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My first scary inmpressions was on October crash way back in 1987 when I was a newbie "understudying"with an old timer who invested his time as a stock investor instead of being a doctor. He gave up his clinical practice and the stock broking firm was his clinic where he analysed shares instead of sickness.
Incidentally, I was there in that month where I was there almost everyday as there were some PYT in that firm and the doctor and I were friends. As I was trying to buy in stock , the doctor cautioned me against buying. On that fateful day of oct crash 87, I witnessed the velocity of the shares tumbling while he just watched while even clearing up his position on blue chip banking stocks. After the sessions, I asked him the rational of selling under panic. He was even trading away those original shares of those banks owned by his families where the lots traded were in 10,000 and 50,000 per lot!
"I told you not to buy anything this month, and me selling even the shares left by my dad on this day. Why because I was scared about October. My fears were confirmed when I saw DJ dropped like a stone on Monday.( it was Tuesday in Malaysia). People dont read history and fundamentals of stock market - I do." But you can pick them up later, say in December where you get probably discounted price of 30% or more." He was right!
Time pass by , I forgotten all about it and never get to ask him again. He was about 30 years my senior and doggone investing yonder.
That is why I am seeking - what makes October a bogey month which makes him cautious? And why significant crashes seems to be in the month of OCTober?
There will never, ever be a Stock Market crash again. Ever. Too many safeguards in place: electronic circuit breakers and such. Failing that, the Fed will back it up. So even in the extremely remote (I'm talking odds on the order of one in a trillion) chance we ever see a one day four digit drop again, you can absolutely count on it bouncing right back and then some within a matter of days if not hours upon the next session open. Trust me. 10k on the DJIA is an absolute granite rock solid bottom that it will NEVER get below. Skies the limit on the upside.
A few up and down swings here and there, but that's only because the shorts need the swings to make their money. The market WANTS to go up and in the medium and long term, that's the only direction it will go. So don't lose sleep over it.
Actually crashes are not scary for those geniune investors. What is scary when they invest in stock market, is the index goes down and nibble away slowly. Similary, for a good company that see the slides comes down on certain dismal performance on beyond thier contol and management, it is prudent to keep the patiently as eventually the stock would would finish up ward with innovation, productvity and prudent management after the crisis where it is short term.
So as in the case of this October, Novemnber or any other months - circuit breakers or Feds intervention, if the indicator of economics, unemployment, housing slump, poor consumers confidence. lower manufacturing, banking failures, deficits are the factors - then it is scary each month of the year. Because even the prudent companies cannot perform well under these poor conditions.
BTW, still have yet to get the financial theory why massive crashes seem to be associated with the October month in particular?
Lastly, IMHO 10,000 Dow Jones is still not rock steady with all the negative indications. With Japan Nikkei as an illustration, investors have had been waiting for years since that market was nibbling slowly but surely over years since it peaked at 1990 at about 40,000. Now after 20 years, it is just about 8,500.
( caveat - I am just a Mean Olde Chef trying to cook up my views and observations - past and present and not to be taken as professional financial advice )
Last edited by zinglicious; 10-01-2011 at 04:07 AM..
Whatever cliche you want to hang on October, I see a bunch of good-looking stock prices right now.
Oildog, our BHP is getting down there. Closed at $66.44 on Friday, just another $30 lower and I will be a buyer again.
Now that everyone is warning each other to get out of stocks, it is the time to watch carefully for a turn-around. Some of my holdings are looking good for additions, I just have to wait for the prices to rebound a little bit.
Look at this.
XOM at a forward P/E of 8.7. 2.6% DY. Price-to-cash flow of only 7.8 (anything under 10 is good.)
BG at a forward P/E of 9.1. DY 1.7%. P-t-cash flow of 3.33! These two companies were not known for the dividend yields, but have decent dividend growth rates (10% range) and solid niches.
Harris (HRS), a technology company, now shows a 3.3% DY (25.6% dividend growth rate) and a price/cash flow of 5.6, forward P/E of 7.0.
Belly-ache all you want about Obama-on-omics, he is driving prices down for me!
Somebody nuke Greece for me. If the ECB can't get their crap together, they should dissolve ASAP.
No sight of a bottom yet. My portfolio looks scary.
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