Stock Market craziness

[abelenkpe]

Is it just me? The whole sudden drop and correction yesterday while the Senate was working on financial reform and then Sanders amendment being watered down and the break up the banks amendment being voted down seems suspicious to me. As if Wall Street was trying to send a message. I'm sorry if this has already been discussed....been very busy at work. What do you all think? Coincidence? More a reaction to what's going on in Europe? Any thoughts?

[Warpy]

1. No, it has much more to do with people looking at the PIIGS situation

in Europe and imagining the worst and moving their assets to either gold or T-bills. They're welcome to, but I've long considered panic the worst reason to make any decision.

The truth is that the market is overvalued. It needs to fall. It's been pumped up on funny money since the end of the Clinton administration, and the funny money, much generated by imaginary investments created by hedge funds, is starting to evaporate. That's what the PIIGS crisis is all about. With no more funny money, they're bankrupt.

The problem with major financial crises is that we won't know what the smart thing to do is until it's long over and everybody counts up what they have left. I'm staying put. I can't make any suggestions for the rest of you.

[Juneboarder]

4. Do you feel...

"they" are investing in physical gold or paper gold? I feel buying into paper gold is just as bad as anything else in the stockmarket at this point. Physical gold is the way to go for today...

[Warpy]

5. You have to be careful with physical gold

since quite a lot has been found salted with tungsten. In addition, it's heavy, hard to store, hard to redeem in a real crash, and a thief magnet. It earns nothing, and is only a hedge against inflation. In a steep deflationary cycle, something it looks like we might see yet, it loses its value along with everything else.

I'm not in the shiny rocks camp. I heard too many stories of the Depression and people offering food shops solid gold items for just a few days' worth of groceries.

[brewens]

9. I think it was George Steinbrenner that said, "never sit around

discussing things rationally when the situation calls for panic." I had that in mind when I dumped all the mutual funds in my 403b. It had been going good so I decided to get out and watch it for awhile. It's all stashed in a safe money fund.
If the DOW shoots back up again I'll be kicking myself in the ass. I just can't risk being in during a huge slide.

[abelenkpe]

11. My SIL did the same.

Good luck!

[Warpy]

12. Every situation is different

and if I hadn't inherited as much as I did (Dad left me a big surprise), I'd probably have done the same weeks ago when the rally started to run out of gas.

As it is, I can afford to hang onto what I've got on the theory that it will never go to 0 and will continue to produce the income I'm living on.

Don't ever gamble anything you can't afford to lose.

[abelenkpe]

10. It is an ugly situation

over in Europe. Difficult to imagine this wont effect the rest of the world as well. On top of that, volcanos and oil spills the world is getting quite wobbly and people are on edge.

What do you think will happen in Greece and Spain, etc? Will they adopt austerity measures or do you see a different outcome?

[Warpy]

13. The IMF, in its infinite wisdom, will force similar austerity measures

in the rest of the PIIGS and those measures will eventually come to the US.

Things will have to get truly desperate before the sainted rich are tapped and the military budget cut.

[cbdo2007]

2. It is strange that the sudden drop happened but is easily explained by

someone entering the wrong amount of shares causing a snowball that kept all the prices dropping as more and more automatic orders were placed.

At this point it really just seems like a coincidence as there could have been no real point to it. It makes Wall Street look bad and unorganized if anything, so I would think it points out their flaws more than their power. Markets were expected to be down this week due to Europe situation but that sudden drop can only happen by technical error.

[Turbineguy]

3. If the markets are trying to send a message

that they do not need regulation, they are not doing it well. They are sending the opposite. The DAX for example has circuit breakers that would have stopped the sell-off of yesterday much earlier. Those fucking socialists in Germany.

[Cali_Democrat]

6. Circuit breakers or not, you can't stop mass selling

I do think it was a message sent by the powers that be. It was a demonstration of power and it was impressive.

If the German exchanges or any other exchanges have circuit breakers, the people pulling the lever can simply wait it out. It's impossible to stop.

You can't freeze a market like that forever.

[kentuck]

7. I think they were trying to send a different message...

They were daring the Democrats to stop them. The Democrats could not muster the courage yesterday. Unfortunately.

[abelenkpe]

8. Yeah. The vote yesterday was disappointing

to say the least. Even Feinstein voted no. :(