Wow, There Goes the Dow

[Lapizuli]

And down it goes, and fast...try refreshing every ten minutes. Depressing sort of entertainment.
[google.com...]

[J_RaD]

" TOTAL FEAR "

at least news casters will have lots of things to keep their viewers freaked out and glued to their TV's.

[wheel]

I did a lot of reading on index funds and the stock market a couple of years ago. Now I ignore all this, it doesn't matter in the long run.

If anything, now's the time to rebalance (i.e move money into the index, not out).

[jecasc]

Oh well, let it got...
Some time ago I decided to invest some money in stocks. So I made a list of stocks that looked interesting. However - even as I made the list I noticed how I turned into a selfish and greedy scumbag. When I read about new privacy regulations for online companies - which I would normally have backed - I now thought: Hey, that will affect the profits of one of the companies on my list. And then my brain would start looking for excuses to morally justify my selfish greedy thoughts. "Privacy is dead anyway, why should I not profit like all the others and buy some Google stocks." Or: What? Raise taxes for Jet fuel because flying damages the environment? Well ok - flying is much too cheap nowadays - but I got an airline on my list here.

So I decided: the stock market is not for me. But the experience gave me some valuable insight. Everytime I hear some arguments in the political debate that sound totally nuts - because they ignore basic science and reality - I now know: This guy is not really nuts, he has only invested in the stock market.

[SevenCubed]

Like wheel I studied the mechanics of stock market investing when I was younger. It was a 2 year ordeal :) and with the exception of mutual funds which were not a vehicle at the time I have an in depth understanding of the crackshaft (not a typo) that makes it run.

To sum up 2 years of studies into a few pointers:

1) - The stock market is a secondary market established for the purpose of organizing an outlet for buying and selling investment shares. It is NOT a representation of the actual worth, or lack of worth, of a company who has investment vehicles floating on it. It's all about perception.

2) - Companies listed on the markets are NOT there for love of shareholder value. If that has always been your emotional understanding get over it and move on. Most forget they have shareholders except for when they are reminded at annual meetings.

3) - Their original well-intentioned purpose has devolved into what is now a gambling outlet for the bored elite who have too much time and money on their hands. A market's intended purpose was to buy shares, hold them until maturity (yours, not the shares), and cash out in your retirement years to supplement your income. That still does happen but to a lesser extent because these days retail investors get spooked by volatile short term swings up and down. That keeps a lot of "little people" money out of the market. With few exceptions, it's now simply a game of speculation driven by greed.

4) - If you want to make money in the stock market, do the opposite to what the market is doing. Buy when it's sinking, sell when it's rising. That's where the speculators get their thrills, from trying to guess where les peaks and la vallees are going to turn next. It's all about the life of PI. It's a game of patterns that is even influenced beyond the markets themselves.

5) - The only aspect of secondary markets that still function somewhat as intended are commodities markets that provide hard working farmers assurance of selling their crops even before the seeds are planted. But even in commodities markets the speculators have their claws dug in, especially in sectors such as oil and gas -- so much corruption and collusion it would bring tears to your eyes if you only knew.

Unfortunately those volatile activities influence public perception which in turn affects the very foundation of our societies in the way people will spend, or not spend, their disposable income.

So this latest plunge, bah, I'd like to see it crash personally because we need to tear down this house of cards to rebuild again because western society has reached the saturation point and cannot bear any more upward growth because the extreme wealthy have horded it all and are not willing to pay their fair share for the betterment of our collective societies.

[Lapizuli]

Their original well-intentioned purpose has devolved into what is now a gambling outlet for the bored elite who have too much time and money on their hands. A market's intended purpose was to buy shares, hold them until maturity (yours, not the shares), and cash out in your retirement years to supplement your income.

Hmmm, my understanding was that the market wasn't about retirement, it was about gambling from the start. We made it about retirement at a time when it looked like economic growth was on a permanent exponential upswing and we could safely prop up governmental retirement programs with the strength of the private sector. That hasn't been the case for half a century.

The original point of the stock market was to invest in companies and foster economic growth. As in, you think a company has a growth product, you invest - if it does well, your risk pays off; if it doesn't, it doesn't. It's devolved to a sophisticated kind of tautological gambling; you gamble on what you think the gamblers think you're gambling on.

The stock market was originally at least marginally about product, so early on it was regulated by the organic rise and fall of product. It's so divorced now from product that it is absolutely no measure of real economic growth. Product - e-product, that is - is booming right now at an unprecedented rate, but the stock market is only seeing a tiny fraction of that boom.

[SevenCubed]

Hmmm, my understanding was that the market wasn't about retirement, it was about gambling from the start.

I don't doubt that some saw it as a gambling forum from the beginning. But, to the best of my understanding, from the beginning it was intended as an outlet to raise capital to allow a company to expand quicker than it would be able to grow if left to an "organic" path. That growth (in theory) would provide long-term stability in communities through employment. That long-term rosy employment outlook would assure people they could put aside some money to live on when in later life they could no longer work. That also encouraged them to buy shares in the companies they worked for as a long-term investment strategy. It was a long-term symbiotic relationship between employers and employees. But now, the proportion of jobs created in relation to the revenue being generated is way out of whack. Google (they've earned the honour of being picked on) is a prime example where they are not employing enough people to cover their customer service requirements when they easily could. Would anyone argue with that?

Original investing was intended to be for companies that had solid products or services that were much needed and were already somewhat proven. They wanted to further expand. Whereas now, too many unqualified money managers are inducing havoc into the markets because of the "I want results now" attitude breathing over their shoulders. They make moves they know are dangerous. Sooner or later the market has to correct itself when it becomes obvious that the upward trend was based on hype rather than value.

It has become a game of chasing ideas rather than investing in true underlying value.

[viggen]

...by sheer luck 15 years ago i got into gold stocks when the gold price was 190 dollar and ounce, I actually forgot i had them, a few months ago i remembered them, i sold a third righ away made a big profit and well my point is, go for the long run, unless you want to gamble...

[Rugles]

Bloodbath today. DOW Down 6%.

I think the markets overreacted to S & P downgrade. I would not be surprised if it bottomed out this week. Corporations are still making decent profits. If you are brave, might be a good time to buy.

[wheel]

Might be? Stock market crash=low market. Pretty sure buy low still applies :).

Except all the sheeple are watching TV and calling their advisors to sell before it gets any lower. Then they'll wait until it recovers and buy back in. Sell low, buy high. It's almost astounding that most people are still doing this.

The next thing to compound their misery is that the markets don't recover gradually - they reverse crash in one day. So if you're waiting for the uptick to jump in, by the time you catch it, it'll be too late.

[J_RaD]

I think the markets overreacted

don't the speculators always over react?

Except all the sheeple are watching TV and calling

oh yea the media is having a ball with this one! FEAR - CHAOS - PANIC - CRASH - OMMGGGG they can't come up with enough scary headlines fast enough.