Journal CauseWithoutARebel's Journal: The DOW is down over 2% again today but... 2
.. the real news was the volume and the non-mobility of light crude.
Although it may seem odd, what the market really needs - and what it seemingly wants to do - is to crash a good 10%-15% in a single day. One good selloff could potentially purge much of the markets illness and get it back on track to a healthy, if not rapid, recovery.
Think of it like this: have you ever eaten something that just sort of "sits in your stomach" and leaves you feeling a general malaise? If you stick your finger in your throat and get it out, you feel better. That, crude as it may be, is what the market really needs.
So, why isn't it happening?
Well, there are three major problems right now:
1. The real-estate scamfest still isn't over
When all those bad mortgages were packaged up, maliciously overrated, and resold they wound up being flung far and wide all over the markets, and now nobody can figure out where they're at. The financials like BAC (Bank of America) and C (Citigroup) hold a lot of them, but to what extent any single financial institution holds bad loans is a great big unknown. This effectively means that holding any given financial institute's stock across trading sessions is like playing hot potato and it creates a great deal of volatility in the sector which often leads to the sector being battered and the DOW driven down.
2. Crude is in serious flux
That light sweet crude is currently overpriced is practically a given. Even if you believe supply and demand is all that's working on the price, it's overpriced by many tens of dollars (though, this wouldn't be unexpected since significant shocks in supply or demand of a commodity will typically send the price see-sawing until it settles where it should be).
However, regardless of the cause, it wreaked havoc with markets. As the prices rose, so did consumer costs, which shrunk buying power and soured consumer moods. When people don't buy, companies suffer, miss their bottom lines, and people bail out of their stocks for things like gold, currency, and..... oil.
3. Too many people with too much to lose
A lot of baby boomers are coming up on retirement right now, and even if they've shifted heavily into fixed income investments, they've probably still lost several percentage points on 401ks in recent months. Coming up on retirement and watching your 401k lose $30,000 or more, even when you've done the right things, is pretty jarring and tends to cause you - and your fund managers - to try and correct things in the short term rather than continue to think long term (times like this are one of the many reasons I generally view 401k plans with contempt).
If the market does ultimately purge, a lot of people are going to get badly hurt by it, but I fear there may not be any choice for a long term recovery but to accept that it must happen.
Buy low Sell high (Score:1)
Good ol' greed keeps Wall Street fat and happy. If there is a significant drop of even a percent or two, somebody will always see the profit potential. When it gets way high, everybody gets jittery. It's wild speculation at its best(worst?). The nature of the market could fuel this behavior for a very long time. Even the crash of '29 didn't kill it off. It provided great "investment opportunities". People can't even call in their loans anymore if they want to get paid at all. I see no end to it...until genp
Re: (Score:1)
People trying to "catch a falling knife" in the vain hope of short-term profit might explain some of the upticks of 80 to 100 points (though I'm more inclined to be pessimistic and suggest it's people covering short positions), but the 200+ point recoveries we have every now and then seem more likely to be desperate attempts at turning the DOW around. People think if they clap their hands hard enough, the fundamentals that Wall Street and corporate America have abandoned will suddenly fall back into place a