TODAY: Dow Futures Down 500 Points!!

so what, things are not going to change. and you can always join the military.

they'll all shoot back up again tomorrow and the usual suspects will make another big pack of moolah at the expensive of the other idiots. Call me back when it's down 30%

on the week,or even better when there is no more share trading..

some of these indexes are close to, if not already past, down 30% for 2008. that's a very significant drop no matter how you measure it and it's got to give every investor cause for concern.

This sell-off (and anticipated sell-off)ia a bit scary to me, largely because I think that it makes so much sense. U.S. fiscal policy has been irresponsible, U.S. foreign policy has been atrocious, and U.S. mortgage lending and borrowing practices have been absurd. Now that the chickens are coming home to roost in an election year, politicians are seeking to bail out many of the malfeasors, and everyone is blaming Ben Bernanke, who is the only person trying to act like a grown-up and do what is right in the long term instead of what is expedient in the short term. The sell-off overseas is persuasive evidence that the much ballyhooed "decoupling" of the U.S. and international markets has been vastly overstated.

Indeed Wall St was closed to day, all the other bulls n bears

had no-one to hold their hand so they panicked, tomorrow it'll all be back up again.Can you see 6% or so being wiped of the Dow in 1 session I can't, that'd be 7OO points or so,the others will step back in a make a quick buck.

Traders are are scared. You can almost smell the fear.

People are hyped that a major depression is going to occur when the indications are that we are due for maybe a mild recession.

I agree that the gov't has overspent and mortgage brokers went wild. Energy prices also hurt our growth. We were due for a correction. I am not nearly worried as some.

If valuations move further downward, I won't complain. I am in the accumulation phase now and the cheaper I can buy into the market the happier I am. I don't plan to use most of the money I put into the market in next 20 years.

lick my dog wrote:

People are hyped that a major depression is going to occur when the indications are that we are due for maybe a mild recession.

I am not nearly worried as some.

i know this was only an offhand comment, but would you care to elaborate on why you are so comfortable that only a mild recession is due? there are some serious structural problems with the way the US has been operating for around 25 years and everyone knows that someday there will be a massive correction and jolt to the world economic system as things move back to a sustainable equilibrium. we've had signs for some time now that such a realignment is currently taking place. the dollar has plunged around 40% against the euro. china has moved away from blindly purchasing (US) treasury bonds.

i just put a bit of money into the market after hours thursday, but i fear there is a meaningful chance, perhaps 25% or so, that the market will continue down throughout the calendar year at historic rates. perhaps a 50% drop this year. and why not? if the US consumer begins to default on consumer debt (that is, credit cards, auto loans, home equity loans) as he has on home purchase loans, where is the spending going to come from to keep the US economy moving. and without a healthy US economy, why should china, japan, etc. keep lending to us knowing that a decline in the value of the dollar is so likely? i suppose they'll do so for a while to protect their sunk costs (existing treasury bonds) and to attempt to keep us buying their crap. but if it's not working after 6 months or so, eventually isn't it possible that they'll collectively cut their losses and start investing at home and in developing countries and/or europe rather than in the US? and then what does the US do without the daily infusion of, what, a billion dollars or foreign capital that it currently needs to stay afloat?

again, i think everyone who pays attention recognizes that a big correction was/is coming. the outstanding question has always been whether we'd have a gradual correction with relatively constant prosperity or a more radical correction that requires investors to quickly jump ship to preserve their capital. i'm betting more heavily on the gradual correction than some, but i'm certainly scared of the more radical one.

Cervantes wrote:

Can you see 6% or so being wiped of the Dow in 1 session I can't, that'd be 7OO points or so,the others will step back in a make a quick buck.

October 19, 1987: Dow down 22.6%, SP500 down 20.5%, NASDAQ Composite down 11%. This happened in 1 day.

This was the worst drop in US market history, so it's obviously an outlier. However, it does illustrate that 6% in one day can easily happen.

The good news is that when the market has a sharp massive sell-off it tends to recover relatively quickly. It's the long drawn out bear markets that are painful.

kaitainen wrote:

You're such a pessimist.

All your comments on this matter talk about the sad state of life in the US economy and that the world is doomed.

Take a chill pill guy. Just because things aren't going up doesn't mean the world will implode. You can't expect things to always go up. We made a few mistakes spending wise and people lent way too much money. They'll tighten up, the economy will recover slowly. Give it a year the thing will even out.

In the mean time try relaxing for a second and taking a deep breath. It's people like you that spread fear and panic in semi-bad situations that aren't the end of the world.

We should thank China every day for buying our debt. If they don't we are screwed since we will have higher interest rates in the coming years while we have to support a lot of baby boomers and need growth.

A lot of companies in the S&P500 make a lot of revenue outside the US. It isn't only US consumers who drive the US economy.

I am not all that concerned because I am in the market for the long run. I don't try to time the market with the bulk of my money unless I thought the valuations were really out of whack like in 1999 early 2000, which I don't believe to be the case. Right now I am dollar cost averaging.

I know people like Bob Brinker has said that the market is cheap at the mid 1400s. I have a chunk of money on the sidelines that I still plan to dollar cost average. I think he may be off in that people are trading on fear and he is underestimating that fear. I won't dump all my money in right now.

I think the fear is a bit of an over-reaction though. Maybe in 2008 the market will go down. I am okay with that. I'll ride it out. In the long run, I think I'll be better off riding it out and sticking to my plan than trying to time it with the bulk of my investment capital.

Because valuations are low, the fed has said it will react aggressively, and both parties have now put together plans to stimulate the economy, things will turn around. I want to be in the market when it turns around. The housing market will take some time to get it together but what is the housing market - about 5% or so of the overall economy?

The last jobs report was pretty sucky. In my state there has been little growth. It will probably be a net job loss for the first half of 2008. But again, I am going to stick to my investment plan and not try to get tricky and time the market.

Actually China owns very little of our debt, around 4%. Japan owns more and the UK is quickly catching up to China. The vast majority, about 50%, is owned by the US government. American citizens own about another 25%. The rest of the world combined owns less than 25%. So don't thank China, thank your fellow Americans.

Otherwise, I agree with the rest of your post though I do think the market will be ugly until all the sub prime mess is revealed. Glad I insured myself with Puts on Friday.

You are right last time I looked Japan owed a lot more of our debt than China.

I should have said Asia and Saudi Arabia and other oil-exporting countries and others like the UK. I shouldn't have only thanked China.

Avocados Number wrote:

This sell-off (and anticipated sell-off)ia a bit scary to me, largely because I think that it makes so much sense. U.S. fiscal policy has been irresponsible, U.S. foreign policy has been atrocious, and U.S. mortgage lending and borrowing practices have been absurd. Now that the chickens are coming home to roost in an election year, politicians are seeking to bail out many of the malfeasors, and everyone is blaming Ben Bernanke, who is the only person trying to act like a grown-up and do what is right in the long term instead of what is expedient in the short term. The sell-off overseas is persuasive evidence that the much ballyhooed "decoupling" of the U.S. and international markets has been vastly overstated.

I believe we are in for a pronounced (or at least protracted) slowdown, not a garden-variety recession (not that there is such a thing), which is why the S&P 500 does not look cheap to me, because I expect earnings to contract significantly. I have been totally on the sideline since the beginning of the trading year, and while I believe we will get a bounce fairly soon, the only thing I am interested in owning is volatility. The massive credit bubble is unwinding right as the 800-lb gorillas of medicare and social security liabilities are coming due. CDOs still lack any kind of transparency, and the collateral itself is heavily collateralized. I believe it's a near certainty that a Democrat takes the White House but can do nothing about this ominous situation (except make it worse with onerous fiscal policy) and that the pendulum will swing all the way back to the right in 2012, probably when Newt Gingrich makes he foray toward the exexcutive branch. Should be fun to watch. Good luck.

Sagarin wrote:. . . probably when Newt Gingrich makes he foray toward the exexcutive branch . . .

Good one! I thought all of Newt's supporters had gone into hiding. Most Americans seem to have rejected the Contract On America with a decade of perspective on where it got us. Do you have any idea how few of Newt's revolutionaries will remain in Congress a year from now?

Nothing you said wasn't obvious. That's why he retrenched and didn't put his name in the hat. He'll be back in 2012. It's a strategic calculation, just wait and see. I think you think I am a huge Newt fan, which I most definitely am not. But to say his Contract WITH (not On) America was unsuccessful, when everyone wants to attribute the "success" of the 90s to Clinton who was forced to accede to supply-side cuts by the GOP is at best disingenuous and, at worst, horribly inacccurate.

Shares in China's banks fell sharply Monday after news reports said its No. 2 lender, Bank of China, might write down holdings of U.S. mortgage securities and two others increased reserves for possible losses.

The reports were the first indication that Chinese lenders, which have so far avoided damage from the U.S. credit crisis, might face problems due to their holdings of subprime securities.

Also Monday, China's banking regulator warned that lenders might face risks from fluctuations in fast-rising real estate prices. (In China)

Bank of China is expected to announce a "significant writedown" on its $7.95 billion in U.S. subprime mortgage securities, Hong Kong's South China Morning Post newspaper reported, citing unidentified sources.

Bank of China spokesman Wang Jianping declined to comment. He said the bank would release details of its assets in late March when it announces annual earnings.

Bank of China shares fell 4.1 percent in Shanghai market and by 6.4 percent in Hong Kong. China's biggest banks are listed in both cities, with shares in Shanghai off-limits to most foreign investors, while Hong Kong is open to global traders.

The fall in bank stocks helped to drive overall market declines in both cities, with Shanghai's main index sinking 5.1 percent and Hong Kong plunging 5.5 percent -- its biggest percentage drop since 2001.

"The subprime woes in the U.S. have raised concerns at home about risks in the domestic mortgage market and prompted selling in banking and real estate companies," said Wang Junqing, an analyst at Guosen Securities in Shanghai.

Bank of China, China's biggest owner of subprime mortgage securities, said in October they were 3.05 percent of its total holdings. The bank said it had set aside $473 million for potential writedowns.

Avocados Number wrote:

and everyone is blaming Ben Bernanke, who is the only person trying to act like a grown-up and do what is right in the long term

YES! Why does it seem almost nobody can see this. Delaying the pain via massive reinflation is not the answer.

its a recession folks, they have happened before and are actually critical for the economy, much like a forrest fire is critical to the forests future growth...I am a Bush supporter (yeah yeah geer and throw bottles at me) but his attempt to stave off this recession is just not a good idea. Let it come, get it over with and lets move on. People are acting like this is the end of the world...