addited to debt.
BUY GOLD — an 11+% increase from December 31, 2007 to today looks pretty good to these eyes compared to the -5.7% change in the DJIA.
Why would cnn put something like this out there. This is the typical head fake done by the street to dump holdings at higher prices. The market is a long way from its bottom and they know that. We are heading into a recession and the last thing to be doing is investing in companies or indexes that are headed lower. I will wait for much better prices then these. Don’t fight the trend and don’t fool yourself into believing that wallstreet is full of ignorant traders.
As I read the comments, I can’t help but admire the strength of herd mentality. I bet if you ask the same question last year when DOW was at 14K, everyone would have express bullishness.
Yes, there were a lot of skeletons in the closet. But the market has also dropped 20% to account for that. If there was no bad news, AAPL would not be at $130, GOOG would not be under $550. That’s the way the market is, when it goes back up, how does one know whether it is a false start or really heading back up?? And when you miss it heading back up, you will kick yourself for not jumping on.
Guessing the absolute bottom is tricky just like guessing the absolute top. I say if you can get within 90% of the bottom and 90% of the top, you are doing very well.
But stock market operates exactly opposite to the human emotions. Just look at the postings, you should be buying now and selling when the DOW was at 14K. Yet, most people are holding cash right now. When DOW goes back up to 14K, that’s when people are putting money in stock.
That’s why a lot of hedge fund managers make hundreds of millions because they understand the psychology of average investors.
Now is the time to buy. The problem with today’s market is that too many traders(not investors) are worried about what the media is saying.Traders want to make some quick cash and then when they read the bad news they start selling. Go figure. The traders are the people that are making the market go down because of the sell off. Most of the companies had good earnings and some possitive predictions for the rest of the year. People need to stop panicking, stop reading magazines and just do your homework. We need to be patient. Many investors are going to regret bailing out of the market because they will lose a lot of gains in the near future. There is a reason why we have the best economy in the world. Buy low and sell high.
Personal opinion follows…Sure, now is the time to bargain hunt, especially the quality companies. However, hunt but don’t buy right away. Two opinions follow:
(1) Wait during the next 2 to 4 weeks to watch the djia. Should it sink to 12000, pull the trigger on a few of the highest quality companies with the largest dividend yields, and wait on the other (middle and lower) companies on your list just to see if the djia goes down further to 11,750 or less; if so, then buy those middle and lowers on the list but diversify sectors and perhaps cost average on the top ones already bought. Do keep 25% to 30% in cash though for several months as a reserve and also as a way to have the cash to bail out of some losers you may already have as well as buy more winners, but still keep at least 10% to 15% in cash regardless in a mix of money market fund and/or higher yielding CDs than the money market fund. (2) If the djia creeps up again from the current 12,468 mark (11AM 1/31) to 12,750 within the next 2 weeks or so, pull the trigger on the top highest companies on your list.
Wait and watch for a down-draft of the djia for a couple of weeks, and if the djia retracts to around 12000 to 12200, then pull the trigger on the middle group of the companies on your list. Diversify your stocks, think about cost averaging to top of the line and forget the lower ones. But still keep around 15% in cash.
Think and research: cvx, ups, hd, dow, pfe, bac, bud, ge, mcd, ko, mo, syy, mmm, cat, axp, aa, wmt, vz, fre, csco, txn; to name a few of the ones I like.
Summary: The market is too scary right now to be investing more than 30% of all your available cash. Some defensive stocks are advised. High dividend yielding ones are advised. Some mid to lower yielding stocks that have been around for many years may be better than some of the higher yielding ones that seem to be very jumpy right now. Do your research, try not to buy huge amounts of single company stock because the price looks right, because for the simple $10 fee to buy, you can buy more during the next few months as the djia mellows some more and grows at a mellower rate.
I hope this all might make sense to you.
I’m 100% in cash and sitting it out. There are way to many unknowns. And let’s just say the truth…for the past few years we have lived from “bubble” to “bubble”….we need to change from “in God we trust” to “in bubbles we trust”. In my opinion it is not time to get into the market and all of you who do get a rebate, my advice is not to spend it but to may down your debt because bad days are in the horizon(bad like we’ve never seen in decades!)…..am I an alarmist?…NO…I’m a realist and if you comb through all the news carefully, you will see the truth….”the truth will set you free”…the gov. wants YOU to save them…but if you are wise, you will say the hell with the gov. and save YOURSELF!
To me, the “time to buy” phrase implies one is attempting to time the market. There is too much market uncertainty for one to do that consistently over time (my opinion). That’s why I am big on “Dollar Cost Averaging”, or buying in consistently every two weeks (i.e., my paycheck) over a long period of time. It’s the way to go.
Ed B.
Wait a minute. Surely, those countries whose economies, homelands, governments and lives have been rescued or saved off the backs of American veterans and American military would step in and help us out if we had a total economic collapse! I mean come on! they are waiting in line to help us out after all the trillions we have spent…well, aren’t they?
Why buy when Housing starts are way down, consumer spending is down, GDP is slowing, producion is down, the dollar is falling, inflation is increasing… There needs to be signs of improvement before one should start buying. We are a long way from that time.
I laugh everytime I hear someone make the comment about “uncertain times.” The future has ALWAYS been uncertain. I don’t understand how one day’s future is that much more unknown than another.
Also, the US, many US corps and many citizens are over-leveraged. The bill eventually comes in for everything. It’s like the stock market has had a night of binge drinking and everyone is waking up with a hangover. The Fed’s bloody Mary will take the edge off, but we are just postponing the inevitable. I think the stimulus pkg will literally buy us time, but the hangover will come back with a vengance. Keep $ on the side to be safe and take advantage of possible drops. Don’t over-cash out, because the market may temporarily rebound. Stop trying to time the market! Stick with some investment principles. Diverisfy, globalize investments, and don’t think emotionally. Invest based on your lifestage and needs. Good luck!
It seems to me that if we continue to bail out banks and mortgage companies (remember the Savings & Loans of old)we will continue to have big messes. We should let the “market” correct itself and let the bad business, or business that are run badly, be corrected by the market. That way, the executives responsible for the messes will not have a chance to mess again and retire with their humungous summs or money – like that guy from Merrill Lynch, who after screwing the mortgage credits department horribly, retires with over 100 million dollars.
Irrational exhuberance, irrational fears… I think the key here is IRRATIONAL! If you buy or sell just because everyone else is then you deserve what you get. If you buy or sell based on an intelligent valuation of the company and future then you shouldn’t get burned too badly or too often.
Be a wise investor. I’m never out of the market. I’m buying right now but with the knowledge that the market will correct before it can really grow again. I think you want to watch the companies you buy and sell closely. Yes, buy great companies for the long term; but right now reserve some cash and wait for the real bottom. Then you can go back in heavy and even do ETF’s and mutual funds. Cherry pick now and go all in later.
Yeh, in a recession people will go out and spend money on the newest Microsoft operating system, or Office product. As a computer consultant I can tell you that theory is rubbish.
I think that this one will be a whopper, and that people “getting back into” the market will presently be buying at a high.
What a bunch of gloomy guys we are … Best of luck for you intrepid investors. Remember Capital preservation, capital preservation, capital preservation. Hope to see you on the other side of this crazy period.
Fear and uncertainty are a function of the fact that the 150 billion write-down by a handful of banks is only the tip of the iceberg, so far. The media cannot dispel this with fairy tales narrated by sooth-sayers – public or private. Today the monolines/bond insurers are reporting losses with their credit ratings at risk. Now we’re talking TRILLIONS – not billions! If the media did not report this it would be akin to leading sheep to slaughter. Bears, at least, have some idea when a hard winter is coming … and eat accordingly. The fat accrued is for lean times.
The DOW only goes up in response to the inevitable massive inflation brought upon by an out-of-control money supply.
We have allowed politicians to really screw things up in this country. We produce nothing. We invade sovereign nations. We spend money we don’t have on things we don’t need. People have consumed and consumed and now they can consume no more, now we must pay the bill.
The DOW is toast, because it’s priced in a currency that’s toast. For the time being we can still act like all of this “doom and gloom” is just the result of a few people with bad attitudes and a crappy outlook. When the full extent of this derivatives mess becomes apparent, we’ll all be stocking water and canned veggies in the cellar.
We are on the precipice of the worst recession in 50 years. If the Fed lets inflation or deflation out of control it could be a depression. The last recession in terms of GDP was only about a sixth as deep as the average recession, but corporate profits plunged 50% in part because they were so over leveraged. They are even more over leveraged now and a deep recession will send many corporations to bankruptcy.
Take a look at how many false bottoms the Dow had from Jan. 2000 to Jan. 2003 and that may make you pause before buying.
Gentleman tighten your belts and hang on. I believe this is going to be the worst ride since the 30s.
Sooner or later there has to be a correction, things are over valued, inflation will kick in even more, and there needs to be a recession, the Fed should let it happen and get it over there has been too much money chasing stocks inflating their value due to the large demographic called baby boomers, what goes up will come down and should come down. The market it way way over valued and has been for years, let it fall the lunacy should stop, let them pay the price for bad mortgages and stupid prices and dumb investments. I look forward to hopefully big drops and some retrun to sanity after the carnage, in fact some carnage would be good. Bring it on!
Doom and gloom is a fascinating read and thus great material for the media. However,they are justified. We have not seen the bottom yet. Companies (ex-financial, housing, real estate) are in good shape. Stocks are cheap and will get cheaper still.
We are seeing a great debt blowout unfold. Until we see credit markets flow (after full disclosure and failures)we are stuck. Housing is saturated and not coming back for several years ! Any one who wanted a house bought 2-3 years ago when the deals were great and the boomers (50+ crowd)are not going anywhere for a while.
Put your crash gear on…Equities are going to sustain collateral damage whether they deserve it or not.
I see a repeat of Tuesday, October 29, 1929 coming soon. It’s a damned shame that we don’t have anyone that truly knows how to turn around the economy in this day and age here in what’s supposed to be the so-called Greatest Country in the World !! (The so-called Greatest Country in the World that can’t even pass / provide Universal Health Care coverage to their hard-working low and middle-income citizens like 90% of the rest of the world…GREATEST COUNTRY – BAH HUMBUG !!)
No not yet. There is still a huge downside risk. Let the Fed and politicians panic. Over the next year, a couple builders and banks will go belly up and oil will drop. When things hit rock bottom, buy!
The Hedge Fund managers brought the market down yesterday. No one likes to talk about it, but to bring it down that fast is not done by amateurs. They control the market and will determine when the market goes up or down. Sometimes they get a kick out of it. Go ask Kramer.
In nominal terms stocks will go up, but in real terms stock values will be going down due to inflation skyrocketing as the Fed continues to increase liquidity.
I am not a stock market investor – never have been but from what I see these rate cuts are doing more harm than good. Is the Fed panicking? You bet. The stock market needs to be left alone to correct itself. The price of stocks have been overvalued just like the real estate market and needs to reset to affordable levels.
your quite correct, good time to buy. i have a question. how did you manage to get your article into cnn.money. it has got to be the ulimate financial site for doom and gloom.
For all the hand wringing about the falling market, the DOW is still at 12,400+. Considering that it was at 8000 in 2003, it has achieved a considerable gain. The interest rates hikes were ill advised, and will ultimately help the DOW creep back down to more appropriate levels.
It’s the right time to buy if you are excited about inverse index exchange traded funds. Do yourself a favor pick up some QID and ride the lack of consumer confidence for a few more months. When our system wakes up to the fact that our countries consumer overspending glut has been paid for, only then scoop up your bargains looking for a bull ride.
Nowhere close to time to buy, unless you want to short financials and monolines (yes, still more bad news to come). Oh, and you can also safely short all US stock indices.
To those who wish to “jump in” now, good luck. It may be a LONG time before you come back to even money.
Well one certainly needs to do their homework. It isn’t all just about interest rates. i was fortunate enough to jump in and grab 4000 shares of FordMoCO (F) when it was down to $6.15 last week. Albeit the intent is for a long term purchase, there are many other great deals out there like this with companies that have plenty of cash on hand and a turn around plan in place.
I know this sounds very old fashioned, but looking at the fundamentals–we have:
Economy sputtering, hints of stagflation, rising spector of inflation, housing market in deep do-do, mortage market and banks licking their wounds, credit card market hemoraging, change in the bankrupcty code allowing less relief, federal deficit ballooning, dollar sinking, …..and the Fed Reserve conjuring up “incantations” and desperately using up the only arrows in it’s quiver…(fed funds rate cuts”.
Oh, yes we do have that $600 tax rebate on the way. Yes, that should do the trick and set things right again.
Yeah this is a great time to jump right in the stock market.
Perhaps, Mr. La Monica could post a smattering of “vulture funds”. We can pick at the bones of the weak, dead and wounded.
From the Fortune article by Brian O’Keefe today regarding Jim Roger’s view of the where the economy is headed: “‘Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I’m afraid it’s going to be much worse,” he says. “Bernanke is printing huge amounts of money. He’s out of control and the Fed is out of control. We are probably going to have one of the worst recessions we’ve had since the Second World War. It’s not a good scene.’ … Does that mean stagflation? ‘It is a real danger and, in fact, a probability.’”
Stagflation is an optimistic view.
Once the Fed loses its ability to assist the credit markets, which it is very close to right now, very few companies are going to be able to grow sales. The ones that might or maybe will do less poorly than others are the traditional ones (sin, used cars, deep discounters, some of the medical companies to the extent that people still have medical insurance, and food); any company that sells discretionary goods and services, or where their customers can reduce or defer expenditures (including most technology stocks) should be viewed very carefully.
So I don’t thing there are very many good buys in the U.S. at this point, unless you intend to hold for a very long time.
Finally, watch the unfolding disaster in Credit Default Swaps (see WSJ article on 18 January). Bond insureres are just the tip of the iceberg. If the scenario portrayed in the article happens, any company that depends on credit to function will find it nearly impossible to maintain its business. So the downward spiral of business downsizing leading to job losses leading to reduced spending leading to business downsizing leading to more defaults .. will accelerate.
What’s the term for depression with inflation — depressflation?
Wheelbarrows of money anyone? It has happened before.
Patience. Subprime has rattled Main Street even worse than Wall Street. It is not abstraction when your neighbor is upside down in his home loan.
For equities a minimum, 10% downside remains and possibly much more. If properly positioned, the near future may offer some of the greatest buying opportunities in stocks and real estate since the Great Depression.
The rate cut was already in the market. It was a “sell on news” event. The averages have only pulled back to last summer’s corrections. The bear has a ways to go. Institutions and funds know that good stocks are on sale, but they expect them to be even cheaper in the next few weeks. And everyone wants to see signs of a bottom that sticks. The value investing cycle starts when the market begins clawing its way back up. Fed cut too much, too soon, keeping no powder dry. And the law of business cycles has not been repealed this time either.
Nope – not unless you mean buying in the China market or gold and silver. Read Jim Rogers’ article today from Singapore. As per the record of past bear markets, we have a LOT further down to go.
Wrong. Unless you’re looking to catch the proverbial falling knife, it’s not time to buy. You have to consider that there is still a lot of writedowns to be reported still left in the system.
What’s worse? To let the market hit bottom and begin to move up finally and perhaps miss a couple hundred points of the next upmove to last thousands? Or to buy now thinking it’s the bottom and watch as the market continues to sink and possibly risk a thousand or so points to the downside?
Think hard on that.
We may possibly get a bit of a bounce here in the short term, but the Fed’s panicky behavior should tell us all something: There is a very large rat in the woodpile. Long term, it is time to be very defensive; maintain portfolios if you wish, but I would hedge intelligently without question.
There are a number of companies which will not be affected much by the continuing financial/economical turmoil and are currently oversold in panic. There are others which, even though their price went down quite a bit, are still overvalued. As always, the difficult thing is to tell the difference between them. Therefore, I think that: “Fear! Panic! Time to buy” is an oversimplistic view.
I think it is actually quite funny that someone from CNNMoney would actually write an article like this. People can twist and turn the news to sound any way they like. Remember only last year, if it was bad news then the market would skyrocket because that meant that meant the rate would be cut. The way I look at it, if the Fed has to keep cutting rates, it means something is really wrong with the economy.
I think there are a lot of attractive stocks right now. Having said that, I don’t agree that we are at the end of the downturn. Yes, there is fear in the market, but we are down well under 20%. There hasn’t been any thorough washout. And we are due for one of those. Sucn a washout happened in tech in 2001. It happened in housing and mortage stocks last year. It may be happening (somewhat) in retail right now. It is like we now have rotational washouts. To really have a true bear, it needs to be a bit more widespread.
This is a stock pickers market. If you are patient and pay attention to the fundamentals, you can do okay.
You are absolutely right, I’ve never seen a period like the last two or three weeks when everyone in the news media is actively seeking out bad economic and financial news. Read any story coming out these days and you’ll have to go to paragraph 4 or 5 to read anything positive—even if the postive news is really the story line. Buying time for equities is here for sure. (Oh yes, and my other pet peeve is that the media seems to set absolutely no qualification levels for any writer to comment on economic news or finacial events. Probably a good way to keep movie critics employed during the writer’s strike. This may be fine for TV news media—we’re used to them running after the most recent ambulance, but the written press should be ashamed. We expect better from them.)
No, it’s time to move investments out of stocks and into index bond funds or other. Stocks will plunge alot more — the S&P 500 plunged down to ~750 in Bush’s first recession. This will be Bush’s second recession, and it will make the first one look mild. He can’t blame Bill Clinton for this one — no one will buy it. The consequences of Bush’s and the Republican Congress’ bad policies all bent on increasing business profits at any cost will outpace their spin.
Yes, yes, and yes again. The market’s reactions those pas few weeks reminds me of the saying “a woman will never tell whats she wants but reserves the right to be upset if she doesn’t get it”. The market wants good news, gets them, heads down. The market fears bad news, gets them, crashes. Someone should tell those traders to get a grip or a life or a better lover. But may be not right away. At least, not until I get those Apple’s shares at $200 a piece! Hello retirement in Maui 
No, The market is reacting rationally to the fallout from the mortgage/credit crises. The optimists have been consistently wrong about the severity and scope of this bursting housing/consumer bubble from the get-go. I think we are still in the early stages of the economic fallout with plenty more bad news yet to come. There are better bargains to be had for those who are willing to wait for this mess to play itself out.
You bet it’s time to jump back in. With stocks at, near or below 52 week lows the smart investor is looking to make a killing.
Unfortunately one of the major driving factors of the irrational behavior of investors is the media. Look at the majority of the major headlines over the last month. “Stocks fall as recession fears climb”, “Are we at the bottom?”, “XXX company reports strong earnings but economic future uncertain”. The media has been feeding the fears.
I wonder what the market would look like if the headlines had been, “Good earnings for most major companies show economy is not tanking”, “Blue chip stocks still performing as expected regardless of the mortgage fiasco”, or “Fed rate cuts and stimulus package should have desired impact to pull country back from possible recession”?
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Better start buy gold and silver metals!!! http://www.kitco.com Great site that give you idea what is going on with market,so forth and also you can buy precious metals.