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A stock crash is not bad. The sky is not going to fall. Your stock's value

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conspirator Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:27 AM
Original message
A stock crash is not bad. The sky is not going to fall. Your stock's value
will be back. Their overall performance in the next 10 years will still be above inflation.
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SpiralHawk Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:28 AM
Response to Original message
1. A car crash is not bad
Edited on Tue Jan-22-08 05:34 AM by SpiralHawk
I mean, just get the wreck down to the junk yard and call your insurance company and have them, um, 'adjust' your premium.

Then hoof it down to the Emergency Ward and have the doctors sew you back up. It'll probably only cost 20 or 30 K, and an, um, 'adjustment' to your premium (assuming, of course, you are one of the 'elite' with insurance).

In ten years or so, everything will be just peachy.

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water Donating Member (504 posts) Send PM | Profile | Ignore Tue Jan-22-08 05:46 AM
Response to Reply #1
11. Do you think that's a valid analogy?
Come on... the worst economics-wise that can happen is sky-rocketing interest rates. I would much rather have that than be involved in a collision.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:55 AM
Response to Reply #11
15. Interest rates aren't going up, we are in a recession. How bad will it be?
Let's hope they can limit it to a recession. We have a major liquidty crisis out there

If the fed does not come in no later than Tuesday to lower rates before their meeting, the next stop will be 110000 on the dow


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water Donating Member (504 posts) Send PM | Profile | Ignore Tue Jan-22-08 06:01 AM
Response to Reply #15
17. Lowering the rates would delay it...
... and make the correction even worse! When the economy is pumped full of monopoly money, you don't pump more in.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:07 AM
Response to Reply #17
19. No, that is the mistake they made during the great depression
money became extremely tight. If you want to watch history repeat itself, it would happen if the fed was stupid enough to increase interest rates, which they won't do


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water Donating Member (504 posts) Send PM | Profile | Ignore Tue Jan-22-08 06:09 AM
Response to Reply #19
20. Money became extremely tight...
... because the feds kept pumping the money supply and the market corrected -- severely.

Then, FDR caused the second depression by requiring the banks to hold more money in reserve, further contracting the money supply.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:25 AM
Response to Reply #20
23. Keynesian economics would have minimized the depression period /nt
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water Donating Member (504 posts) Send PM | Profile | Ignore Tue Jan-22-08 06:42 AM
Response to Reply #23
34. Pumping more monopoly money into the economy right after it had crashed from having too much?
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:50 AM
Response to Reply #34
37. Yup, that is what you do until you recover. Then you reduce spending or increase taxes
during the recovery and boom periods


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water Donating Member (504 posts) Send PM | Profile | Ignore Tue Jan-22-08 06:54 AM
Response to Reply #37
40. Why would that work?
Edited on Tue Jan-22-08 06:54 AM by water
Considering that the market was in a correction -- a correction because the government had been inflating the economy -- re-inflating it wouldn't have done anything (except prolong or deepen the correction). The government still would have needed to find lenders for the money anyways; you can't create money out of thin air.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 07:08 AM
Response to Reply #40
44. I agree, what I am saying is inflationary, and it is complicated by the fact
Edited on Tue Jan-22-08 07:08 AM by still_one
that the consumer is already in too much debt, but lowering interest rates might prevent some defaults and forclosures, and stabilize things enough for the economy to recover

However, there will not be real recovery until we start creating new jobs here

Lowering interest rates by themseleves probably won't stop the excesses that have built up through the years anyway, and no matter what they do, those excesses will just have to work their way through the system

It may all be philisophical at this point



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PCIntern Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:34 AM
Original message
110000 on the dow, I'll take...
I certainly have no problem with that...

:hi:
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SpiralHawk Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 07:53 AM
Response to Reply #11
45. Yup. My analogy is excruciatingly apt in light of the OP glib kissoff of a Stock Crash
Edited on Tue Jan-22-08 07:55 AM by SpiralHawk
No soup for you today. Come back in ten years.

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Bright Eyes Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 07:04 AM
Response to Reply #1
43. ...
"Tis only a flesh wound"

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mondo joe Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:09 AM
Response to Reply #1
48. If car crashes corrected the way stocks do, they wouldn't be as big a deal either.
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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:29 AM
Response to Original message
2. Shhh....dammit.
I'm looking to pick up quite a bit of undervalued stock this year, and this "crash" is the perfect opportunity to do such.
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bluerum Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:30 AM
Response to Original message
3. And your homes value will increase over the next 10 years,,, but you won't own it.
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Uben Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:32 AM
Response to Original message
4. PANIC !1!1
Those who panic will be the real losers. The stock market has always had highs and lows, the real trick is not to buy into the panic selling. Rich peple make money off of those who panic, and they will make a ton off of this drop. I wait patiently to pick off some very good deals in the days to come.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:04 AM
Response to Reply #4
18. That is fine if you are well diversified, and working, but what if you need the money NOW
Sure there will be opportunities for those who have the means. Some people never recovered from the 2000 crash. In fact the triple qqq are still 50% lower from their all time highs

The Japanese market never completely recovered from its all time highs

It took WWII before the U.S. stock market recovered after the crash

No one knows the extent of the credit losses, and the ripple effect it will have yet. There is a lot of worthless paper out there, and a lot of prime assets may still need to be sold to pay for that worthless paper

There is a saying on wall street, "don't fight the trend".

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enid602 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:28 AM
Response to Reply #18
53. watch it
"It took WWII before the U.S. stock market recovered after the crash.' Don't give Bushco any ideas.
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Jawja Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:49 AM
Response to Reply #4
36. Yes and I am trying not to panic...
almost did yesterday but calmer influences urged me to sit tight in the market.

That's what we DON'T need is widespread panic.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:52 AM
Response to Reply #36
38. If you don't need to sell, you don't need to panic. Don't watch the idiot tube
of course you may be missing an historic event, but if it makes you nervous, come back in about a year or less




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GOPBasher Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:35 AM
Response to Original message
5. Well here's the difference between now and other stock crashes.
We no longer have the natural wealth, i.e. natural resources, upon which to build an economy. We no longer have the endless cheap oil, or the forests, or the top soil, or the freshwater. We're even fishing far faster than the fish can naturally be replaced. Without natural resources for our most basic needs, there is no economy. I certainly hope I'm wrong (and I'm definitely no expert on either ecology or economics), but it looks much scarier to me now.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:11 AM
Response to Reply #5
21. The biggest problem we have right now is debt, across the whole spectrum
It will need to get worked through the system, but the fed is going to have to be more agressive in lowering interest rates to minimize its effects

That should buy some time for some, whose adjustable mortages are going to be revalued. They cannot wait for Congress to act on this one, it will be too late

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MadHound Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:36 AM
Response to Original message
6. Hmmm, experts were saying that on October 28, 1929 also
Sure, the market came back then, after twenty five years, but hey there was a huge Depression in the intervening years.

Sorry, but the market has been artificially pumped up for years now, with little more than hot air and bad paper the only thing keeping the market up. Now that all bubbles are bursting, the stock market is going to tank badly also. That will be wiping out one hell of a lot of wealth, and for retired investors and such, this is going to hurt. They don't have years for the recovery to come.

A stock market crash is indeed a bad thing. About the only ones who find it to be a good thing is those with the money to buy at bargain basement prices, and if the market goes low enough there won't even be many of those.

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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:39 AM
Response to Reply #6
8. And despite what those experts said back then...
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:28 AM
Response to Reply #8
24. That assumes you didn't need the money invested in the market for 10 years
during the depression to live

It all depends what period of time you view something. That is why be well diversified is the best protection for bad times

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BadgerLaw2010 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:30 AM
Response to Reply #24
26. If you need money within 10 years, you shouldn't be heavily into high-test stocks with it.
This is pretty basic stuff. Don't speculate with the rent money and don't allocate aggressively when you are approaching an end to your active income stream.
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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:34 AM
Response to Reply #26
28. My portfolio beta is around 1.75, so these swings are nausea-inducing
but, then again, I'm only 34 so I've got time to ride them out.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:38 AM
Response to Reply #26
31. Oh, I see, banks much more stable. How many people in the U.S. understand about investing? /nt
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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:41 AM
Response to Reply #31
32. Judging by the Chicken-Little threads here on DU...not many
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:48 AM
Response to Reply #32
35. You and I agree. Obviously, mutual funds were the best thing for most people
but even there people should balance their stock funds with fixed income funds

If the small guy sells into this when they don't have to, then they should NOT have invested in the market in the first place

I suspect the Fed Will intervene before there meeting which might provide some stability. If they can't then the next support level on the Dow is 11000, and 100 point less on the S&P

Definitely interesting times


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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:53 AM
Response to Reply #35
39. I only wish I had some extra cash to dump into the market right now...
Where's my tax rebate when I need it? :evilgrin:

Seriously, though...my investment goals have not changed and the underlying strengths of my investments have not changed, so right now would be a good time to pick up a little extra while the getting's good.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:57 AM
Response to Reply #39
42. Personally, I think you will have plenty of time. Until the full impact
of the credit crunch is washed out of the system, the market will probably not go much higher for a while

I actually plan to nibble a little bit on Monday, but I still want to keep some of my powder dry in case the Fed is not able to stabilize the situtation

Statistically, we are now in a bear market
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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:32 AM
Response to Reply #24
27. "That" assumed nothing
I merely posted a chart showing the DJIA's upward growth for the past 80 years despite major market corrections.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:42 AM
Response to Reply #27
33. They constantly remove losers from the DJIA, and replace them with winners
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Double T Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:39 AM
Response to Original message
7. Sure. Once THEY outsource tens of millions MORE US JOBS to foreign slave wage countries.......
Edited on Tue Jan-22-08 05:42 AM by Double T
with NO environmental protections EVERYTHING with the stock markets will be just fine. Let GREED and DELUSION be your guide!
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BlackVelvet04 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:43 AM
Response to Original message
9. Hey, you're going to upset the
chicken littles.
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Recursion Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:44 AM
Response to Original message
10. Some middle-manager you work for may not be so sanguine
He may see "our stock is down... time to cut that dude who spends all day posting to DU instead of working"

Then things get bad for you.
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deacon Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:47 AM
Response to Original message
12. And those permanent tax cuts will just be lovely, all is well... n/t
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:52 AM
Response to Original message
13. That depends on a lot of factors, and under no circumstances should social security
be allowed to be invested in the stock market

Why don't you tell that to the folks who invested in Enron, World Com, Lucent, plus a hell of a lot of other stocks many of which made up the QQQ which reached a high of 5000, and still is down 50%

Yeah, if people diversified well enough they should be OK, IF THEY DON'T NEED THE MONEY, AND DON'T HAVE TO SELL THEIR STOCKS to pay their living expenses

There is a MAJOR liquidty crisis happening right now, and there is no guarentee that as interest rates go down, money still won't be tight

"A stock crash is not bad"???

What if you are retiring, and you need your 401K, but its value has substaintially decreased because of a long term market crash?

This is NOT the kind of crash that occurred in 1987 or even after 9/11, this is due to a lot of factors, and it could take years to recover. That is fine if you don't need the money, but I suspect many who have IRAs and 401Ks, and pension plans do

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Squatch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:56 AM
Response to Reply #13
16. If you're getting close to retirement
then you should have positioned your portfolio so that is relatively unaffected by large swings in the market, like in bond funds and other interest-bearing instruments
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:35 AM
Response to Reply #16
29. and what happens to those who didn't diversify properly?
That is only ONE reason why social security money should not be put into the market.

Socical Security is a SAFTEY NET for those who didn't save or invest properly, and that money must not be put at risk

That is what IRAs, Roths, and other retirement type accounts are for



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mondo joe Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:12 AM
Response to Reply #13
49. SS shouldn't be in the stock market. But as far as retirement plans are concerned,
if you do something dumb with them then you are more likely to be unhappy with the outcome.
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girl gone mad Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 05:55 AM
Response to Original message
14. It's bad for people nearing retirement..
just like the housing crash has hurt many who were counting on the home price gains to fund their retirements or had already taken the equity out and spent it.

Regardless of what happens in the stock market over the next few days and weeks, economically, we are in serious trouble. Our banks are facing epic losses. Our service-based economy is ill prepared for a major downturn. We have a negative savings rate and the credit has dried up. Inflation is probably the least of our worries for a while.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:30 AM
Response to Reply #14
25. That is the whole point, it depends whether you need the money or not /nt
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deacon Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:23 AM
Response to Original message
22. Not too bad if you are under 45 i guess. i hate this idiotic me me me veiled threads...onwards! n/t
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Le Taz Hot Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:17 AM
Response to Reply #22
50. Excuse me but those of us
over 45 aren't doing that peachy either.
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KharmaTrain Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:37 AM
Response to Original message
30. Diversification Is A Good Thing
Anyone who has all their money tied up in markets deserves the white knuckles ride they're on. Those with money in diversified funds will feel a bump, but fixed earnings will help...especially if interest rates begin to creep up. Yes, the market does well in the long term and I suspect it will recover from this fiasco as well, but its what kind of market? Hopefully what we're seeing is the self-destruction of the worst speculators in the markets...the end-result of years of "de-regulation" that let the foxes run the henhouse. This "bad money" will be washed out and that's what will turn the markets around. It may takes months to happen but it will.
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ayeshahaqqiqa Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 06:56 AM
Response to Original message
41. I'm so glad I've followed my great-grandmother's advice
She told me never to buy stocks and that stockbrokers and such were crooks. She lost a lot in 1929. I've looked on them as gamblers all my life, and avoid purchasing anything from them directly.
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Le Taz Hot Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:22 AM
Response to Reply #41
51. I've always felt the stock market is for the big boys.
They can ride out these 3-, 5-, 10-year "corrections." The little guys can't. They sell short to the big boys and voila! Little guy looses all of his investment money, big boys get richer.

Personally, well-invested real estate, even if it's just the residence you live in, is virtually always the best bet. Well-planned home improvement will get you 2:1 for your money. And if you do the work yourself, it's more like 4:1.
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LanternWaste Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 07:55 AM
Response to Original message
46. Manyof the 'crash' threads have the same religious fervor...
Many of the 'crash' threads have the same religious fervor, terror and apocolyptic overtones as the Rapture Ready board.

Same destinations, different paths...

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Virginia Dare Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:08 AM
Response to Original message
47. I know people who lost their entire retirement after 9/11...
it depends on what your situation is.
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NewJeffCT Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-22-08 08:24 AM
Response to Original message
52. Good advice
The market dropped 22% or so on Black Monday when Reagan was president - the largest percentage drop in history. The equivalent drop today would be an over 2,600 point drop.

The Great Depression started with several big drops, but none even close to that 22% drop - that was like 11%, 10% and then 9% over the course of a little more than a week.

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