Is the stock market going to tank?

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Originally Posted by 4matic

I believe the the new down tick rule "excuse" has some validity. Give traders a chance to pile on and they will.

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I dont think so. It may have added some volitity, but not a lot. The futures market have been like that forever... it now a true auction market, which is what it should be.

Bottom line --> 12,600 may not hold. We could be looking at a min. of 20% decline, with a few bounces here and there.

Heard just a bit of an NPR story [all things considered-Monday] on how this is exacerbated by some creative 'alchemy' of bundling both prime and subprime paper, and 'shopping' for ratings. That whatever rating company would give them a strong rating would get their business. It was an interview with the Fortune reporter who broke the Enron debacle, wish I had heard more of it so i wouldn't sound like such a dumbass...

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Originally Posted by BeanDip4All

Thats my thinking too. I will just rachet up the fear; It will just make more fear. If the fed does an emerecy meeting and cut 50 bbp we will get a bounce.

I think it would only help the market out a few days. The banks are just not lending; its the craziest thing I've ever seen.

This is a very different thing then past panics. The fed has to be very careful what it does.

Alot of my friends that sit at debt desks are home staring at the ceiling... there's no liquidity.

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the fact that CDO's and repacked ABS are striated through every level of the credit world and no one seemed to be able to properly predict subprime and alt a default probabilities very well, coupled with black box long/short trading verging on irrational at the tails seems to have alot in the biz. wary of trusting all you quants ;) add to the general malaise the fact that notionals on derivatives are >$3 Trillion...fear is completely kicking greed's ass!

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Originally Posted by mtnwriter

the fact that CDO's and repacked ABS are striated through every level of the credit world and no one seemed to be able to properly predict subprime and alt a default probabilities very well, coupled with black box long/short trading verging on irrational at the tails seems to have alot in the biz. wary of trusting all you quants ;) add to the general malaise the fact that notionals on derivatives are >$3 Trillion...fear is completely kicking greed's ass!

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That is not even English. Do I sell everything and move to a shack in the woods or not?

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Originally Posted by mcsquared

That is not even English. Do I sell everything and move to a shack in the woods or not?

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sorry...translation = yes ;)

nah...i dunno. i'm just the next dumbass watching things go a little sideways. a bit of a cryptic speculation, but if perception becomes reality (kind of a fear induced feed back loop) the economy as a whole could head towards recession. most likely calmer heads or a strong profit motive will prevail and the economy will limp along at around 2% GDP. fundamentalists seem to be sucking their thumbs and repeating in a mantra "valuations and multiples are still historically strong". from an equity standpoint this is true, but the problem in the credit markets could exacerbate and quell equity multiples/valuations pretty quickly.

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Originally Posted by mtnwriter

sorry...translation = yes ;)

nah...i dunno. i'm just the next dumbass watching things go a little sideways. a bit of a cryptic speculation, but if perception becomes reality (kind of a fear induced feed back loop) the economy as a whole could head towards recession. most likely calmer heads or a strong profit motive will prevail and the economy will limp along at around 2% GDP. fundamentalists seem to be sucking their thumbs and repeating in a mantra "valuations and multiples are still historically strong". from an equity standpoint this is true, but the problem in the credit markets could exacerbate and quell equity multiples/valuations pretty quickly.

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this is better english?????? TacoDip, can you translate please? Is this the time to sell and get ready to reinvest and buy in 6-9 months?

Nope, the time to sell was a couple of weeks ago. Now you're just fucked. Hunker down and take it like a man.

The problem with switching out is if you miss one or two of the best days your returns really suffer. Trade or don't. No middle ground:

"For the 10 years ended December 31, 2005, the S&P 500 returned about 9% a year. If you missed just the 10 best days (out of over 2,500 days the market was open) your annual return was only 4%. And if you missed just the 20 best, your return was 0.2% a year."

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Originally Posted by mtnwriter

not to stir the pot, per se, but round 1 went to the dangerous mathemetician and her hearsay:

http://www.bloomberg.com/apps/news?p...jBg&refer=home

not calling you out, CUBUCK, but SPIDERS Fin Index down 13% YTD and total correction DJIA is near 10% recapitulation. Fed Rate cut seems more and more imminent based on Fed Funds Futures probabilities rising dramatically everyday...>30% for 50bps.

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Fair enough, but I think its still early. Everything I am hearing, and I have met with management teams with two large I-Banks over the last two weeks is that its still just indigestion and not in any way a cyclical inflection point. Business is still good, unemployment is still low etc etc. Just have to sit and wait for the pig to get through the snake.

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Originally Posted by 4matic

The problem with switching out is if you miss one or two of the best days your returns really suffer. Trade or don't. No middle ground:

"For the 10 years ended December 31, 2005, the S&P 500 returned about 9% a year. If you missed just the 10 best days (out of over 2,500 days the market was open) your annual return was only 4%. And if you missed just the 20 best, your return was 0.2% a year."

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What was it if you missed the ten worst days?

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Originally Posted by David Witherspoon

What was it if you missed the ten worst days?

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Good question. The indexes were up about 200% during that period so I'm not sure how a couple 3-4% moves would have affected it.

Asia is down BIG. the likely hood for a fed cut just went down a lot tonight.

i was hoping for a bounce tonight to get more shorts off. very worried about the cp market. and the treasury market is going crazy. *yawn*

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Originally Posted by mtnwriter

most likely calmer heads or a strong profit motive will prevail and the economy will limp along at around 2% GDP.

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anyone who is predicting anything at this point is smoking crack. :cool:

it's a toss up right now. we are getting close to a point where things will start to detrioiate really fast on many different levels. the last time something like this happened was three generations ago, and not too many people understand this.

this is NOT a contagion. LTCM, anyone? we're looking at a totally different ball of wax.

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Originally Posted by lemon boy

Nope, the time to sell was a couple of weeks ago. Now you're just fucked. Hunker down and take it like a man.

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Or even earlier...

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Originally Posted by Endlessseason about 1,000 Dow points ago in this forum:

Well, this is all I need to see. My personal investing experience over the past 25 years has shown me that when EVERYONE starts talking about stocks; your neighbor, barber, shoeshine boy, skiing message board, it's time to sell. I kid you not. I'm lightening up a large percentage of my holdings starting tomorrow.
Look back at this thread in a few months and see if today wasn't within a couple months of the top of this current bull market.

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Wow. Was that a good call, or what? It reaffirms my decision to always sell when everyone thinks you're a dumbass for selling.....

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Originally Posted by Endlessseason

Or even earlier...


Wow. Was that a good call, or what? It reaffirms my decision to always sell when everyone thinks you're a dumbass for selling.....

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Not really. You sold in April and the market is right where it was then. So are you out for good or when is it time to get back in?

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Originally Posted by BeanDip4All

anyone who is predicting anything at this point is smoking crack. :cool:

it's a toss up right now. we are getting close to a point where things will start to detrioiate really fast on many different levels. the last time something like this happened was three generations ago, and not too many people understand this.

this is NOT a contagion. LTCM, anyone? we're looking at a totally different ball of wax.

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1987 was pretty bad.. The markets almost died. Greenspan again but I digress.

I have a feeling some of this is the hedge funds and funds of funds having forced liquidations and having to raise cash. People have to be bailing out of quant and hedge funs in droves.

So....my favorite question....if the stock market is "tanking", where else are you going to put your money? Real estate? .....CDs?

amd '87 wasn't all that bad - look at '88.

Everyone is out of bullets, there is no liquidity and all the big players are short vol.

Capitulation for some is near.

Dont predict, react. Sell the rallies until it no longer works. Then wait for confirmation before going long.

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Originally Posted by Benny Profane

So....my favorite question....if the stock market is "tanking", where else are you going to put your money? Real estate? .....CDs?

87 wasn't all that bad - look at '88.

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87 wasn't bad? Where do you get this stuff? The market dropped 30% in three days and volume dried up for months.




"Stocks Plunge 508 Amid Panicky Selling; Percentage Decline Greater Than in 1929"
- Wall Street Journal, 10/20/87, the day after the '87 Crash - just 8 weeks after the top

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Originally Posted by 4matic

87 wasn't bad? Where do you get this stuff? The market dropped 30% in three days and volume dried up for months.

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Isn't the market, like, 2 or 300% higher than it was in late '87? Are we talking day trading here?

Now, 99-2000, that sucked. Still feeling that one in a few places.

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Originally Posted by 4matic

Not really. You sold in April and the market is right where it was then.

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Why would I bother re-posting if the "market was right where it was then?"

The day I started selling (because I never sell everything all at once) the dow closed at 13,140. I completed selling sixteen business days later, at dow 13,557.

So, maybe the index went on to add another 3% by July 19th. As of this moment it's at 12,699, down 9.3% (1,301 points) from that brief and meaningless single day that it touched 14,000 at the close.

I'd rather sell INTO strength any day than try to unload during weakness. I got lucky by remembering how this last few weeks felt just like 1987, 1997, and 2000.

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Originally Posted by Benny Profane

Isn't the market, like, 2 or 300% higher than it was in late '87? Are we talking day trading here?

Now, 99-2000, that sucked. Still feeling that one in a few places.

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You said 88 was worse than 87. Simple..

http://www.djindexes.com/mdsidx/imag...h1980-1989.gif

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Originally Posted by Endlessseason

Why would I bother re-posting if the "market was right where it was then?"

The day I started selling (because I never sell everything all at once) the dow closed at 13,140. I completed selling sixteen business days later, at dow 13,557.

So, maybe the index went on to add another 3% by July 19th. As of this moment it's at 12,699, down 9.3% (1,301 points) from that brief and meaningless single day that it touched 14,000 at the close.

I'd rather sell INTO strength any day than try to unload during weakness. I got lucky by remembering how this last few weeks felt just like 1987, 1997, and 2000.

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Lets say your average sale price is 13,350. Dow now around 12,700. You saved 650 dow points. About 4%. A 4% swing in equity prices is a statistical anomaly if you are investing for the long term.

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Originally Posted by BeanDip4All

i was hoping for a bounce tonight to get more shorts off.

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All for getting more shorts off as well.

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Originally Posted by 4matic

Lets say your average sale price is 13,350. Dow now around 12,700. You saved 650 dow points. About 4%. A 4% swing in equity prices is a statistical anomaly if you are investing for the long term.

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You have a good point today. It will be interesting to re-read this in a month.

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Originally Posted by 4matic

You said 88 was worse than 87. Simple..

http://www.djindexes.com/mdsidx/imag...h1980-1989.gif

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Yeah, a little bad on short term dates there. But we are up a whole bunch than the 2000 or so in 87. Look at long term charts, and it's barely a blip.

I'm actually quite lucky with this one (for once), even though I have a bunch in the party. Come November, I will have a very sizable chunk of money rolling over into the market. Nice timing, expecially if interest rates drop a little.