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Markets often take a dive in the last hour before the end of the trading day, and they often take exactly the opposite course, shooting up off their lows. When the market jolts up, it is usually due to an expectation that the underlying cause of the initial decline has eased, and it is time to buy bargain-priced stocks.
When stocks take a dive, it is often because the underlying cause still looks bad, or looks even worse than it did at the beginning of the day. This causes a lack of confidence, and traders seek to unload their stocks before the bad news causes further losses at the beginning of the next trading session.
The basis these folks attempt to use is not the product or people or benefit of the service, but merely past return on the money in -- or dividends, as you say. Look at the definition of a Ponzi scheme . . . that is it. "Chumps" is a kind word for this behavior.
I mostly agree with you. About a year ago I decided that it was unlikely that I was going to get 9~10% long term rate in mutual funds that is often projected. Frankly it doesn't make sense why someone should be able to get an almost risk free 9~10% in the long term for pretty much doing nothing (As you say, its a sort of Ponzi Scheme). As a result I pulled most of my money out of the equity markets and now have it in things that seem more reasonable (bonds, CDs etc).
But, still the stock markets are an important part of the economy. Its primarily Joe six packs's involvement in them that makes it odd.
And it's Joe Six Pack that's getting creamed. The Big Boys got their money out a long time ago; now they're just gambling with pocket change. It's the retail investor that will be taking the hardest hits. Money locked in pension plans is like a sitting duck... and Mr. Market is reloading.
Location: Sitting on a bar stool. Guinness in hand.
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Quote:
Originally Posted by Lulu101
Tomorrow the market will go back and everyone in the media will forget today happened
Everyone will be watching the FED tomorrow for their rate decision. Unfortunately I think they will be disappointed when the FED does lower interest rates.
The whole theory about the longterm 10% return on the DOW was heavily influenced by the go-go results of the 90s when the market returned 28% per year under president Clinton. So far, under George W. Bush the DOW has been stagnant moving only from 10,587.59 (1/20/01) to 10,917.51 (9/16/08) for a meager 3.1% return (approx. 0.4% annualized) No modern-day president has lorded over such a poor performing stock market except for Carter who left the DOW within a couple of points of where it was when he took office.
But hey, it's not over yet. Perhaps George W. Bush can beat Carter and actually leave office with the DOW in worse condition than when he took office 8 years earlier.
Given the uncertainty in the market model going forward it is not inconceivable to imagine that the 10% longterm returns used as a basis for moving everyone into individual retirement accounts was just an anomaly.
Real money is made on investment in real things that people need to live. Derivative investments and businesses that offer nebulous services do not produce longterm wealth.
Markets often take a dive in the last hour before the end of the trading day, and they often take exactly the opposite course, shooting up off their lows. When the market jolts up, it is usually due to an expectation that the underlying cause of the initial decline has eased, and it is time to buy bargain-priced stocks.
When stocks take a dive, it is often because the underlying cause still looks bad, or looks even worse than it did at the beginning of the day. This causes a lack of confidence, and traders seek to unload their stocks before the bad news causes further losses at the beginning of the next trading session.
ALL true,until John Q. Public finally realizes thats is all one big pyaramid scheme at which point traders all run in a ctrcle ,jump and shout-
who knows we're all out.
And it's Joe Six Pack that's getting creamed. The Big Boys got their money out a long time ago; now they're just gambling with pocket change. It's the retail investor that will be taking the hardest hits. Money locked in pension plans is like a sitting duck... and Mr. Market is reloading.
And it's Joe Six Pack that's getting creamed. The Big Boys got their money out a long time ago; now they're just gambling with pocket change. It's the retail investor that will be taking the hardest hits.
That's because Joe Six Pack always buys into this "stay the course" nonsense. I dunno ... maybe you have to suffer through a bear market as an investor and lose your shirt before you figure out you need to quit listening to all of that stuff.
I learned my lesson from 2001-2002 ... and this bear market was MUCH easier to predict than that one. You didn't have to be a rocket scientist to figure out that subprime, etc. was going to be a major disaster. A prolonged, controlled disaster but a disaster nonetheless.
So I got out of stocks in the summer of '07. If Obama wins ... that's when I'll start buying again. If McCain wins ... I'll probably wait.
Last edited by sheri257; 09-18-2008 at 10:01 PM..
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