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Markets Tumble Into Correction
Wall Street Journal ^ | 8 January 2008 | PETER A. MCKAY

Posted on 01/08/2008 2:52:49 PM PST by shrinkermd

The stock market suffered a big hit from an old two-headed monster.

Worries about bad mortgage bets and weak consumer spending -- the same problems that plagued the market throughout late 2007 -- intensified Tuesday and sent major indexes sharply lower. The Dow Jones Industrial Average plummeted 238.42 points, or 1.9%, to 12589.07, its lowest point in nearly nine months.

The Dow is down 5.1% in 2008's first five trading days -- a key period often considered an important harbinger for the market's fate the rest of the year. The blue-chip average has also fallen 11% from its early-October record, a decline that fits the traditional definition of a correction that removes speculative excess from a market.

One of the Dow's weakest components was AT&T, which slid 4.8% after its CEO said at a conference that the telecommunications giant is experiencing a slowdown in its consumer segment, including an increase in disconnections due to unpaid bills. The news came late in the day, adding downward momentum to a market already beset by fresh concerns about fallout from the credit crisis.

"Everything we've seen today just reinforces the fears people had," of a spillover effect from Wall Street's soured credit bets on the broader economy, said floor trader Ted Weisberg, of Seaport Securities, a New York stock brokerage. "We rolled over the calendar, but our problems came with us."

The S&P 500 fell 1.8%, or 25.99 points, to end at 1390.19. Both its consumer-related sectors veered from positive territory into the red following AT&T's comments. The technology-focused Nasdaq Composite Index was down 2.4%, or 58.95 points, at 2440.51 at the close.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Politics/Elections
KEYWORDS: market; stock
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To: Walmartian
Dollar cost averaging can be your friend in the long run.

Agree. Take the Vanguard Wellington Fund, for example. It is basically an index of value stocks and high quality corporates & treasuries, in roughly a 2:1 ratio of stocks to bonds.

The fund started in July 1929(!), and has returned about 8.5% per year on average over nearly 70 years.

Personally, I invest monthly amounts into the Vanguard Total Stock Market Index fund and their GNMA fund, at about at a 1:1 ratio. Such index investing is simple, cheap, and has proved itself over long periods of time.

41 posted on 01/08/2008 9:51:08 PM PST by Ken H
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To: Mojohemi
I am at a loss for reason and logic! 8 consecutive days the Nasdaq has lost! The hemorrhage must stop! Mutual funds are getting hit hard!!

SOMEBODY DO SOMETHING!! QUICK!!

Wait! On second thought... aren't corrections and bear markets part of the normal stock market cycle?

42 posted on 01/08/2008 10:06:57 PM PST by Ken H
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