“While that may be true, I think it is really because of the mounting debt crisis and the fact that stock market manipulation these days is comparable to NBA basketball.”
Agreed.
I’m not a stock market historian, but seems to me that the market has evolved from an investment to a casino.
Whatever happened to buying a stock, and accumulating wealth based on performance and DIVIDENDS?
BINGO!
In the good old days these markets were ways to generate income! If you bought a bond perhaps it paid 3%. The reason to buy a stock was to get 4% or 5% dividends. You were a part owner, you expected the company to make a profit and share it with you.
This went out the window with the "Growth Company" model which is also referred to as "the bigger fool" model: there will always be a bigger fool to buy this stock (that pays nothing) for more than I paid for it in the future. Originally the model was applied to start ups, where it made some sense. Eventually it was extended to almost every company.
Bush tried to move the markets back towards paying more dividends, which would be helpful to help deal with the boomer retirement buldge. Some companies did start (re-start) payinging dividends. But many established companies do not.
You are exactly right that it's made the Stock Market into more of a casino.
Folks getting out because they need the cash to pay bills since they can't get jobs.
Not too much else to invest in right now if you do have cash. CD’s paying a little better than 1%.
I'd rather be in US stocks than EU.
I am pessimistic about how O is running the Country but I feel the tides are against the Dems and democracy and the free markets will prevail.
JMHO.
Actually, that is exactly what a lot of people are doing these days. And the market is falling because the prognosis for these dividends simply isn't very good. This is not the same stock market that we say back in the late 1990s -- when investors bid up the prices on stocks that paid no dividends but offered apparent potential for strong capital gains.
One big reason for this change in investor attitude is that under the changes in Federal tax law passed a few years ago during the Bush administration, qualified stock dividends are given similar preferential tax treatment as capital gains (i.e., they are taxed at a much lower rate).
One of the things to consider as 2010 marches on is that these preferential tax treatments are going to disappear in 2011 . . . and that might be a big reason why so many investors are starting to sell out of the market now.