Stock Market 101greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Help! I need a crash course in the stock market. After the market went up yesterday, & if it keeps rising, its going to be very difficult for me to convince my husband to close out his 401K & to take our money out of the credit union in January. I also have a friend that has a nice little "bundle" invested in the stock market & has been concerned about the y2k issue but after hearing a y2k report on our local Fox channel tonight, she now "feels so much better" because the guy they interviewed said "don't be foolish" & sell your stocks, just let them stay where they are. She now also thinks that we are not going to have a crash because her husband told her that "they" fixed it after the last one so that could never happen again, it will only go down so far & "they" will just stop it (the market). Is this possible? Are there any good web sites that I can go to for some good information? Sorry this is kinda ramblin!! Would appreciate any insights that I could pass along to her (and my hubby.) I just don't know enough about it to give even a half way intelligent answer! Thanks for any help.... Donna
-- Donna in Texas (Dd0143@aol.com), November 24, 1998
Donna, Go find a book by "Adam Smith" with the title of "Money Game" It's older but a good primer. Thenm read the section in Tom Clancy's (either "Debt of Honor" or "Without Remorse" and I'm pretty sure it's "Debt of Honor" where tom does the best 25 page explanation of how th emarket works and is put together. Someone may be able to help us out with the page numbers).
Then, look up "tulip Bubble" and "South Seas Bubble" in any referense book or here on the Net.
Then, look in the "card catalog" of the library on the Crash of '29.
Recognize that the "Circuit Breakers" in place now are supposedly designed to halt trading when the market drops 10% 20% and 30% in individual increments. This is to give people some "breathing and reflection time" to hopefully NOT continue selling at whatever the market will (or not) bear.
studies have shown that these breakers have a "paradoxical effect".
Meaning that they have the OPPOSITE effect and cause drops to become steeper. (Something about the mentality which sez "Whadda ya mean they won't LET me sell my stock!!! I WANT IT SOLD **NOW**!!!!!")
Good luck on your research!!!
(MAKE him read the two BUBBLE studies because this is another textbook case of a BUBBLE!!)
and bubbles always have to break!!
-- Chuck a night driver (firstname.lastname@example.org), November 25, 1998.
The book is "Debt of Honor". I don't know the exact page, but it's somewhere towards the end of the middle of the book, I think.
Read "Without Remorse" anyway, if you have time. It is probably the best thriller I have ever read.
-- Leo (email@example.com), November 25, 1998.
Chuck & Leo--Thank you so much for the info!! Will get started on my research as soon as Turkey day is over! Would still appreciate anyone else's input!
Have a great Thanksgiving everyone!! Donna
-- Donna in Texas (Dd0143@aol.com), November 25, 1998.
Old saying in markets something like: "Bulls make money. Bears make money. Pigs get slaughtered."
-- kibitzer (firstname.lastname@example.org), November 25, 1998.
I have absolutely nothing to base this on other than a "feeling." I suspect we'll see 10,000 sometime in December, just because, psychologically it's a global challenge. Once the Y2K problems start surfacing in January, and get publicized, then I suspect we'll see the slide. Daily monitoring would be a good idea. Perhaps your friend can issue a standing "sell" order with their stockbroker if it hits a certain point. My mother refuses to take anything out. Over 50 years, she's seen it go up and down and just waits for it to go back up again. Don't think anything's going to budge her "investment" strategy.
-- Diane J. Squire (email@example.com), November 25, 1998.
Don't try to convince your husband to do anything he doesn't want to. If he loves money that much then he will be mad at you if the stock market goes to 15,000. If he loses all of it, he will have no one to blame but himself, and he will discover that you really don't need money to be happy. The only thing money is good for is controlling other people because I am a very sick puppy and this is how I get off.
-- bill gates (firstname.lastname@example.org), November 25, 1998.
Like everything in life, if you want to know truth you MUST search for it.
I know that this is somewhat synical but generally speaking, I believe just the opposite of what the controlled media spoon feeds the public.
You will need to steer clear of the gleeful advise most brokers are blabbing on the nightly news. Remember, its to thier advantage to keep the house going.
I did hear one pundit admit tonight that the economic news we are hearing is probably a very false indication of what is really going on in the world. Earlier this year I began to notice a lot of chatter about deflationary effects on the global economy. Its a lot worse that inflation for all the obvious reasons.
Well, you may initially benefit from lower prices due to cheaper imports but it will eventually cost you your job.Also, those cheaper gas prices are coming at a price. Other countries depend on the revenues to finance internal activities. Lower oil prices can cause flight of capital out of the afflicted country.
In other words, deflation eventually could push us (the world) into a depression such as never seen before. Remember, the Walton's don't live here anymore! Hello Freddie
I feel that the real issues in the economy are to be felt in the next few months. We have only heard the tremors so far. Y2K will probably be the straw that breaks the camels back.
There are a lot of other issues like national debt, low consumer savings, High consumer debt, moral corruption ect which will eventually push us over the edge.
But then who knows, If I had of owned stocks when the markets crashed in October I would have sold out and missed a chance to recover because I was listening to doomsayers such as myself.
If you believe that God speaks to his people, Many of the prophets are sounding the trumphet of alarm in the land. The alarm should be listened to and appropriate action taken.
-- WAYNE WITCHER (WWITCHER@MVTEL.NET), November 25, 1998.
Donna: You may not know a lot about stocks/markets but you do understand your husband and friend well enough (I assume) to know what they respond to. Use that as a starting point. Some folks respond more emotionally (greed, fear) rather than intellectually (logic, reasoning). Once you decide upon how to approach each of them, then you can concentrate on the details, some of which have been posted already.
-- Rob Michaels (email@example.com), November 25, 1998.
Something to think about when you talk to your husband is whether you have savings. If you and your husband have savings separate from the stock market that you could live on even if one or both of you become unemployed--then that's one thing.
If the money in the stock market IS the family savings, then I would take it out. If it's not needed in late 1999 and early 2000, I'm sure there will be some real stock bargains in 2000 to put the money into.
Think of it this way: the odds of your family being economically disrupted by Y2K in the next year and a half IS greater than your chances of being in a car accident in the next year and a half.
We do buy auto insurance. Why not some Y2K assurance?
-- Kevin (firstname.lastname@example.org), November 25, 1998.
Great approach, I think most have probably recovered well enough to sell at least a break even point. Hold the money in mayby T-bills then get back into the market "after it bottoms" in late 2000. This what I have been planning on doing.
PS, some are saying that the market will not bottom till mid 2002. something to do with a larger buisness cycle.
Donna, once lived in texas, nice place.
-- WAYNE WITCHER (WWITCHER@MVTEL.NET), November 26, 1998.
Wayne- you say it won't bottom until mid 200_2_?
That's 4 years from now.
I think Diane is right when she says the Dow Jones will hit 10,000 in December because of psychological factors. Also, don't forget Christmas spending- that usually gives the economy a good boost.
And I think that after that it'll fall sharply and a long way. Sometime in spring or maybe summer (this is AMERICAN seasons, here in Australia it's summer *now*), the market is going to crash hard. Information technology, ESPECIALLY the internet businesses (I'm thinking of Yahoo especially) that don't expect to earn major revenues in the near future, but have "great potential", will be the hardest-hit. They'll go down, the computer industry in general will be bashed hard, and the rest of the industrials will follow. And many, many, MANY Americans will be out of jobs. (Oh, and many Australians too. Phooey.)
That'll probably be June-July-August. Maybe earlier. Probably not later, because from what I've seen I don't think the markets can hold for too much longer. Also in the first half of `99, some important companies will face y2k failures (or admit they won't be compliant) which will help with that.
Unrelated: If the US collapses, that means you can't support Japan and Asia any longer. It also means their export markets will be slashed heavily. Will those two factors cause second crashes in Asia?
-- Leo (email@example.com), November 28, 1998.
What I mean is that the some anticipate that, after the initial crash, (early 99?)the markets will go sideways for a few years.
I think that Yardini is predicting 15,000 by 2005. POOSHA!! If TEOTWAWKI happens then i will assure you that it will be decades before our world recovers. Rememeber this. A collapse of global economys will cause global starvations and wars.
Russia will marry a dictator. The middle east will war against Israel and Europe (a new world power) will march against its neighbors. The global markets will burn with fire.
I personally believe that the above senerio will occur. I dont necessarily believe that the markets will recover in 2002 or 05.
You may ask, how can I maintain my sanity with such a doomsayer opinion of the future? I look for the return of my messiah, Jesu Christ.
Wish I was in Australia. See ya.
-- WAYNE WITCHER (WWITCHER@MVTEL.NET), November 28, 1998.
Donna... In August of this year Jim Lord (Author and Westergaard pundit) was asked to outline some of the steps he, himself, was taking (I guess the questioner wanted to know if he was taking his own advice).
His reply, in part: "We are taking steps to isolate our fimancial affairs from computing systems by the end of this year. Not because I think there will be a collapse of the banking system or stock market but because I just believe it is safer to be on the sidelines for a while."
-- Liddy Brite (firstname.lastname@example.org), December 01, 1998.
I came across an interesting article the other day on the stock market. It talks about some lesser-known areas that could impact the market between now and December 31, 1998:
"Liquidity Crunch Could Cause Scare" is the name of the article.
-- Kevin (email@example.com), December 01, 1998.