A Stock Market question

[olevetonahill]

Ill be the 1st to admit I dont jack **** about it.
The Big drops are Caused By everyone selling right Now right ?The more it drops the More people freak out and sell.
Since Most have prolly Bot when the Market was High . Seems to me they are Panicking cause they gonna lose Money , right ?
My question is If ya Know yer gonna lose , Why not ride it out ?:confused:

[SoonerInKCMO]

I think a lot of people are pulling money out now with the idea that they'll put it back in a while from now when they think the market is near the bottom. That way, they'll make more money when the market goes back up. Since the people running the bailout aren't supposed to start buying stuff up for a few more weeks, some folks are thinking that's when the market will start to turn around. They could be right and make big bank; they could be wrong and lose their ***.

[olevetonahill]

Ok that kinda makes sense.
But what about the Small dudes? Or is just Big money that runs that thing ?

[SoonerInKCMO]

By 'what about the small dudes?' do you mean 'what are they doing?' or 'what impact do they have?'.

If it's the first question, all I know is that this small dude pulled money from stock funds and put it into bonds last week. Now, if I can just put it back into stocks at the right time I'll be golden. :D

[olevetonahill]

So even tho you lose some Money on the deal. you hope to gain in the long run ?

[Chuck Bao]

Hmmphf, like I need to explain the stock market to a poker player?

You got to know when to hold’em and know when to fold’em.

The fold’em part is the cut loss. Short-term traders should have a cut loss price in mind when they buy in. As SoonerInKCMO said, they would hope to buy back in cheaper.

My biggest stock market mistakes were when I ignored this basic cut loss rule.

If you had bought into the Thai stock market at the beginning of this year and held on, you would have lost about half of your investment. I believe that most markets in the world have had similar performance.

Oh… you could ride it out. If you are a long-term investor and you’ve invested in quality blue chip stocks with stable earnings growth prospects. Reliable earnings and reliable dividend payouts tend to support share prices. I would imagine that a lot of investors do this. Many more would be holding onto diversified portfolios in their mutual funds managed by professional fund managers.

However, the problem is that fundamentals change. In this current economic environment, we are finding out that what was blue chip yesterday may not be blue chip today. Market sentiment also changes. A share that traded 10 times earnings yesterday could be re-rated down to only 5 times today if future growth prospects appear to diminish.

Think of it like you are playing poker with about 80 million people.

[SoonerInKCMO]

So even tho you lose some Money on the deal. you hope to gain in the long run ?

Yep. I lost about 10% before moving most of my IRA from stocks to bonds. The bonds have been flat since. If I moved back to stocks now and they went back to where they were when I moved out, I'd net about +30%. With the drop being dramatic as it has been, I can miss the bottom and buy back on the upswing and still make a decent return. Normally, I wouldn't try to do any market timing like this... but with the huge swings and the potential for huge gains, I thought I'd take a chance.

[olevetonahill]

Thanks Guys , I aint kiddin when I said I dont know Jack
My Son was talkin to me the other day and said Hes Bought stock . I dont know how much or what kind . He did say he had some Cont. tire tho .
So If He asked any of yall fer advice Right Now .
Should he Hold Or pull out and Hope It keeps dropping ?

[jkjsooner]

Should he Hold Or pull out and Hope It keeps dropping ?

That's the trillion dollar question and who really knows at this point?

I moved half of my 401k into as conservative of funds as possible about a year ago. At some point I want to go back to more aggressive as I have a long time until retirement. I'm not going to try to time the botton though.

As for non-retirement, well, unfortantely I have too much in stocks. Kind of backwards isn't it? I wanted to liquidate it a year ago but didn't want to pay the fee and taxes. Stupid, huh? At this point I'm riding it out.

Another reason some small time players may be selling is that they may have not had enough cash on reserves for a rainy day. With the economy it such horrible shape they may need their money sooner rather than later. As they see it go down they may decide to sell so that they at least have some type of reserves in case they need it.

[SanJoaquinSooner]

OK, the above discussion took place during the market free-fall you see in the chart below toward the end of 2008.

So, for those of you who bailed out of stocks around this time, are you now back into stocks? Are you still holding out for a double dip?

A friend's wife, who works as a financial advisor, told me and her clients last year to move into inflation-linked bonds as she was anticipating a double dip.
I didn't.


The double dip never hit -- or at least hasn't hit yet.

http://i995.photobucket.com/albums/af80/sanjoaquinsooner/totalstockmarket5yr.png

[Mjcpr]

Buy GO's or school bonds, they're the next best thing to a Treasury but with higher yields.

[SanJoaquinSooner]

Buy GO's or school bonds, they're the next best thing to a Treasury but with higher yields.

So you are out of stocks and into GO's and school bonds? Does GO = general obligation?

[Penguin]

I'm pretty sure leprechuans control the stock market.

[Mjcpr]

So you are out of stocks and into GO's and school bonds? Does GO = general obligation?

I'm not necessarily "in" anything other than my deferred comp funds because I am a poor public servant. I'm just offering them up because of my limited investment knowledge, it seems that for guaranteed return, a GO (general obligation) or school bond would be the next best thing to a Treasury but with higher yields. As long as you buy strongly rated paper, the likelihood of the bonds being paid are about 100% because the property taxes are pledged to repay them and are levied to do that each year.

[SanJoaquinSooner]

I recall watching Nightly Business Report back in my grad school days, when Paul Kangus announced a major analyst was calling a turn in the market so that he was now bullish. The market never looked back after that day. It was 1982 and we had languished for 15 years with MLK and RFK assassinations, the Viet Nam debacle, Nixon's wage and price controls, Watergate, Nixon's resignation, Jerry Ford's impotent Whip Inflation Now (WIN), and Jimmy "I-have-lust-in-my-heart" Carter's Malaise speeches. Maybe this secular bear market we've had this past decade with 9/11, the Iraq and Afghanistan quagmires, the housing bubble burst, and the 2005 BCS National Championship game, is similar, and now it's a matter of waiting until we shift into bull market gear. Maybe we already have, although many think not.
http://www.mptv.org/data/podcast/17442_logo.jpg

[SanJoaquinSooner]

I'm not necessarily "in" anything other than my deferred comp funds because I am a poor public servant. I'm just offering them up because of my limited investment knowledge, it seems that for guaranteed return, a GO (general obligation) or school bond would be the next best thing to a Treasury but with higher yields. As long as you buy strongly rated paper, the likelihood of the bonds being paid are about 100% because the property taxes are pledged to repay them and are levied to do that each year.

But if you were going to invest in an IRA to supplement your gov't pension, you would weight it more heavily towards GOs and school bonds?

[hawaii 5-0]

I just smile everytime I hear someone buys an ipad, ipod or iphone.

[SanJoaquinSooner]

I just smile everytime I hear someone buys an ipad, ipod or iphone.

An Apple stockholder, no doubt. ... My biggest IRA holding is Fidelity Contrafund. I know its top two stock holdings are Apple and Google. The fund has done very well.

[SanJoaquinSooner]

Prevailing attitude seems to be that the small and mid-caps have had a nice run, but the large caps are over due for a nice run.... Year of the large caps.

[hawaii 5-0]

Google makes me smile as well.

[hawaii 5-0]

For me, the trick is to buy quality stock and watch ' em grow. Simple

[Mjcpr]

But if you were going to invest in an IRA to supplement your gov't pension, you would weight it more heavily towards GOs and school bonds?

If I were closer to retirement and was willing to sacrifice a little yield for the security of bonds, yes.

[Mjcpr]

For me, the trick is to buy quality stock and watch ' em grow. Simple

Hadn't thought of that.

[olevetonahill]

Prevailing attitude seems to be that the small and mid-caps have had a nice run, but the large caps are over due for a nice run.... Year of the large caps.

WTF are these Caps ya speakin of?
http://www.hypebeast.com/image/2009/01/rocksmith-new-era-fitted-fifty59-caps-00.jpg

[SanJoaquinSooner]

http://cfnewsads.thomasnet.com/images/large/020/20725.jpg
hey vet, maybe you should consider investing in a Mexican Large cap