Can anyone explain WTF is with the DOW?

[ColbertWatcher]

It dumps nearly 1,000 points during the RNC, but jumps almost 300 the day after the Fannie/Freddie bail out?

What's going on?

(EDITED TO ADD)

Oh, and can anyone point me to a web tube that shows how the dollar is doing over a period of time on a graph?

[Art_from_Ark]

1. Plunge Protection Team?

Can't have the DOW crashing less than 2 months before the big election.

[mth44sc]

2. If you are doing big business

and just know the feds wil bail ya out not matter what...

[JBoy]

5. Exactly. Investors say "the floor just got raised".

[Trajan]

3. The takeover of Fannie and Freddie by the government ...

Provides some sense of stability to investors as opposed to them being 'private' ...

Another failed experiment at 'Privatization' ....

[MercutioATC]

4. In case you hadn't noticed, it's been a volatile market for 6 months or so.

None of it makes any real sense. They're not trading on fundamentals, they're trading the swings.

[ColbertWatcher]

8. "they're trading the swings." what does that mean!? n/t

[MercutioATC]

12. The market has been fluctuating between 11,000 and 11,700 for a while.

Traders are taking advantage of the swings between the two extremes to make money.

[lxlxlxl]

6. one of the weirdest things about the market is how they portray the overall value of the market...

as a sign of health. think of that number they show on the news as macro level view of the market. as people are realizing, some sectors of the market are of more importance than others (mortgage backed securities), and some are so important they tie into the entire market (major investment banks).

yes, that number does represent something significant, but to me, as someone who doesn't even invest, it's one of those blatant tricks that gives you something simple to look at to keep you from engaging the complexity.

it works by the way. every four years economic issues come into the presidential debates, and the guy that trys to explain is labeled "elite" and the guy that says "i think the guvmint should stay out of it" is branded the "clear headed realist". It's bullshit.

dont ever let someone tell you the market is too complex to understand.

try to start here.
Crash of 1929
http://video.google.com/videoplay?docid=7233622324068640582&ei=Y-LFSMGTOZzYqAOM-dWVCg&q=1929+crash

[ColbertWatcher]

9. "something simple to look at to keep you from engaging the complexity." Nicely put.

Thank you.

[Indy Lurker]

7. The market is predictive

That is to say the value of stocks are based upon anticipated results.

During the RNC there was concern that hurricanes could do a lot of damage to the gulf, this raised oil & nat gas prices, which in turn caused stocks to drop.

No one wanted to invest in Fannie/Freddie for fear that they "could be stuck holding the bag if things turn out to be worse than expected.

By bailing out Fannie/Freddie new investors are no longer responsible for the damage that was already done. This has already caused a 1/2% drop in 30 yr mortgage rates. The market sees the drop in mortgage rates as a positive sign for the economy that wasn't there on Friday.

There's a thousand other thing that also factor in, but you get the idea.

The thing the market fears most is uncertainty. That's why the stock for a company can go up when they announce bad results. The stock would have already dropped in anticipation of the bad results, often times farther than necessary, which is why there is an upward correction when the bad news hits, and it not the worst case scenario.

If Hurricane Ike looks like it will head for oil & gas wells, you can expect another drop in the market.

[ColbertWatcher]

10. Great explanation. But I still blame the RNC, not the hurricanes, for the drop! n/t

[1]

11. ha! if someone could explain the dow, they could explain the meaning of life...

it is unexplainable.

i will share what i know. it is unexplainable.

it is all about the concept of "confidence"

remember just a few years ago (2000) when all sorts of folks invested in "no proven technology", "nothing to offer", "hype and nothing more than hype" stocks of dot coms? they were confident that these investments would climb to the astronomical returns.

confident.

and they did.

until they didn't.


remember when the housing market was an unbelievable easy access to future wealth. buy low sell high?

confident.

and it was.

until it wasn't.




markets depend on confidence. the confidence that it will get better. until there is no confidence. then things get worse.


now, go get a phd. in economics, business, finance, whatever. the key to the whole show is confidence.

and that is nothing your phd can ever get over on. nothing you can ever control. go be an over educated moran. its not about phd's.


its the folks on the street. good luck with that...