Posted on 08/21/2015 1:18:44 PM PDT by SkyPilot
U.S. stocks closed deep in the red on Friday as global growth concerns accelerated selling pressure to push the Dow into correction territory.
The Dow Jones industrial average closed at session lows, off 531 points and in correction territory for the first time since 2011 as all blue chips declined. The last time the index closed more than 500 points lower was on Aug. 10, 2011. In the last five years, the index has only had four instances with closing losses of more than 400 points.
"For investors the momentum and the drive of the market is now lower (than) it used to be because there's no place to hide," said Lance Roberts, general partner at STA Wealth Management. "Every time we hit the major technical points we kept selling."
A traders noted that investors stopped looking at techincals and were plowing through them.
"It's an expiration day and it looks like they're to have for sale on the close maybe as much as a billion dollars," said Art Cashin, director of floor trading for UBS.
(Excerpt) Read more at cnbc.com ...
If the markets are truly beginning to puke up the fake money, we’re gonna see the shiite hit the fan, that’s for sure.
Just a week ago, the talking heads on CNBC were telling us that “The Death Cross” meant nothing, just ignore it, and to BUY! BUY!! BUY!!!
The Dow dropped below 8,000 in 2008. Where were the speculators waiting on the sidelines to jump back in then?
Just saying that your scenario isn’t a given.
Wall Street is pulling it’s pre-election year temper tantrum a little early, and I refuse to panic. Seen it so many times already.
Bush got the blame for all of this last time, funny how the media report differently
The total for the week is 9.9%
3% isn’t that bad. It is a correction and it will continue to correct. The Stock Market is incredibly over valued at this point.
Now, continual 4-500 point losses a day over a week, yeah; pull your cash out and hope you prepped for a good stretch.
Guess we will see next week.
When you can’t get 3 to 4 percent compounded daily with instant liquidity you’ve entered a fantasy world of financial sleight of hand.
Nah. It’s 5:00-ish on Friday. They’ll forget about it by Monday. ;p
That happened because of the uncontrolled effects of the Lehman Brothers collapse and the near-collapse of AIG and Citicorp. I still think the speculators currently sitting on the sidelines are waiting to jump in—and one Warren Buffett is waiting to pounce, too.
No one should believe anyone in the media about anything, especially matters of faith, matters of morality, and matters of money.
99% bow to The One, and their interest is to protect this wicked and evil man at all costs.
It is not the 3% drop it is the 10% drop from the high just a short time ago.
I remember that song.
AS I read the headlines these past few years of "Dow Soars on News of Latest Jobs Report!" - I thought to myself, really?
They believe the Obama BLS numbers?
It's all a lie. The stock highs have been driven by Central Bank Pig Teats.
I believe the definition of a stock market “correction” is defined as being down 10% from it highs. The use of correction is ....well....correct.
Probably right.. scare Joe Schmoe out of the market and pick back up.
If you do not have enough counter cyclic investments to weather a storm you should not need the money or not be in the market. This interesting (?) article was written by James Bogle on July 6, 2015 in Newsmax Finance. It was rational at the time I read it and rational every time I have read similar information. I’m trying to keep remembering it is rational now:
Retirement Investors Leave 80% on the Table
by James Bogle
The headlines pulled no punches after a poor January and a tough start to February for stocks: “Brutal” said one, “horrific” said another.
The natural human compulsion in such times is to take action. Yet before investors really absorb such headlines, the time for action will have passed. And that’s the problem.
The solution, to cite Vanguard Group founder John Bogle, is to do nothing at all. While that sounds like a weak strategy, it’s the only strategy retirement investors should consider.
Here’s why: You aren’t a hedge fund. You aren’t paid to manage other people’s money. You aren’t compensated for the time you spend reading headlines on finance websites or poring over earnings.
Nobody gives you a bonus at the end of the year for attracting more money to your fund or for going on TV to blather about global politics. You simply aren’t a money manager.
The difference is subtle but important. As a retirement investor, it’s likely that you feel the urge to actively “run” your own money. But the incentives aren’t there. It isn’t your job. At best, it’s an expensive hobby.
Wall Street would prefer that you think, and behave, otherwise. The whole structure of the retail investment business rests on the mistaken notion that small investors have a role to play.
They don’t. In fact, retail buying and selling at a breakneck pace during market setbacks is exactly how Wall Street makes its living, through commissions and by trying to take the other side of whatever trade you might be pondering.
Bogle put it this way in a recent column online:
“While the interests of the business are served by the aphorism ‘Don’t just stand there. Do something!’ the interests of investors are served by an approach that is its diametrical opposite: ‘Don’t do something. Just stand there!’”
Do nothing? Just sit still and watch the market fall? Yes, that’s right.
In part, it’s right because there’s no way for you to react with enough speed and agility to affect the outcome. But it’s also because reacting costs you money — big money.
Having the overwhelming urge to react to a market decline isn’t smart investing. It’s reacting, and that’s all. If you are a young, long-term investor with decades ahead to save, falling stock prices is great news, a chance to layer into positions at lower prices.
If you are near-retiree with a properly allocated portfolio, the last few weeks have been an interesting blip on your radar and nothing more. Something to gab about, perhaps, but by no means a real problem that requires action today.
However, if you are an older investor near retirement who is nevertheless acting like a young investor, well, yes, you should be worried. And that’s where the big money comes in.
Chances are high you will wait before selling it all. And wait. And wait some more. Right about when stocks finally bottom — in a week or a month or midyear, whenever it happens — that’s when you will sell, locking in your losses permanently.
The young investor who commits this kind of mistake can recover. In fact, it can be a “good” mistake to make, a life lesson if you will. If you are older, there is no room for error.
There are two fundamental pieces of math to remember here. The first is about percentages.
If you have $100,000 and the market makes a 10 percent correction, your investment is now down to $90,000. You decide to sell. Question: What return do you need to recover?
If you said “10%,” pull out a calculator and try again. You need more, about 11.1 percent or so, to get back to even — if you sold the investment. To recover from a 20 percent loss you need a 25 percent return. The farther down you cash out, the bigger the gain you need to get it back.
The second piece of math is courtesy of Bogle. If you pay a hefty fee to an active manager, what happens to your potential return?
Answer: Nothing good. At 2.5 percent over a typical investor’s lifetime, an astounding 80 percent of compounding returns ends up in the hands of the manager, not the investor, by Bogle’s calculations.
Says Bogle: “When our financial system — essentially our money managers, marketers of investment products and stockbrokers — put up zero percent of the capital and assume zero percent of the risk yet receive fully 80 percent of the return, something has gone terribly wrong in our financial system.”
To put it another way, the retirement investor should be like a wily boxer. Don’t get worn down by the nasty punch of investment fees or let yourself be knocked out by selling at a market bottom.
Wall Street wants you to throw wild punches that will tire you out. If you can stay on your feet for all 12 rounds, compounding will guarantee you a win by decision.
Yes, I’d say so.
I just wonder if there is not more to come.
I’m not going to let now and the next 17 months of this administration dictate my next 10 to 30 years.
Things are coming together nicely I’d say for the September Shmita bust.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.