Market Fear = Crashed Market

Looks like we have a real crash of the world markets.

From the technical standpoint, we've crashed. Dow is down 21% over the past 10 days. Dow futures are pointing to further drops today. From what I can see, every world market has lost 7-to-11% overnight.

Still, there seem to be no runs on banks. Credit cards, debit cards are still working. People, for the most part, are still working and getting paid.

So where is all this going? Will we fall to 8000 in the open hour of the trading? Will that be the bottom and firm up so that bargain hunters will come into the market to start buying or will it continue to drop toward 7500?

Bob, I have no clues to where it is all going, but I fear the worst. The Australian market fell 8% last night and 16% in the last week, And it's a double whammy with our dollar crashing.

Dow down 500 five minutes into the day.

A couple days ago I was thinking the market would hit about 8800 by next Monday, I was sure wrong. How far down and how deep is a great question. I am now figuring for every 1000 drop in points now you should have a 30 day supply of cash on hand to tide you over. If things continue downward there has to be some fallout as to how the banks/savings and loans will do business. I think the federal gov may step in and put some limitations on banks and what they can do in regard to withdrawls in general. Our money is not ours when it is held by a bank, it is theirs to use and it appears they have used it unwisely in many instances.

Some "experts" or so called persons of finance are predicting the possibility of 6000 and then a very slow recovery over several years to 12.000 again. Money flow has to slow for any recovery to take place. Credit cards companies will tighten when people stop paying their bills and the losses start to mount. Job losses will happen if credit is tightened which is happening. I think we are only beginning to see the first of a lot of economic problems that will be here for several years.

What is astounding to me is that many of the companies are reporting good news and solid profits but the stocks are falling like rocks.

I've got CNBC on right now watching the morning open and it appears that there is simply chaos in the stock market. The market just fell below 8000, its down 630 points at 7896.

The US$ is gaining ground against many of the foreign currencies and I don't know why.

Maybe it is time to put 30 days worth of cash under the mattress and don our tin foil caps?

In the depression the Dow fell to 25% of book value. At yesterday's close we were still at 154%. With mechanisms in place today that did not exist at that time; I would doubt a drop to that level. But the real bottom still may be a ways off. And it is correct that good companies are still doing good.
This is not the end of the world. There are some real good buys to be had coming up.

It's hard to predict where the market will go until the election is finalized. I suspect it will be total chaos until January and there is some form of predictability as to what direction the Federal Government will take.

There is no "confidence" at the moment and anything the current administration does will be viewed as a short-term band-aid.

This Slide Show presentation from Sequoia Capital has been showing up on all the tech related blogs:

http://venturebeat.com/2008/10/10/the-sequoia-rip-good-times-presentation-get-your-copy-here/

My prediction is that the DJI is headed back to somewhere between 1982-1992 where the values were much more "real" and not as inflated.

http://stockcharts.com/charts/historical/djia19802000.html

Once things get into that range then you are looking at the real value of solid companies. The pretenders will be long gone and solid performers will remain. But then again I'm just guessing.

Pulling cash only makes the matter worst. WTF is a fist full of cash ging to do.

daedong said:

Pulling cash only makes the matter worst. WTF is a fist full of cash ging to do.

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You are better off to just take that cash and buy everything you could possibly need for the next five years. Your dollar is just loosing purchasing power so no matter where it is - it is losing value.

We should all go out and do our Christmas shopping today.

PBinWA said:

We should all go out and do our Christmas shopping today.

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so true

PBinWA said:

We should all go out and do our Christmas shopping today.

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Better shop early this year...I have heard reports that Christmas inventories are drastically lower due to companies inability to get capital to buy all the desired inventory.

I saw an economist last night predict the bottom will be at 5500. Close to what Bill (Mtntopper said at 6000). It is indeed a guessing game right now. And how will things be affected if Israel attacks Iran in December as some were predicting?
What a roller coaster ride we are in for.

DaveNay said:

Better shop early this year...I have heard reports that Christmas inventories are drastically lower due to companies inability to get capital to buy all the desired inventory.

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Doesn't matter. They won't need near as much inventory this year anyway.

Cityboy's Dow/S&P 500 Prediction: DJIA = 5000 before it bottoms. S&P 500 = 500.

Hang on folks, this one's gonna be a bitch.

daedong said:

Bob, I have no clues to where it is all going, but I fear the worst. The Australian market fell 8% last night and 16% in the last week, And it's a double whammy with our dollar crashing.

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Vin, remember our conversation about the bailout? I said I believed it will make things worse than they would have been had we left the markets alone. All this Federal Reserve "magic" cash that has been created out of thin air, loaned to the U.S. government and pumped into failing financial firms will only make the crash longer and more painful.

We are so inflated right now it will take years to shake out. Too many "quick" fixes for too many years. Better take some cash and buy lots of beans & rice & ammunition.

B_Skurka said:

The US$ is gaining ground against many of the foreign currencies and I don't know why.

?

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You know, I don't have a clue either. Scratch my head as I'm already doing it. Maybe we should hide?

B_Skurka said:

The US$ is gaining ground against many of the foreign currencies and I don't know why.

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I think we're gaining ground because worldwide the economies are so tied in with the price of oil.
the exchange rate went belly up when the price of oil in America doubled, but the increase wasn't nearly that bad elsewhere. Now the price has dropped from the high $140's to the mid $80's in a couple of months, while not dropping so fast elsewhere, so it shored the exchange rate back up.