“Holy Reaganomics, Batman!” DOW plunges 750 points in one week!

[Mugsy]

Via "Mugsy's Rap Sheet":
(Note, this blog entry was started yesterday before today's additional 200 point drop. Expect and update over the weekend)

“Holy Reaganomics, Batman!” DOW plunges 311 points.
(down 526 points in six days). Have Neocon economic policies finally started catching up with them?

I had another report nearly ready to go for today’s edition when news came across the wire that the DOW plunged a frightening 311 points this/Thursday afternoon (falling as much as 438 points at one point, recovering slightly as bargain hunters feasted on the wounded). After struggling for days to crack the “14,000 point threshold”, the DOW smashed the 14,000 point barrier with all the gusto of a 98 pound weightlifter before closing at “14,000.41″ a week ago Thursday.

The DOW then collapsed in an exhausted heap on the floor, falling 149 points the very next day, the market bounced around like a basketball, making modest double-digit gains in between record triple-digit losses of 226 points last Tuesday and 311 points Thursday.

Last March, I reported on the DOW falling 416 points in one day, “officially” translating into a net ZERO gain (actually a net NEGATIVE loss) in the stock market (adjusted for inflation) since President Bush took office 6 years earlier. Since then, the DOW climbed an unwarranted 1,700 points in just four months, a staggering amount raising serious concerns when you consider that there has been NO significant economic news to justify this “irrational exuberance”. None, nada, zip.

(...)

Please visit "Mugsy's Rap Sheet" for more. (The story will be updated this weekend to reflect today's additional 200 point loss.)

[Vincardog]

1. See what happens when your customers are laid off?

[Zywiec]

2. The stock market is no place for people with a weak stomach

If you're into investing long-term, and not looking daily, you'll be fine. If you worry about every little turn, it's best to keep your money under your mattress.

[mmonk]

3. I was part of that sell off.

Does that mean I'm guilty of anything?

[whistle]

4. The monkeys got their coconuts and left Wall Street...

...how about an Oct 1987 style plunge?

<snip>
Black Monday (1987)
From Wikipedia, the free encyclopedia

DJIA (19 July 1987 through 19 January 1988).

FTSE 100 Index (19 July 1987 through 19 January 1988).Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell dramatically, and on which similar enormous drops occurred across the world. By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%. (The terms Black Monday and Black Tuesday are also applied to October 28 and 29, 1929, which occurred after Black Thursday on October 24, which started the Stock Market Crash of 1929.)

The Black Monday decline was the second largest one-day percentage decline in stock market history. The largest one occurred on Saturday, December 12, 1914, when the DJIA fell 24.39%. However, in that case, the New York market had been closed since July due to the outbreak of the First World War. The greatest point loss in DJIA history was on Monday, September 17, 2001, 684.81 points, six days after the September 11, 2001 attacks and the first day after which the market was open.

A certain degree of mystery is associated with the 1987 crash. Many have noted that no major news or events occurred prior to the Monday of the crash, the decline seeming to have come from nowhere. Important assumptions concerning human rationality, the efficient market hypothesis, and economic equilibrium were brought into question by the event. Debate as to the cause of the crash still continues many years after the event, with no firm conclusions reached.
<MORE>

http://en.wikipedia.org/wiki/Black_Monday_(1987)

[David__77]

5. I think expressing it in percentage terms is better: 4.2% loss.

That's a big loss for one week.

[mmonk]

6. Yes it is.

But it will find support at some point.

[Mugsy]

9. For comparison sake...

It's the biggest drop in five years, and in daily terms, second only to the 600+ point drop when the markets reopened after 9/11.

I'll try to do a full historical workup over the weekend. Please use the RSS link on my blog for updates. :)

[indepat]

7. And when the loss in purchasing power of the dollar is factored in,

the performance of the stock market under KGIII's reign has not been all that good.

[Swede Atlanta]

8. Troubling Swings

I am not a nervous "nellie" when it comes to the market but I have to ask myself why we are seeing such huge swings in the market. I would prefer a small 10 point gain each week rather than an uptick of 150 points average for two or three days and then a 200 point drop. Those kind of swings make me think we either have too many amateurs investing that follow their emotions or computerized trading is wreaking havoc on the market. Just my observations.