** So what happens if the market totally crashes? **

So we know this thing keeps going down and down. And we know it will probably go down even more over the course of the next 6-9 months.

My guess is that people have finally realized that the Stock Market has degenerated into nothing more than a big huge Ponzi scheme. At a certain point, it is designed to lose it's value where people lose money so that others can get rich.

It has LONG ago stopped being a system whereby companies raise capital to fortify their future growth and well being. Companies like Microsoft, Ford, GE, and Apple hold ten of billions in the bank. Why do they need further investment? They don't. It's just all about seeing if you can hype your company up enough to get more and more suckers to part with their cash... 'till it all comes caving in on itself.

Ponzi sceme... plain and simple.

Repubs are now throwing themselves off of very tall buildings right now yelling "FREEFALL!"

This is not freefall, this is the market adjusting to true value. For 10 years Wall St and the banks have worked hard to convince us that there is no ceiling never concerning themselves with where the floor might be. Simple law of physics. What goes up must come down. Where was the market in 1995-1996? That's where the slide will stop. The question to answer is will we have the forditude to do what is required when we get there?

The damage done by Reaganomics is yet to be fully realized but it's time for a new, viable economic system ASAP so hopefully we can hit the ground running.

So my question is this: Now that this "correction" is happening before our very eyes, what happens at that point where we reach the point of no return? Does the stock market as we knew it ceize to exist? Does it get stopped when it hits a certain point and get overhauled and reopened like a resturaunt getting a brand makeover?

it's all paper and only has gain/loss value when sold. Panic sellers cause the price to go down.

Msongs

Those with the money buy up the stocks that are now dirt cheap! It's a game, and those with the big money know how to tilt the game their way. Create panic, but up the cheap stocks and then watch the price go up!

we are at the bottom, or close to it. eventually stocks will go back up. and it's not like he's retiring tomorrow. He is just freaked out by the big loss of money. his 401k has tanked. but he has invested in green technology and energy, and i told him that he should be just fine. the stimulus has money for green technology and he should just stay right where he is. i have thought about buying a couple of stocks for my kids. i don't even know how to do such a thing. i've been thinking about it for years....

And stockholders can collect dividends, actual stock price is no big deal.

The only practical benefits of a high stock price, from a business's standpoint, is that it makes loans cheaper and discourages takeovers.

In the Reaganomics merger mania, once the stocks got to a certain level and pretty much everything that could be merged was merged, businesses that were not able to compete by running profitably are prime for crumbling. Businesses that can only compete by buying out their competition are in for trouble.

at first I thought who could afford to save anything? Then I thought people are cashing out on the market and putting into savings.

I think more and more will do so as the market goes down.

My 401k has gotten so small I have mentally just written the money off in my head. Its the only way I can sort of live with it.

The shit will explode.

If folks keep their cool, then things can work themselves out.

Our choice, really.

I'm reading a lot of panic here on these boards,
and pray that "at least" those doing the panicking
actually have investments in the Stock Market.

One would hate to have those who have nothing to lose (or so they think)
feed a frenzy just cause they can.

don't know where you live, but I live in the Los Angeles area. There are those Tea Party groups forming every day, some quite large. They are starting to get more viscious. I'm getting ready to buy a couple more guns, can goods and water.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x429423

enjoy your stay

:thumbsup:

Yeah, that sure is terrifying.

NOT.

The market means very little right now. Its merely a game to the big time investors while the little people end up screwed as always. It was overinflated and no way was it ever going to stay up that artificially high. People cause panic when they don't get this. The market is going back down to mid 1990's levels. People who want to retire right now are double screwed as part time jobs and older workers will probably be laid off first. I am thankfully my husband and I are only 33 and have very little in our 401k to really be affected. I am worried about my parents even though they voted for Bush twice. I wish they would realize how much Bush and his wealthy buddies screwed them over.

So, I guess ir wouldn't be that much worse than what's already happened. We've already had Bernie Madoff types take 55%. How much more can they do?
At this point, everyone who was really counting on stock funds for retirement is already screwed, and everyone who was just tinkering with a little change is like someone coming home from Las Vegas a little poorer and a little wiser, and the really rich - I'm sure they'll be just fine, even if they have to be hundred millionaires instead of billionaires.

There's no upside to a major break-down.

It doesn't make people ethically superior or closer to the earth or more "sustainable"... it just wrecks everything good and forecloses good options going forward.

chaos breeds chaos, people need to understand that.

Moving money into bonds worked well in 08, but you don't have to take it out of money markets... like the players out there want.

The people who truly know just shift their money from one "balloon" to the next. Stocks, bonds, gold, real estate, commodities, around and around it goes. The ones who get caught are the ones who don't know they're on a ride and never get off until the ride breaks down and quits running altogether.

The way things are going, we could easily hit '96 levels by next week.

IIRC, the Dow was around 4-5K points and its valuation was where it should have been before speculators/investors went nutty during the .com frenzy.

The crazy thing is that after the .com bubble burst, the Average went back up to pre-bubble levels, then went back up to "irrational exuberance" levels. Yet, there was no real economic 'boom' driving the steady climb, aside from the scores of new 'average Joes with their new eTrade accounts' pumping their retirement money into the markets.

Meanwhile, the hedge-fund managers, market-makers, arbitragers (i.e. insiders or "smart-money") have been betting against these "Joes" the entire time. Don't let the news of the markets going down fool you, there's still plenty of "smart-money" people making money off of this decline, although it's a lot harder now that so many are pulling their money out. But they'll still complain because WAS easy money for them, when they could siphon off of "Joes" going all-in off of the 'Hot-Stock' news on CNBC.

That being said, IMO, this correction will cause the markets to revert back to being more of a pure capitalization vehicle for business, albeit much smaller business, because the money really isn't going to come from anywhere else. Also, the commodities markets are still used by viable businesses (such as farms) as a hedge for their capital investments and production levels. So, they won't cease to exist, and they really shouldn't because in many ways our economy needs them, but they'll (hopefully) look a lot different than they do now. Especially if the Administration can charge the SEC to curb speculator influence and manipulation in the markets and impose stronger regulations on investment firms.

When people had pension funds, and pension funds were restricted in their investment choices to mainly bonds, this would not totally collapse an economy.

The stock market is gambling. Unless your purchasing an IPO you are not providing new capital. All your doing is buying an interest in an existing company that somebody else provided capital for. You are making a bet that the company will be succesful.

When you buy a bond you are making a loan. When you buy a stock you are taking a bet. Instead of making loans we started taking bets.

In 2009 retirement funds are all invested in the stock market. We've tied up money in old capital instead of the bonds which are new capital.

people to even have retirement money in, not if its a big game with over speculation.

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The stock market IS crashing. Down 50% in a year, and now MORE expensive than then because of ravaged earnings.
There is no reason the DJIA shouldn't be at around 4500-4800 TODAY.... and as things deteriorate, it could go lower.
I predict we see it around 2000 within 2 years. And when we bottom, it will be a long, slow "lost decade" (Probably 2 or 3) then we will re-build and do it all over again.

If the stock market doesn't come back, the economy won't come back, and then the GOP will clean house in the 2010 elections and quite possibly in 2012 as well.

Also, this is normal people's retirements we're talking about. My parents, who have abot $88,000 in their portfolio (down from about $120,000) can't afford the stock market to tank more.

And my husband and I will have lost our life's savings.

think somehow this time may be a little different. All markets are based on perception. The perception which is being driven into us is that "things are bad"... Why would anyone invest if "things are bad"?

Or the markets. He has no control over them and a pep talk (which, btw, I feel he's done enough positive public speaking to at least stifle some of the Wall St. panic - if it were that simple) will not change the nature of the beast. You said it yourself, the markets are controlled by emotions, especially with these inflated valuations.

I hate the fact that people are going to lose their retirements, but the markets needs to do this. It's a terrible situation, but Main St needs to finally put the markets in perspective. I have always thought that 401K, mutual funds, and other securities-backed "retirement funds" are the biggest scam pulled on the Middle Class - ever! The premise is to, basically, 'hand your earned income into Our hands and we'll take care of it for you... because the markets ALWAYS go up!' It's total bs. If the fund managers were doing their jobs, monies would have been moved out of the securities markets during the first signs of trouble. The problem is that the fund managers don't give a crap about the people's money. It's all about leverage to them. They earn a percentage off the funds no matter what so, even if the market tanks, they still take a piece home. And let's not forget that they have their own personal stake in the markets. Don't think for minute that they aren't betting against the crash of YOUR money! That money doesn't simply disappear into a vacuum. That sucking sound you hear is the money going into their hedges.

Anyway, the President has no control over this. The only thing he can do, and he has us moving into the right direction, is to amp-up the SEC and reinstate their authority over the nonsense that's going on right now. The markets will continue to balk at this idea until all of the fluff (read; Speculators) is shaken out.

And, btw, it is NOT time for people to be investing in the markets. There are no opportunities for the new-to-average investor - the bulk of the people who are taking a bath right now. The only people who should be investing in the markets right now are the investors who've spent a least three-five years studying the markets - before they made their first trade - then worked out a proven system based on market actuals instead of news. By NO means should the President be advising people to jump into this situation without being properly prepared! The markets are an Olympic-sized swimming pool filled to the brim with Tiger Sharks... It would be completely irresponsible for the President to convince people into 'jump right in'.

I have nothing in the stock market right now except my husband's 401K. We are only 33 so we have years to wait this out. I feel for my parents and other people near retirement age but the over speculation was going to bottom out eventually. Obama can only inspire people so much, the economy needs time to get better. He has not even been in office two months. This is a huge downturn, we won't be getting out of it any time soon.

Or do u have a retirement acct that's all in cash right now?

You said, "I have always thought that 401K, mutual funds, and other securities-backed "retirement funds" are the biggest scam pulled on the Middle Class - ever! The premise is to, basically, 'hand your earned income into Our hands and we'll take care of it for you..."

If you are a fool you invest and let others take care of it for you. If you are not paying due vigilance to your investments you will surely fall into harms way. There is absolutely no reason not to become knowledgeable about the market. If someone chooses to be ignorant about any subject so critical as their financial security, the risk is completely theirs. The markets do not always go up, anyone who believes this must have just fallen off a turnip truck or again chooses to be ignorant.

You stated, "If the fund managers were doing their jobs, monies would have been moved out of the securities markets during the first signs of trouble. The problem is that the fund managers don't give a crap about the people's money."

False, caring about peoples money is how they feed their families. Some are better than others. Why not invest in stocks directly? I can quickly name a few markets that due well in any economy 1) tobacco companies, people will continue to smoke no matter what the economy does. Especially during bad times. 2) Beer and alcohol manufacturers are doing well. 3) Coke is good., 4) McDonald's, still showing a profit.

My point is do your homework people.

The President doesn't have direct control over this as you say, but he can influence the mood of the nation. This is not Hope and Change...it is Despair and Wailing.

Finally, you say "...it is NOT time for people to be investing in the markets. There are no opportunities for the new-to-average investor - the bulk of the people who are taking a bath right now."

False, False, False. Learn about the markets. Invest in a variety of funds, some bonds, some growth stocks. Do not invest if you need to spend the money in the next ten years. I'm 47 and plan on working til at least 65 so I'll continue to invest in the market until about age 60. If I was in my twenties or early thirties I would wish the DOW to hit 1,000 so that I could get maximum growth out of my investments before I turned age 60ish. And no the president should convince people to jump right in, he should however tell the public that now is a great time to invest if you are under the conditions I outlined in the paragraph above.

As Buffet said, be fearful when people are greedy and be greedy when people are fearful. NOW is the time to start loading up.

And I'll quote myself, if I may...

"There are no opportunities for the new-to-average investor - the bulk of the people who are taking a bath right now. The only people who should be investing in the markets right now are the investors who've spent a least three-five years studying the markets - before they made their first trade - then worked out a proven system based on market actuals instead of news. By NO means should the President be advising people to jump into this situation without being properly prepared! The markets are an Olympic-sized swimming pool filled to the brim with Tiger Sharks... It would be completely irresponsible for the President to convince people into 'jump right in'."

I'm not sure how we disagree here? I may have made some generalizations, but my caveat was pretty specific; Learn about the markets, for they're not a place for your new or even average, every-day, part-time investor who isn't using disposable income to trade. If you (not you, specifically) match this profile, you should not be in this market. And I'd say that profile makes up about 85% of the individual and/or private players in the markets (the people who are taking a bath right now).

We disagree about the nature of fund managers: They "feed their families" whether or not you lose your 401K. Yes, they're incentivised for performance, BUT, they also hold their own accounts. I can guarantee they take care of that moreso than the funds that their managing. One of the primary reasons that they invest privately is most institutional fund managers are encouraged to keep a broad range of securities in their portfolio by their firms. When those securities take a hit, there's a lot of red tape to drop them from the portfolio - the fund managers are essentially locked in. It's just the nature of the business.

Ironically, THEY, the fund managers, are taking your advice and doing it on their own! If you can find a private fund manager, George Soros is a great example, who has their own money tied into the fund, then you're in better hands. The only problem is that the average investor doesn't have thousands of dollars laying around to invest.

And when has the President presented a speech that was full of "Despair and Wailing"? That sounds more like the talking-heads on Wall St. If anything, the President's tone has been cautiously optimistic. I'd rather hear him say that there's light at the end of the tunnel rather than full speed ahead.

I dissent from this 110%. And I dissent from the idea that Wall Street is a monolith that can be lumped together and dismissed.

The market is the market - made up of people who like to make money. There are good and bad people in almost all walks of life.

And a pep talk from Obama won't solve the structural problems, but it would make a big difference temporarily. Sustained positive talk could have a sustained, limited positive effect.

I cashed out 90k when the market hit 11,000. I am now reinvesting it at the current market rate. When the DJIA doubles, and it will, so will my 90k. It is not fantasy, it is economics. You can choose to sit on the sideline and put your money under your matress but you will be the one who loses in the long run due to the annual increase in the cost of living.

When you buy stocks (or mutual fund shares) you are buying a piece of the compay or companies in the portfolio. If the companies succeed-you succeed. If the companies fail or go broke-you fail or go broke. The key is in choosing smart investments over the long-haul.

Think 1930...not 1987.

We have to remember that the stimulus money takes months to penetrate our economy, so it's too early to panic. A year from now we'll be better off.

:rofl:

Shut'r down .... implement the new policy with much tighter oversight controls, then start it back up again.

Hopefully Mama's still got it going on. :rofl:

The economic disruption will likely spill over into every area of life that involves money.

Probably it will result in widespread rioting as food shortages grow and services are disrupted. The civil unrest will trigger changes. We have to be ready to help ensure that those changes are positive and that a new system emerges that serves people rather than their self-appointed overlords.

The banking and real-estate sectors are in freefall, and the entire consumer economy's belly-up. It's doing exactly what it should be doing, given the circumstances. The markets still look overvalued, IMO. I got out of stocks in 2007 and have been sitting mostly in cash and some bonds since then; I'll start looking to buy here and there when we hit a market PE in the single digits. We're not even close to that yet, which leads me to believe that if anything the market's still too optimistic. Dow 3000 by August, is my guess.

I held stock in a company that went bankrupt. They did not go to complete liquidation bankruptcy unfortunately. The per share value of the cash on hand appeared to be worth more than the share value. All of the patents and assets of the company held were worth many times the per share valuation. It was worth a lot more dead than alive.

The common share owners of the company get zeroed out. The courts take the company away from the common stock holders and give it to the preferred stock holders. The preferred stock is usually what Directors and VP give themselves. The company comes out of bankruptcy and the brass the ran it into the ground makes a killing.

They hyped and diluted the company to raise capital and then gave the common share holders a thorough zeroing out.

Please tell me that I am understanding this wrong.

Customers with discretionary income to spend. That has been declining since 1973, with the exception of a brief uptick in the late 90s. Give workers more bargaining power and that will happen.

move out to the country to Uncle Phil's house... eat from the garden and buy locally produced food.

An "investment" business has closed up in our little town while at the same time we are getting all sorts of offers to invest from brokers in other states.

What a joke! I have NEVER bought a stock and never would because I've always thought it was an excuse to gamble and is also exploitation of other peoples labor.

Not only that, but I long felt that stocks are the domain of the rich, who can afford to lose and gamble their money.

Last but not least, I don't have a dime to invest in the first place, so why in the hell do these a$$holes think I'm going to give them one thin dime?

They are obviously desperate and I don't feel one bit of sympathy for them.

No. Not for sharks.