World Markets Plunge - DJIA Futures Down Nearly 500 Points

reply to post by disgustedbyhumanity


Well I am a very conservative advisor.. I don't advise what I would consider a unnecessary risk. Maybe it will prove worthwhile when the markets go down and the old folk I look after don't have to worry at night how much money is in their accounts.

But I do get what your saying, and if my clients where younger, I would advise the same.. but I don't like the idea of playing with retirees financial outlook. Again, the people I typically work with only have 100k or less in their retirement accounts.

reply to post by Rockpuck


In my view you expose your clients to plenty of risk. They may feel safe but the truth is that they will die a slow but certain financial death. A steady income in a rising cost world is financial suicide.

You should read "Simple Wealth, Inevitable Wealth" by Nick Murray. He lays it all out so it is easy to understand. I am 100% convinced that his approach is the right route to take, although it is anything but easy to stick to it.

Wow this thread is still going I thought it would be long gone but since it isnt let me throw some more input in. Great jobs numbers today NOT! But I will say this that the FED is now awake and not sitting on the sidelines. Regardless of what ANYONE says out there the interest rate cuts were great for the situation we are in as far as for the financial institutions. In other words it was a great bailout. The insurers will get bailed out also the MBIA and Ambac of the world. With that being said we will see the market ralley which it has and continue for a few. Oh and light like I told you 2 weeks ago I am now long stocks and will be for at least another 2 to 3 weeks.

With that being said it still doesnt change the fact that the poor are getting poorer and the middle class is right behind compliments of all the high costs gas, food, heating, etc etc etc and the wages by far are not keeping up. Most peoples savings account is in their house and we all know what the story is with that. Jobs are being shipped over seas and the dollar is going in the crapper but hey Exxon Mobile recorded the biggest profit ever for an American company way to go Exxon.....(Being Sarcastic) The point is wall street and main street are not connected and never will be if it was the market would be at 8000 right now. Ill contiune to ride the waves and make money on it just because I have to to eat but I still dont think it is right that mainstreet is being left in the rear.

reply to post by mybigunit

The insurers will get bailed out also the MBIA and Ambac of the world.

While I agree with most of what you've said, I wouldn't bet on this bailout. The short trader that turned over docs to the SEC is claiming 12 Billion in losses each. The Banks would have a hell of a time coming up with that kind of capital considering their own liquidity problems. Kinda like that SIV bailout they were gonna do a few months back.

reply to post by mybigunit


Actually the Fed that is not a government regulated agency nor a per say private owned is actually owned by few elite families within the world banks and they are protecting themselves and corporate American.

They careless about the citizens nor the nations currency their goal is to keep afloat those that are part of their system.

reply to post by marg6043


Right I said the Fed is awake now and yes they are bailing out the banks like I said so in a sense bailing out the elite totally agree. But with that being said the way our nation is set up right now if the banks dont lend our economy goes to a standstill plain and simple as that. I wish main street didnt have to borrow the way that we do but that is the way our nation is set up..a nation of credit and oh yes that is how "the man" wants it. As long as they can keep the sheep borrowing they will be slaves

[edit on 1-2-2008 by mybigunit]

reply to post by mybigunit


Interesting how they can print money at will even if is not backed by liquidity, also the get to borrow from each others banks at lower interest but when it come to loan to us the consumer they can do it a higher rates, so actually the interest rates are not really benefiting any of the consumer at the end of the stick.

reply to post by marg6043


Once again totally agree like I usually do on this issue. Example my 2nd mortgage is an adjustable. When the interest rates went up my rate went up but now that the rates are going down you think my rates have? Hell no. But the problem we have is the banks are not lending at normal capacity to keep the economy growing jobs being created (even though they are low paying jobs they are still jobs). If this is what it takes to get them lending again then that is what has to happen. A friend of mine says Grease makes the world go round and its true. I as a business owner knows this to be true (I actually pay my people well though)

reply to post by mybigunit

If this is what it takes to get them lending again then that is what has to happen.

Printing money (Inflation) has its own set of very nasty repercussions. This is well known monetary fact and the FED is supposed to fight against the destruction of our currency. The situation we are in was created by excess 'liquidity' (too much money chasing too few services). Therefore, the answer is not more of the same. More Debt will not solve this problem.

The cure is higher interest rates. And yes, it will be worse than the disease TEMPORARILY! If not then the disease will consume us. Deflation is already underway. Inflation by the FED will trap us in Stagflation.

reply to post by HimWhoHathAnEar


I agree to an extent but understand something look at inflation over the few years. As we were raising interest rates the dollar value was going down. Just a fact. The value of the dollar is based on faith on America. Right now there is not a lot of faith in America for a lot of the reasons that are in a previous thread with the link here. www.abovetopsecret.com...'
With a strong affluent economy along with reasonable interest rates and a government that doesnt spend all sorts of money it doesnt have will come strength in the dollar. The fed interest rates are 1 part of 3 and right now we have serious issues with 2 other parts.

It's my understanding that mortgage rates have less to do with the Fed Fund Rate and more to do with the rates on the 10 and 30 year T-Bill or LIBOR. These rates havn't necessarilly reacted in tandem with the rate cuts. There was a time maybe couple of months ago where the Fed was cutting and mortgage rates were still rising.No one in the financial MSM have mentioned this except Steve Santelli.
I've heard it said that Forex traders are the smartest (lots of leverage and a couple of pips move in the wrong way can HURT), next would be bond traders ( the debt markets are pros at sniffing out BS), and finally comes equities traders ( usually the last to recognize a problem). I"m not short or long anything right now, i'm generally bearish, but a bear market isn't any kinder to bears than it is to bulls. The swings are too violent and can easily shoot past any stops or limits you may have. The only trading i've done recently is very short term, usually less than 72 hours.

reply to post by mybigunit

Adjustable mortgages as rule are based upon the average of rates over a year or two. My rate for example is based on the 2 year cost of funds. However the rate is averaged over 24 to get my rate. Thus it takes a while before the rates fall significantly. They will keep falling even after the fed begins to hike again because of this averaging. Anyone with adjustable rates should realize that their payment will be falling for many months into the future.

reply to post by mybigunit


Agreed. Reserve Currency status made us way too cocky.

I noticed that Manufacturing looked up a bit today. That really could have turned the tide back when manufacturing was a larger portion of GDP. Unfortunately 70% of GDP now is Consumerism. I think that's what's so dangerous right now. If you break the Consumer Loop at any time, anywhere, you start a vicious circle in the service economy. Refi's won't bring more prosperity. At best they will help the Consumer to merely go on living. Meanwhile taxes from Deficits and Debt will increase causing more hardship.

Sorry, double click

[edit on 1-2-2008 by HimWhoHathAnEar]

I have all 23 pages of this thread
and now i have a major headache...too many numbers

Here is my question, where does someone, who only recently gained enough money to start doing anything other than actively putting money into a high(ish) yield insured money market acct, go to start making investments that will help build more assets and savings for future things like college and retirement.

Its my understanding that the next bit of time might be a good time to do some buying, but only if you are going to stick out the ups and downs that are sure to happen in the next year or three or even ten!

I need stock market investing for dummies...its all so abstract to me even though i deal with finances daily for my business and do it all myself.... that is tangible stuff

ETA: im not asking anyone here to give me stock market for dummies, just that i need it in general, I have a whole stack of books and articles that i get about 1/4 into and then it all starts getting lumpy and garbled

[edit on 1-2-2008 by gluetrap]

reply to post by gluetrap


You can ask traderonwallst he have an active involvement in the markets and a positive outlook he will be one of the people in here (is many that deal with the markets) to ask the questions.

reply to post by gluetrap




suggestion... for a long term investor, elect to keep only a small portfolio of 'Dividend' paying stocks.



oh, and for the broader landscape ahead of us read this link and the
related material found in the presentation;

www.new-enlightenment.com...

so the European? banks are coming to plan a "bailout" of the bond insurer's. or maybe they are just organizing a team to investigate the real damage as opposed to what those grading their own losses report.
these banks are more capitalized than the american counterparts that were the "first" team in , but in the end they will likely say "umm no thanks , but we did give the market rally material for a week, and perhaps the gov't would like to step in now". and then the gov't step in and the muni's are saved and that is all.

I hear that when reading between the lines, even with a "bailout of bond insurer's" that the only things "saved" will be the Municipal bonds (you know what used to be the vast majority of what these monolines insured) b4 they got their greedy hands on more "exotic CDO's and the like".

I think bubble vision will try to keep the illusion alive that this bailout will be good for share holders in order to keep the market rally going.

so we first will see if the mainly euro banks decide to provide capital to the Monolines, and then if this will maintain their ratings. and if they don't maintain their ratings wether they maintain their solvency.

on the one hand the rate cuts by the fed are to help recapitalize the banks , on the other hand not stepping in and asking the gov't to bail out these monolines and helping preserve their AAA ratings would seem to really hurt the recapitalization efforts due to fresh and large potential writedowns resulting from the downgrade. does the fed have this much clout?

Would bond insurance downgrades cause any hedge funds to go belly up?
Would bond insurance downgrades cause massive derivative losses?

Would this be "the exogenous" event that finanical economist michael hudson talks about which would provide a destabalizing shock to the financial system

IMO this seems like one of the only things that is big enough to overcome the PPT, and if you are a short in the market it appears the fed and ppt will cut and wave their wands if the market misbehaves all the way down to the time rate cuts are above 0%.



[edit on 2-2-2008 by cpdaman]

reply to post by gluetrap


For college you should use a 529 savings plan, as earnings accumulate and can be taken out tax free. Each state has 1n or 2 plans. Check your state first to see if you get a tax break. If so then do that plan. If not, then I like to put people in the West Virginia Smart 529 Select. They allow much more exposure to foriegn stocks and small caps than any other plan I've seen. You can choose from about 8 allocations. I prefer the growth and all equity portfolios. Need to become much more conservative though as child nears college age. The Virginia plan from American Funds is a good, more conservative plan as well.

As far as investing for yourself. Buy 6 different mutual funds(IRA/401K) or 6 different Index funds (taxable account).

20% Large Cap Value
20% Large Cap Growth
15% Mid Cap Blend
20% Small Cap Blend
15% International/ Foriegn
5% Emerging Markets

You can look search for funds at Yahoo finance in their mutual fund screener. You want funds with long term management of at least 5-10 years, in the top 1/2 of all funds for all periods(1,3,5, 10 years), and reasonable expense ratios. Reallocate to the original % every year or use your additional investments to reallocate (add to the worst performers). I tend to stay away from no load funds as the investors in these funds have no guidance and the bailing out that occurs in market panics tends to cause them to underperform even though they are cheaper.

Slowly build up a cash reserve as well. Under 50 you should have 6 months worth of living expenses in cash. Over 50, add a month of cash every year until age 65.

U2U me if you want more specific advice. But a portfolio built along these lines will outperform 95% of all investors in your lifetime. Even if you only pick mediocre funds. Allocation is everything for long term success.

reply to post by disgustedbyhumanity


With the market so cheap right now value is the way to go there are a lot of undervalued stocks out there. That is if you are investing for the next year or two.