MGB: why is the DOW down so much?

If you believe most of the media it is because Wall Street doesn't have confidence in the ability of the government to handle the situation. (Almost verbatim for CNN a few minutes ago.)

Another, more general theory, is that the market never likes uncertainty and this election situation might be the mother of all uncertainties.

A final theory that I heard today was that Wall Street is scared absolutely to death the BHO will be elected. The idea that investors and business owners, large and small, realize that his election will most certainly be the death knell for capitalism as we know it might be giving investors and bankers and business folks the heebie jeebis sounds quite plausible to me. It certainly has that affect on me.

Jack

jack, it is definately fear and the Stock market trades on emotion more than reality. I believe there is some fear in the businesses. If you take the craziness in the fnancial markets there are still good companies doing business every day and are profitable. I get frustrated when good companies get hurt. I think what he smart people would say is the earnings multiples were too high anyway. But I believe it is emotion.

But if you are an investor and Obama is coming in you have to factor in what the increased tax is going to cost and also the new social programs which are going to come from business it can't come from anyone else. Obama is saying everyone else gets a cut. It does not add up so it scares the markets.

..........I wish I would have never gotten in the market, I have zilch stock market sense, and my life savings is evaporating....fast. How long must I wait again just to break even. I got in again at 13500.

why is it down?

because there are far more people wanting to sell than buy....right now....

that will change...at some point...

I suspect most of the sell off is to finance margin calls.

I applied for an equity loan and it was determined that I had some. Sorry\

Dave

Stu, I got some emails today from some investment people and that is what they said it was due to Reg T margins and they deserved to take the losses. Now I haven't thought through how that makes feel better. Unless it means that tomorrow it will be going up.

The market is down because the big spenders who were living on credit
no longer have credit. Prices have to readjust to their natural levels.
Painful as that will be for some.

On the other hand, if you've been fiscally conservative, the worlds
largest garage sale will be opening shortly.

SShack,

My bet would be that you have got it about right. When we find the lows, is the time to be buying (even MG's).

JimmyHilton Wrote:

Quote: "
SShack,
My bet would be that you have got it about right. When we find the lows, is the time to be buying (even MG's).
"

My financial manager has advised me to hold on and make no changes to my allocations in my 401K ... In the last 7 days I have lost enough money to buy 10 (that's right ten) MGB's in average condition with and additional bit to have restoration work done to them ...

They, finacial expert, brokers have been telling me for 10 freaking years, think long term, think long term. I got out of the market and stop contributing to a 401K in 2000, put my money in a couple of commercial buildings, don't know if that the greatest thing but it has performed alot better than the market, so my inherited annuity,(not a heap of money, but some) has been easy to watch wth no contributions, it hasn't made a dime over what it was worth in 1999. I moved everything in the annuity to money market at market close today. I no longer beleive the long term BS they have been preaching, I gave them decade and they didn't do shit, I'm done with them for ever. I'l probably thake the money out of money market at the right time, and take the tax hit, and buy something at the "big garage sale" I can make money on. Alot of these so called fianacial freaking experts are idiots, my broker didn't even know I didn't have to pay the IRS the 10% penaly on annuity when I made a withdrawel a couple of weeks ago, that would be like me not knowing how to degree a cam, pitiful.

Hap, sounds like your broker is a spud.

What I want to know is why oil is around $90 a bbl but I'm still paying $3.70 a gal for gas. I was paying that when oil was at almost $140 a bbl.

If the fuel price will ever get to its proper level you will see a real economic turn around.

.Speedracer,...man, you took the words right out of my mouth.......... I got in because all my suit and tie friends with masters degrees were in it and I was a bit intimidated, thinking they knew something I didn't. The stupid part of the story, is I did it....twice........... I am persona non grata around our house......

"opium"...O-P-M--Other People's Money.

that's what local "financial experts" are hooked on. same as City Councils and County Supervisors and State Assemblies and Congress.

hell. i had a big thing about wrong headed politicians who rewrote the rules that allowed Countrywide (and others) to make new 0% down 100% (or in some cases 100+%) equity-adjusted (not libor-adjusted) adjustable mortgages with federal FHA guarantees. And the crooks who sold these packages to (a) people who were unable to understand what they were signing, (b) lazy people not willing to really read what these adjustable mortgages were really adjusted on, or folks who were conned into this load by the brokers (c) wanna-be investors who had no idea what they were getting into and who bought a second house to rent--and who bailed when the mortgage became 2X the market rent.

(c) should be no assistance. You bet, you lost. At least the IRS has said you won't have to pay tax on the difference (a) should have recourse against the brokers who sold the package, and the lenders....often these are second or third mortgages. (b) Well, let's see what they do.

these things affect "Wall Street" only as the individual mortgages are blended into "monetized" bonds by Fanny and Freddie and these bods where then bought as safe investments by the investment bankers. it is when these turned to be not as safe as expected, that is when issues affected Wall Street.

both sides of the aisle in Congress should be blamed and be ashamed (but they know no shame...regardless of party!). Personally, I think they ought to have their pensions stripped and term limits imposed.

While its bad, find the good buys!

Look for bargains...

It takes stones but time will heal wounds

Wray Wrote:

Quote: "
Hap, sounds like your broker is a spud.
"

Wray, you're right, two of th three were, and one of them was my brother in law. The second one was a good racing friend, one of the most honest people I know.
He took a job with Merrill Lynch, I left my brother in law went with him, I told him from the beginning he was way too good of a guy for such a sleezeball industry. The first year, Merrill Lynch beginner program pays these guys $50K, after the first year, my friend had about 3 million client holdings, in the second year to be able to make the $50K he had made the first year he would have needed 10 million dollars in client holding, the most sucessful people in this industry, sell you on the fact to go with them because they will look after your money, when the raw truth is to make big money in this industry, you need so many clients, there is no possible way you could ever have any one clients interest at heart. Merrill Lynch pay it's brokers on a percentage of their clients's holdings, this is alot better than most companies, as most broker only get paid when they first open your account with a certain company, any of you ever noticed how your broker will call you in for a meeting every couple of years and tell you about the latest and greatest new firm and you need to move your money into, guess why, you got it, your broker needs a new commision. This industry and what they do borders on criminal. If the rest of us in our businesses lied like these folks do, we'd be in jail.

Ok, another broker story worth telling, my multi million uncle, he's living proof you can be a dumbass and get rich. Told me a year or so after my father dies, he was heavily invested in this new bank, and thay had this young bright stock broker that was a wiz, and if I didn't tke $10,000 of my inheritence and invest it with him, he would never give me any advice again, I fell for it, because I was yet to find out what a huge dumbass my uncle was. Well the wiz handled the money from 1996-1997, a pretty good time to be in the stock market, when I cashed out with the wiz in late 97, he sent me what was left of the $10K, $631 bucks, oh yeah can you tell I faith in these people. If I had to do it over again, I would taken my chances on the poker tables in Vegas, and my odds would have been much better, and for damn sure I would have enjoyed more.

Bottom line most of us are nothing more to the big guy in the market other than sheep headed to the slaughter house, well I got out of the slaughter line today, this sheep is headed for greener pastures.

If you have access to money, buy residential rental property. So many people that never deserved credit to begin with have been foreclosed on that in places like Avondale, Arizona you can buy nice 3 bedroom, 2 bath, 1,300+ sq ft homes that sold for $250K in 2004 for about $125K today.

Jack, why is the market tanking? The market is looking 6 months down the road. Based on what you know right now, will the economy be better off or worse off in 6 months? Right now Great Britain is facing a total collapse as well. Germany is looking into ways to stem the tide of financial disaster. Because of nationalism in Europe re-emerging even the euro itself is threatened. Add it up and we're in big trouble. Wall Street has submitted their answer concerning the future state of the economy.

Hap, I had a guess that M-L's name would come up. In 89 my folks had some modest stock holdings left over from my grandfather's days. When the market tanked those stocks were sold on the day after the tank and put into a M-L money market account where they proceeded to dwindle away to nothing. The M-L guy was a complete spud, that became clear when I started dealing with him and looking over the account after my mother passed away.

If they had just sat pat on those stocks and let them ride they would have made a considerable amount instead of losing a considerable amount.

Selling stocks during a market slump is not the best idea, you are certain to take a big hit. Wait a month or two and let the dust settle. If the stuff is still way down you can reassess the situation. If it is back up a bit snd are still determined, you can move out of them without taking such a beating.

AzMarc Wrote:

Quote: "
If you have access to money, buy residential rental property. So many people that never deserved credit to begin with have been foreclosed on that in places like Avondale, Arizona you can buy nice 3 bedroom, 2 bath, 1,300+ sq ft homes that sold for $250K in 2004 for about $125K today.
"

There are zero buyers right now for anything. Pure panic mode. Investors with shares in quality companies will do ok over time. I have a lot of holdings like JNJ, MO, PM, KO, COP, KFT, TPP, CHK, HD, MMM, MSFT that pay good stable dividends. I like these companies because everyone buys their products in good times and bad. By DRIP'ing the dividends over the next 4-8 quarters, I should be in ok shape. Given the low yields on any other investments, there is no place good to put any real money right now. I see no reason to sell during a panic. My main retirement funds do go from my paycheck into an S&P 500 index fund, but that money won't be touched for years. One thing to check on is that SIPC insurance is only good up to $500k. If your broker is in trouble, you should understand your coverage, and/or spread around your eggs.

One reason to be optomistic is that all of this is getting worked out at one time. Japan's financial system never did clear all of the dead wood away for over a decade. We should be in better shape in 24 months. I have a number of financial stocks that are trading below book value, but they were in the toilet before this latest storm hit. Other higher quality financial issues like BRK-B, FII, MKL, LYG, and FAF are strong enough to weather the storm. I hope.

Real estate is great, but can be a PITA. Also, it is not very liquid. However, if you can upgrade to a better house closer to your job (save on gas), now would be an ok time to do that. I would do it with cash on hand if I wanted a house.

Soyokaze 72MGB Wrote:

Quote: "
...However, if you can upgrade to a better house closer to your job (save on gas), now would be an ok time to do that. I would do it with cash on hand if I wanted a house.
"

This is close to what we are looking at. My wife has a 35 mile round trip commute, plus we are paying to board her horse every month, and she makes a round trip of 13 miles to the boarding facility four times a week. We hope to find a place with enough land to keep her horse where we live, that's also closer to her work. Not necessarily a "better" house, but a place with more potential and less driving.

Soyokaze 72MGB Wrote:

Quote: "

Real estate is great, but can be a PITA. Also, it is not very liquid. However, if you can upgrade to a better house closer to your job (save on gas), now would be an ok time to do that. I would do it with cash on hand if I wanted a house.
"

You are right. Finding the great deals is the easy part. The only property worth buying are bank owned since shorts sale property usually have a first and second mortgage and the second lien holder typically would rather the property be foreclosed on rather than lose everything now.

And the great deals usually need some kind of work such as new carpet, tililng, light fixtures, blinds, ceiling fans etc.....I do love doing that kind of work so for me it's fun.

But the real pita is renting homes. Forget doing a credit check on anyone these days. And most of the renters won't pay first, last & a seccurity deposit but will pay first months rent plus security.

The only thing you can do to protect yourself is verify employment history and speak with previous landlords.

But the upside to the investments are high. What else can you buy that can yield you positive cash flow, appreciates and you can write off expenses like depreciation?

I think I would have been better off in many ways to have real estate for cash flow then I would not have cared too much what the market did I would not be selling anyway. If you have equity you can stand some reduction in rent. Stock is different in that many like myself live on what I can earn from investments. I have no retirement only investments. I did not get the golden defined benefit.

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twigworker Wrote:

Quote: "
XXX deleted XXX "

Jack,

I am not so sure that you should have deleted your post. I, at least, for one get it. I totally understood it, and am not too far off from your experiences. And am sitting here a bit teary eyed, thinking about you, and likely many others.

Another option in the real estate with so many forclosed folks unable to buy, and a option to just rentint to these folks is, rent to own, owner finaicning, it's not alot different than reneting except your tenant pays the property taxes and insurance, and home repairs, just make sure you get enough of down payment, that it doesn't make it easy for them to walk away. I done this twice, one time worked out well, the other not so well, but atleast I had thier down payment to renovate and the property with. I always tried to get 2500 to 5000 grand down, and I always kept close tabs on my tenant, I would do yearly inspections of the properites to make sure they were not tearing the palce apart. I'll never just rnet residnetial again, way too big of PITA, when they call you at 10pm to tell you the toliet doesn't work, only for you to find out the kid used a half of roll of toliet paper, rent to ow owner financing get you out of this nightmare.

Well I just checked my annuity after moving everything to money market, I made 67 cents yesterday, after losing several thousand in the last week or so I call that progress. :)

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