I'm sure there rest of you are watching the markets today. The stock market is getting hosed. It looks like investors are fleeing to government bonds and gold. As of this writing, the Dow is down about 300 points. I think I'll be having a gin & tonic (or two) tonight. Ugh. Thoughts on what this portends for the future?
As the stockbrokers would say, relax, take it easy, chill out. Sometimes the stock market is over-acting and although the downslide is becoming the trend of the day, somehow the prices will stabilize in a day or two unless there is something to it like a war in the Middle East or a sudden rise in oil prices (again it is the Middle East). So those who have a thick wad of stocks, maybe just hold on and pray so the Dow Jones will be good to you on the next day. And if it doesn't then you still hold on and wait for a rebound.
I wish I could say it's simply just noise but sometimes noise dictates sentiment so much that it becomes self-fulfilling. I think one of the big issues is banks. Banks in Europe grappling with Cocos, banks in the US and their exposure to the energy sector, banks in China and their dodgy lending. When people start to worry about that sector you start getting talk of insolvency issues, liquidity problems, credit crunches etc etc - i.e. problems for the broader economy. Not great.
When everyone jumps ship and goes to cash, that's when you buy stocks. lol It has certainly been an interesting ride. If people are getting out completely though, they are losing a ton of money. Bonds and cash suck too, so no one is really making anything off of that. You're almost better off staying in stocks and riding it out. Bonds still have horrible returns atm. In fact, I would lose money trying to get in to them.
Well, I can't argue with buying when things tank. Goodness knows I've done that on more than one occasion. Still, yet another drubbing on the market is concerning, particularly considering what is going down in Europe and elsewhere.
I wonder how the closure of China's market for the week affected the market. Will we see a huge sell off on Monday?
Quite frankly most of the companies that I'm interested in buying are still quite high... some are getting into the buy range. Banks have certainly taken some hits in the past week so I do see some good candidates there.
Yeah, people need to realize the Dowis just a few dozen stocks, and on many days, it is only a few of them causing all the damage. History says the stock market nearly always beats bonds or other investments Just make sure you stay in the top half of the market.. if I beat the market and the market beats bonds, that really makes things easy for me. When I stop being able to beat the Dow, or the market starts consistently losing to other investments, then I will rethink myself. I must have a weird portfolio, because honestly my worst days this year have been days when the Dow has been flat and days like yesterday are nothing bad to me.
The London FTSE had rallied, and Brent crude is up. Not sure if this is one of those last ditch attempts to save a sinking ship, or if the markets are really turning a corner. Pity it's happened on a Friday; could have done with building up some momentum, which might get stymied over the weekend.
In the USA markets are closed on Monday; I wouldn't be surprised if the market closes down at the end of the day as traders move to cash before the long three day weekend. A comment on BBC's Financial News made 12 hours ago suggested the Friday midday Asian markers would have been have been worse than they were. Oil and banking (especially Europe) are considered among the culprits, the BOJapan had moved to negative interest rates last week and Yellen before Congress just fumbled a discussion of negative rates possibilites for the USA. I'm doing a bit of bottom fishing in this bear market territory. As I have mostly have good dividend payers with decent cash flow, I'll just stand pat with automatic dividend reinvestment, adding more than the normally-expected number of shares. As others here have said, the absolutely wrong thing to do is sell in a panic. Instead, take deep breaths and go for a long walk.
