re: bob’s comment about unions. Bob you are so full of it I do not know where to start. I would like to have the union the bankers have making tens or hundreds of millions wrecking the economy. I would like to have the union that the trust fund babies have never working a day in their life for multi millions. I would like to have the union the real estate salesboys have raking off 7 1/2 percent for inflating the cost of houses and wrecking the economy. I would like to have the union the insurance types have making wads of money denying care and inflating medical costs. See bob, my boy, unions are an easy target but they do not hold a candle to the rest of the gangs looting the country including yours.
POE Orlando Florida: March 6, 2009 2:21 pm wrote :
I agree that the markets are like a casino, only worse because of all the “insider ” manipulation. I agree that once purchased, stocks should be held for a minimum amount of time. Our whole economy has a rotten underbelly that is now being exposed. Throw more money at these fools? Where is it going? Where is the accountability?
And I second that.
The plebs have been encouraged by advisers to put their sometimes meagre savings into shares and have now lost 50%+ when all they wanted was a fair return. Not an overnight killing – but a fair, regular return on their savings. They were not speculators – they were just the suckers that the big guys fleeced.
There is not way that I am ever going to put money into shares ever again. I would have been better off with a passbook account.
When you lose around 60% of your assets in stocks, how can you have any faith left, either now or in the future?
I have lived to see all kinds of markets. A good fundemental rule is to look at the fundementals. In the case of the stock market it is earnings. If you can trust the quality of earnings you can unemotionally know what to hold em and what to fold them. It is not an accident that ultimately stocks will eventually seek their true fundemental level. Based on information we know today and the worst case expectations, the DJIA can expect to settle to 6,000 at the lowest. However, the long-term potential upside in much much greater. Most invertors today are so gripped with fear and so preoccupted with the fear that they may have to pay 1% or two in increased capital gains tax, they are willing to forgo a 50%-100% appreciation in stock prices. Those who make decisions based on fundementals will be looking at hugh increases 12-24 months from now. Those making decisions based on fear and media talking suits will be going “should’ve, could’ve.
Today’s Americans – a combination of baby boomers to Gen Xers – are money-motivated. It’s all about a fast buck and a lot of bucks. In a near-totally unregulated environment, banks and Wall Street created “investments” that were as secure as a cinder block hanging from a thread.
Even my late father, a GE retiree, used to say, “Keep the GE stock. You know it’s always gonna grow.” NOT!
The bullseye that we allowed these “experts” to create for us was a “get rich quick”, gotta-have-a-million, pie-in-the-sky falsehood.
The basics of investing are still there. You have to set a realistic target for yourself, decide how much risk you’re willing to accept, and then, put together a plan that includes 100% safe vehicles, and work to your goals. Operative word: WORK.
I don’t trust the people who work on Wall St. or run the companies. They’re full of it. Every Wed. I watch for the release of gas and oil supplies and then, compare it against the estimates set by these “expert” analysts. THE EXPERTS ARE NEVER RIGHT!!!!!
Would I buy a stock below $5? Yes. But not before examining the companies fundamentals, and I’d buy a little at a time.
Some of these companies like GM are dead. They just don’t know enough to lie down. Others will bounce back, but trust your own instincts. If these experts are so terrific, why are they still working? Shouldn’t they be so successful that they don’t have to anymore? Think about it.
It’s over. The run up in stock prices is over.
Enough retiree-hopefuls have lost enough of their dreams that the mass of dups needed to levitate the stock market will not exist for at least a decade.
The larger economy is also in deep trouble. We are in debt up to our ears and the bill is due. There is a vast unwinding and several years before even the “real” economy recovers.
Marko.
I’m sorry to say I do not believe the market will never return. A study of world economic history suggests that we are in the process losing our economic high ground to China and our economy and the market is not likely to improve any more than England’s’ economy improved 250 years ago when they lost the high ground to us or Spain’s’ economy improved 250 years before that. No matter what we do, in 2-4 years the US economy will look like Mexico’s and Mexico’s will look like central Africa.
Can’t happen here? Every global economic transition was caused by the same two conditions: The losing country had accumulated more debt than their economy could support and the losing country had such incredible hubris they were unable to see it. The debt funded party is over!
unions are the parasites of the us economy – they have killed the auto industry, each and every state budget, and will stifle the effect of the stimulus package that requires over-paid union labor. they’ll die with the rest of us, but they’ll die last because of their gold plated benefits -congratulations!.
I couldn’t pass it up. I bought 500 shares of Citi yesterday. I plan on buying more next week, maybe 5,000 shares more.
The facts speak for themselves. On the average any stocks bought in the last 12 years are underwater, some severely so and some gone.
Stocks are high priced when times are good and nobody needs to cash them. when times are bad and you might need to cash them they are down.
Real Estate has become like stocks or worse because the margin for stocks is 50%, but in Real Estate it got to 0%-10% then poof like 1929 and on.
John, I wasn’t invested in “Petro Kazakstan” or in some crazy penny stock / scheme. I had big banks, international banks (hand grenades with the pins pulled out…) I had energy, minerals and consummer goods. I’m down 60%. When I signed up, I stated that I was ok with a 25-30% drop in my portfolio, and I was. I didn’t think twice about selling until I started heading towards -40,-45 then -50%.
Hindsight is 20/20, I consider your “crybaby” label unfair. If your broker would have told you you risked losing over half of your money, you wouldn’t have been that stupid either.
Regarding Rick’s comment about unions driving inflation. Please explain something to me. Meatpackers paid 10 to 12 dollars per hour wages in 1980. Today most are under 10 dollars per hour. Why does meat cost more today than in 1980? Products made in the Far East have far, far lower labor cost than in 1980 yet cost far more. Why is that? Could it be that inflation is really driven by Greedheads owning businesses especially at the retail level independent of any wage cost drivers? Time to quit blaming the unions for everything just like it’s time to quit blaming Bill Clinton for everything.
to Rick, re: unions:
As a unionized worker, I both agree and disagree with such a statement. When union leaders are incentivized to reach for much better conditions without accounting for the present circumstances of the company,arbitration is almost always the result. On the other hand, unfettered decision-making by executives that have a “devil-take-the-hindmost” mentality are deleterious to workers as well as investors,and that is why there are still pockets of unionized workers in labor organizations (especially). A country without unions will offer no safety protection,a-la Chinese coal miners whose equipment is decades-outdated. If your rationale to these workers is to avoid the work,or get better educated, I’d like to remind you of something my father once said:”Even the CEO has to leave his trash on the curb;who will take it from him?” This “not my problem” IS the problem,and it is evoking the sort of social Darwinism that has ruined many empires. French and American Revolutions, Russian Revolution, Roman dynasty, Manchurian dynasty–oh, BTW–notice the term “Dy–nasty” because that is how they all meet their ends. Just an observation.
Didn’t lose faith in the market. the market is doing what it’s supposed to do when confronted with these policies from this leftist adminstration.
ah,yes,the “casinos” always have the edge. I will be the first to admit that a company offers no control to the individual investor unless that investor owns 50% or more interest. (Privately held works best). The problem is simply that those individual investors with the greatest exposure to their corporations are executive level, and even then they often dump their exercised stock upon reaching certain “favorable” metrics. Can anyone explain how a corporation can leverage itself with debt to enact a share repurchase program,which benefits the transient investor,and leaves the corporation in worse financial shape?
If only I had a crystal ball. There are some great values to be snapped up out there; but we will have to wait. I predict we’ll see the bottom of the market next Oct — the DJIA will drop a smidgen under 5,000 and then the savvy investors will come in and snap up the bargains. Fearful thought and there is little doubt that we’ll see the stock of some [more] large corporations crumble to dust. Alas, I have faith in our country’s businesses and investment profs. Eventually they will find ways to make money and those that stick with them will ‘win’ in the end. Read this in 2011 and see if my crystal ball should be shattered against the bedroom wall or if I am anywhere close to the mark. Chin up America – we all need each other to get out of this mess.
Buch of cry babies…when the market goes up everyone and their mother wants to make money….when it goes down everyone turns on it. To make money you have to take a risk. If you can’t accept the risk and cry about the loss then stay our of the market!!! This is the very reason why the market has collapsed. The common man ivesting in things they dont understand. Is not this part of the reason we had the grear depression?
I just love John’s “hiding money under the mattress” comment.
John, in case no one has told you, in the modern world, the majority of the money supply is all electronic. You CAN’T hide it away and take it out of circulation. Even if you just save it in a passbook account, it is on someone balance sheet doing something.
You call in “hiding” money because people are choosing to stop “investing” in the gambling house we call the stock market.
For some totally unfathomable reason, people have come to the conclusion that the entire wall street thing isn’t all that safe of a place to put their money. Imagine that?
What’s more, a whole bunch of people are starting to suspect that the whole wall street system maybe isn’t all that good, period. What a shock.
Wall street is not a place for investment , has not been since Mr. Reagan’s tax cuts on capital gains, as well as introduction of day trading, hedge funds, options trading. More and omore of the investment community has been intrested in making money of other peoples forunes and misfortunes not in developing industry and the future of the country. Consupmtion has been fueled by federal deficits , lower tax rates, and creation of imaginary wealth and leveraging (creation of bubbles. Average people have lost their lifetime savings in 401k’s and destruction of home values. Now at this point we can not expand based on consumer, no matter how and how much the government keeps printing and giving away money. Recovery in stock market seems a distance dream, not even an evantuality.
In the long run, I think history will look back on this period as the “negativity bubble”. Everyone, and I mean everyone, is irrationally hiding money under their matresses. There are still good businesses out there.
I lost faith in the stock market two years ago and in the FED at the same time. Oil was on its way up, housing prices were at an all time high, stocks were ridiculously overpriced. I bailed. I’ve been in Government Bonds since then and earned 3% (or so) interest per year. I did reenter the market for 1 day in early October and earned about another 3% but haven’t tried that again as the market is too volatile.
There is a serious disconnect between the stock valuation and the company value and unless these are recoupled we won’t have a true market that reflects the actual worth of the companies. Again, just like the late ’90s people had excessive exuberance and would buy anything brokers told them too (note the word broke in that sentence, its not hard to find). Last year we had the Fed (up) telling us we weren’t in a recession all the way up to September and then they said, “We’ve been in a recession since October 2007″. I’m no financial expert but I knew that in December and January last year. The first bail-out was a joke. It was missmanaged and un-audited. Even the banks don’t know where it all went. Most of it went to buy up other banks, which themselves were overvalued and had poison assets. Poison plus poison = poison and no math will tell you otherwise. The executives at these banks were and are stupid to believe otherwise. If the Fed had insisted the funds be used to prop up the housing market and buy up the poison assets it MAY have worked but we will never know now. Frankly I am expecting us to fall into a depression. I don’t want to sound alarmist but that’s where we seem to be headed. Soon there will be deflation. There has to be or no one will be able to purchase anything. Unions may be out the window (no great loss there as they are one of the drivers for inflation). Unemployment will hit double digits by summer and large companies will fall (GM anyone).
As my grandfather used to say, “Batten the hatches and strap yourself to the mast.” Hopefully we can all weather the coming storm but a whole lot of us will end up going down with our ships.
It’s a gamble like playing the horses or cards, etc., I have faith that it is a gamble like so many things in life. I have a 401K and a Roth IRA but don’t depend on others to make decisions for me I don’t give up control. What utterly disgusts me is the people that are part of it; they manipulate, lie, cheat; these people need to be prosecuted and a lot more oversight is required.
No, but I have lost faith in our President after hearing his comment about the market being like a poll indicator. Its a great illustration that clearly our elected officials live in a different insulated world than the rest of us. We could have 25% unemployment, but they will still have their retirement, their private jets, their numerous political perks —paid for courtesy of our tax dollars that they are confiscating from us and squandering.
Faith in Wall Street versus that in a publicly traded company are two different things. Never had any faith in the former. But always had faith in my 1997 F-150 pickup!
Steve in Andover stole my thunder regarding Ford. Been toying with the idea of buying a thousand or two shares of Ford and sitting on them. If they tank, I’m only out a few thousand dollars. But if the share price increases as Steve suggests, the return on the initial investment would be well worth it, more than offsetting the tax on capital gains.
Just don’t think we’re at the bottom yet… Unemployment is forecast to rise through most of 2009. And the CITI/AIG CDS debacle remains on the horizon. So I’m going to wait a bit longer, probably until late 2009 or early 2010. By then I’m hoping we’ll have a better idea of where the economy is headed.
I agree that the markets are like a casino, only worse because of all the “insider ” manipulation. I agree that once purchased, stocks should be held for a minimum amount of time. Our whole economy has a rotten underbelly that is now being exposed. Throw more money at these fools? Where is it going? Where is the accountability?
no, I have no faith in the stock market, after losing most of my life savings during the last 8 yr’s and if stock sold for a penny a share I wouldn’t do it again.I invested heavy for 30 years just to see it wiped out by geedy CEO’s and fund managers and politicians. CEO’s didn’t loose any money, nor there board members who kept them at the helm. The losers were the honest people. I am a little lucky I got out completly at 1300 before I went totaly broke. I have two sons who are well imployed and have some money and evertime I see them I remind them to stay out of the market-do not buy stock or mutual funds, it’s not worth it. I am not alone, many of my friends and fellow retired employees are singing the same song, one man I know lost 600 thousand another 900 thousand 3and 4 hundred thousand dollor loses are common. Can anyone exspect us and the thousands like us to go on a campain promoting investing in the stock market-NO. Friends don’t let friends drive drunk AND “Friends don’t let friends buy stock”..there it is.
We all know the game has changed. So much, that we could discuss for hours and hours. However, i’ll add my two cents and go from there. The buy and hold strategy is done. Simple as that. Most will think I’m nuts when I say Mr. Buffett’s time has come and gone. For the financial experts on tv, on-line and any other form of media seem to believe that something is wrong with a negative bias towards the stock market or the financils in this country, but mark my words most are heavily invested in them and to tell you that we are beyond a recession and in a full blown depression would do nothing but destroy themselves. This country is in a financial mess that will take years and years to come out of. Everyone that is telling you that we are near a bottom are the same people that told you 2 years ago, one year ago, six months ago that we were near a bottom. Buffet included. Google their comments over the past 2 years and see for yourself. the only thing obama is doing different than bush is throw a hell of a lot more money at the mess and it will not buy itself out of a problem. a50 or 60% loss is better than a 100% loss. dow will trade down to about 4500 and the s&p will hit about 425-450. then and maybe then it will be safe for a TRADER not a buy and hold investor to make some cash bakc. Goog Luck.
There is NEVER a good reason to invest in something where you cannot PERSONALLY control cash flow or decision making.
Sooner or later, you are going to be ripped off. So, if you are Warren Buffet, you may have a pretty good chance to win investing in downturns.
If you are the regular person, you better try casino.
Depends on what you mean by “faith in the stock market.” Do I have faith that it will always go up. Or go up at a measured rate? Or never go below some arbitrary level?
No.
But I have faith that it will ultimately reflect what buyers and sellers think are reasonable values for companies. I have faith that the market will do what it always does. It will tell us the present and perceived near-future state of business.
Yes, I have lost all faith in the stock market. It is going to continue to crash. The President and Congress continue to waste taxpayer dollars on bailout plans that do not work. If all of the money that has already been wasted on failed bailouts had been given to American Taxpayers as a stimulus payment (several thousands of dollars per taxpayer) then taxpayers could pay off their delinquent mortgage payments and everyone else would have plenty of money to spend to end this economic crisis which would fix the stock market.
I not only want to get out of the stock market, I think it should be abolished. Yes, that’s what I said. I think it’s fine for people to buy stock in a company, but it should be illegal for these stocks to be traded in an open market. The stock market is fueled by speculation, fantasy, and fear; and it only hurts those who originally invested in a company.
Ditto Bob from Fort Mill, SC:
“This was bound to happen. The stock market used to be a place where people INVESTED in companies — bought a piece of them to hold. Now, the stock market is a place where people TRADE stocks for pure speculation. It has degenerated into nothing more than a casino where people gamble, trying to make a quick buck.”
Agree completely, Wall Street Markets need a complete overhaul before any sane person would considering investing.
Yes, this is an excellent time to do some “garbage collection”. For example if Ford or GM survives it will almost certainly return 10X in just a few years. I wouldn’t fill my portfolio with “garbage”, but there is money to be made by being selective.
Yes, I have lost my faith in the stock market because the President & Congress keep wasting tax dollars on bailout plans that don’t work. If all of the money that has already been wasted on failed bailouts would have been given to taxpayers as a stimulus(about $10,000 each), Americans taxpayers who are behind on their mortgage could pay off the delinquincy and everyone else would have plenty of money to spend to end this economic crisis.
I haven’t completely lost faith, but I am avoiding all financials like the plague. Who knows when the Fed will come in and wipe out all equity by nationalizing another bank? As for manufacturing, it is bound to improve. But the Fed continues to dip its ugly little hands in all these markets. The buy American rule comes from the heart, and well intentioned, but it controls capitalist markets, that would correct themselves on their own. Same with all the housing stuff the Government is doing to try and improve demand for houses. Let the market correct itself so that economists and investors can figure out what the strong companies and markets are. The Fed is causing way more long term problems then short term solutions.
Sorry — I failed to directly answer the question:
No, I have no faith in the stock market because it is no longer a stock market. It is a casino.
This was bound to happen. The stock market used to be a place where people INVESTED in companies — bought a piece of them to hold. Now, the stock market is a place where people TRADE stocks for pure speculation. It has degenerated into nothing more than a casino where people gamble, trying to make a quick buck.
I’ve been repeating Warren Buffet’s words like a mantra lately: “When others get greedy, be fearful. When others get fearful, be greedy.” I’ve been repeating this to push myself to buy a few more funds, and mainly to resist the overwhelming urge I have to get the hell out of all of this already.
I don’t think I’ll sell at this point (I’m down over 60%) I should have done that in September (when I was ONLY down 30%) but I’m done buying.
This is nonsense. It was foolish to invest any money in the markets. I think I’ve learned my lesson: what’s in, is in, but no more. Not even if they’re “just” 1$.
No, if free markets reign (with appropriate regulation). No if the government intervenes frequently and arbitrarily. The reason I have withdrawn is because I have no clue what the government is going to do, how bad they are wanting to screw things up.
No. For the reasons that you mentioned, it’s extremely risky. Also, there’s lots of research about stocks falling below $10 never recovering, which is why mutual funds sell them and don’t buy them: they don’t want to lose money for their investors.
Your column is very timely. Of the Dow 30, these 6 are below $10: AA, AXP, BAC, C, GE, and GM. It would be especially sad to see GE (Thomas Edison’s original company) go down due to management failures after surviving for 120+ years. 5 Others are getting close to $10: INTC, JPM, MSFT, PFE, and DIS. All of these are now profitable, so they’ll probably survive, but they’re getting cheap. These look like cases of short raids, like we saw in the fall against the bank stocks, just driving prices into the ground beyond recovery.
A friend of mine who operates in securities says that the reverse-split is almost always a failure. A better choice to save the stocks and companies is to restructure quickly to profitability, announce a stock buyback program, and have the company load up on its own stock while it’s dirt cheap (if it can afford it) squeezing out the shorts. This is a way that a company stock can come back from the dead, but the underlying business must be sustainable.
Absolutely. For example, Ford at <$2 is way discounted, and reflects the short term economic conditions that have caused auto sales volumes to tank. Presuming that Ford doesn’t file for bankruptcy (unlikely, given current numbers), then when the economy recovers and auto sales recover, Ford will return to profitability, and their stock is likely to recover easily to $10 – a 400% return on investment. More importantly, Ford’s fundamentals are sound – quality product, reasonable innovation, etc – and these are what will underpin the company’s recovery. GM is a different case – I’d not be buying their stock.
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The stock market has proven to be fickle and has failed to do the one thing it should, that is establish share prices that reflect the values of the underlying companies. A year and a half ago stock prices were too high, now they are too low. But that just means this is a buying opportunity. That said, I would not buy GM or Citi Group. But then I am not a stock picker, I invest in index funds.
I am confident that, in the long term, the market will provide a reasonable return on new money invested today. I am also confident that those who were buying at the peak will have a long wait before they recover their losses.