What Happens If Stock Markets "Corrects" Soon

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It looks more and more like the stock market is going to have a major correction, or crash, of 30 percent or more some time in the next couple of months, due to normal market cycles, as well as Y2K concerns. How do you see the public perception and preparation for Y2K changing if this stock market correction takes place in the next 90 days?

-- Alexi (Alexi@not-in-the-dark.com), July 24, 1999


Depends on how the news media presents it. If market falls to 9,000 ("correction") and the press just says it has just gone back to normal. Then most people will just *accept that. If the market falls and the press (and pundents) says it's y2k bailout related, then phase one of the y2k "storm" will begin. (*the sheep are too well trained)

-- dw (y2k@outhere.com), July 24, 1999.

The media will probably portray the drop as normal, not Y2K related, but a few more will prepare...if they have any money left.

-- Mad Monk (madmonk@hawaiian.net), July 24, 1999.

......What if "they" manage to keep the bubble from bursting before 11/31/1999?

Can anyone even IMAGINE what the month of December would be like???

-- Sheila (sross@bconnex.net), July 24, 1999.

Check out the Motley Fool Y2k discussion board. The fools are discussing strategies....

http://boards.fool.com/Messages.asp?id=1020040 000359000&sort=postdate&days=365

-- Tim (pixmo@pixelquest.com), July 24, 1999.

the problem is not so much what the market will do, but what the media will say, how they will portray everything. The media rules the people in general, if the media says there is a problem, people will believe it and begin to sell all, then there will be a crash. How do we keep the media from ruining our lives?

-- connie (ckh@hotmail.com), July 24, 1999.

I know quite alot of people are waiting to see tangible evidence of the seriousness of Y2K impacts. If stocks go down, credit squeezes followed by bank runs and run up of gold could follow. As more people try to begin financial and personal Y2K preps. I hope all on this forum are about satisfied with their prep level by now.

-- Bill P (porterwn@one.net), July 24, 1999.

How do we keep the media from ruining our lives? By making sure Y2k repairs worldwide are finished by the end of the 3rd quarter. (vbg)

-- (wishing@nd.hoping), July 24, 1999.

What happens is that the big people AND the little people both get screwed. (forgive my expression).

The big players don't care because 1. It's not their money (money managers). 2. They still have 1000XXX dollars left(insert N X's).

The little people (you and me) get to watch our 401K etc take a 20 percent (or more) dive like last october. Generally the market has recovered from corrections VERY quickly compared to how long it took in the past...

I'd prefer to sit this one out though...

Personally, I've gone from a full on Bull to a Bear on this. I can't determine what Y2K will do to the market, so I'll forgo 6 months of 30%+ returns in order to have safety and a 5% return.

-- Bryce (bryce@seanet.com), July 24, 1999.

Bryce--you and me both! Have $$ in a 401K stable fund. So what if the market in other funds have rose 14%, all that can be lost in a day and then some. And after everyone scambles to get their money into safer markets, they would lose even more. I sitting this one out too because I can't afford to lose 30% in one whack!

-- sittingontheside (sittingontheside@sittin.com), July 25, 1999.

Just to nit-pick a little on what Bryce said, the "big people" are not the fund managers, they are (as best as I can tell) the ultra-rich family dynasties such as (probably, apparently, don't quote me..) Rothschild, Rockefeller, Dupont, Carnegie, (+others) plus the remaining royals of Europe, plus your overall billionaires' club types. If anyone doesn't get screwed by y2k, I'm guessing it's these folk. But maybe they've been blindsided too, (though I seriously doubt it.) Their ultra-cushy lifestyles are in no way threatened...just bug out to your own Dr. Evil island. The nominal value of the assets they possess, eg 10% of this Fortune 100, 20% of that one, a ton of gold here, a diamond mine there etc, will certainly be reduced on paper, but as long as the relevent state ensures their property "rights", they will be in a position to consolidate and accumulate and come out ahead from the whole f'kup. Some more or less than others, no doubt. It will be fascinating to watch from the sidelines and note whether or not our governments - from the highest branches of national security, to the lowliest town administrator - will by their actions side with the needs of the common people (and there will be needs!), or side with the "natural" right of the ultra-rich to screw the peasants for the last dinari.

(end drunken indignant rant mode.)

-- number six (Iam_not_a_number@hotmail.com), July 25, 1999.

If things do head south, it will be interesting to see where the power base resides. Government? Business? A new, stronger partnership amongst both?

-- Tim (pixmo@pixelquest.com), July 25, 1999.

Back to 401Ks. Many institutions allow you to transfer money from stock funds to bond funds immediately WITH NO COST. You NEED to understand the difference between LONG TERM, SHORT TERM and JUNK bond funds.

If you don't understand the differences, ask your institution for info or read up on it. I'll explain a few things, BUT DO YOUR OWN RESEARCH WITH YOUR OWN MONEY. I'm just Joe Blow investor that has been buying and selling stuff for a while. This is a huge subject..

Basically Long Term bond funds involve greater market market risk than Short Term bond funds because the payable date on the bonds is extended and interest rates can vary substantially (you can get 7-8 percent returns.. not too bad).

Junk bond funds (or the big guys say 'HIGH YEILD FUNDS') involve funds that purchase low grade corporate bonds from companies that are less credit worthy than the federal government or reputable banks. (That's why they pay more interest (10% + is common). STAY THE HELL AWAY FROM THIS IMO (I've been burned big time). You not only have credit risk, but MARKET RISK as the fund as a whole can trade lower just because investors don't feel good about the bond market. (If you want more risk, buy a high yeild bond directly.. For instance, I bought Public Service company of New Mexico, it paid 9.5% at the time).

What I've moved into is short term high quality bond funds. This is the next best thing to cash (without automatically giving Uncle Sam about 40% of my 401K tomorrow). They only buy US govt backed stuff (or notes from big banks) with short maturities (low market and interest risk).

If you have $$$ in a 401K, think about your holdings.. Do what YOU feel comfortable with.

Short term funds hold bonds for short periods

-- Bryce (bryce@seanet.com), July 25, 1999.


That "Short term funds hold bonds for short periods" kind of crept in there at the end.. Please omit.

-- Bryce (bryce@seanet.com), July 25, 1999.

After the Crash of October '87, a few (very few) media stories reported that the big guys -- Trump, Buffett, and the others -- were all essentially out of the market by the end of August. In fact, Trump boasted that he actually made money on the crash. Now we are hearing, on this board and in other places, that the big players are once again getting out of the market. The bubble has been inflated essentially on the strength of 40 or 50 stocks -- Dow Jones blue chips and dot.coms mostly -- while the rest of the market has been in bear mode for the better part of a year. Meanwhile, farm prices are at record lows, even though we're not seeing the results in the meat aisle, and it looks like we're on the verge of another tariff war with Europe while Japan, China, and Brazil totter on the edge of complete financial chaos. Does any of this ring any 1929 bells? Even without y2k, Greenspan and the boys are going to have trouble holding the house of cards up long enough to get Stiff Al elected. What we're looking at within six to eight months will make the winter of '32 look like a Cub Scout camporee.

-- Cash (cash@andcarry.com), July 25, 1999.


I'm not bit**ing. I've prepared. It's foolish to say 'dont trust banks'. If you only have a few K, then it's no problem yanking it out of the bank. For the rest of us, moving money around typically COSTS ALOT and requires planning.

Personally I just got out of stocks and went for high quality, short-term bond funds. If my funds fail, it means that the US Govt has failed with the major banks. BS! If that happens then your CASH is useless. Gold and precious metals are useless (can't eat them) as well. That leaves food and barter goods. 'Already have them just in case I'm wrong about this being a 2 or a 3.

Like I said, cashing out my 401K would involve a 40% loss TODAY. It's much safer for me to keep my high quality bond funds that only pay 5% interest and use this as the vehicle to ride this thing out.

Show me a better way that doesen't involve my giving tens of thousands to the government.

-- Bryce (bryce@seanet.com), July 25, 1999.

Sorry about the last message, I posted it on the wrong thread!

-- Bryce (bryce@seanet.com), July 25, 1999.

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