S&P downgrade Monday 8/8/11 US market poll

What are you going to do first thing Monday 8/8/11 when the US stock market opens?

Poll closed Aug 9, 2011.

0 vote(s)
0.0%

14 vote(s)
82.4%

3 vote(s)
17.6%
1. Aug 7, 2011

moejoe15

Is black Monday coming? What are you going to do with your stocks Monday 8/8/11?

2. Aug 7, 2011

Greg Bernhardt

I feel anyone seriously in the stock market casino either knew this was coming for months or knew that regardless of the rating that the US was in trouble. With that said, I don't know :)

3. Aug 7, 2011

Ivan Seeking

Staff Emeritus
No. The worst is over; at least for now.

9. Aug 7, 2011

Astronuc

Staff Emeritus
Apparently the markets have expected a downgrade. There was a partial recovery on Friday. I would expect some bargain hunters on Monday, and perhaps some trading programs will kick in. If one is considering buying stock, then look over the last 5 years or so, look at the earnings per share (and ROI) and the dividends. Dividends > 3% look good compared to treasuries and savings accounts at the moment.

Also, look the Asian markets tonight as they open on Monday morning there, and then look at the EU markets before the opening of the US markets.

Expect some volatility in the near term.

10. Aug 7, 2011

Insanity

I would tend to agree with QuantumCandy. While everyone's financial situation and goals are different, holding now and even buying more would be a wise idea.

11. Aug 7, 2011

turbo

If you don't need to cash out in the near future (10 years or so, IMO) that's probably good advice.

12. Aug 7, 2011

Insanity

Agreed, history performance shows that every 10 year block, almost without exception, the market goes up. The last 70 years or so, after every bear market, the following bull market goes longer and returns everything that was lost and more, sometimes many times more.

13. Aug 7, 2011

Astronuc

Staff Emeritus
Last edited: Aug 7, 2011
14. Aug 7, 2011

turbo

Double-up in 2 years? I'd like that.

15. Aug 7, 2011

AlephZero

If you haven't taken any action already, there is no sense taking any now, because everything that is already known about the situation is already built into the price the market will open on Monday.

On the other hand, if you had the foresight to move your life savings from USD into Swss Francs a year ago, you would have doubled your money in a year, even before last weeks diversions. And that's without using any financial instruments more complicated than keeping some Swiss banknotes under your mattress.

But IMO many US residents seem to struggle the idea that anything other than a US dollar is really "money" at all

16. Aug 7, 2011

Astronuc

Staff Emeritus
Also, consider the current dividend - and look a Warren Buffet's warrants.

17. Aug 7, 2011

turbo

Yep. 3.6% is a pretty nice yield. I wish I could get half of that on my savings.

18. Aug 7, 2011

Staff Emeritus
First, whether there will be a market correction (in either direction) assumes that the downgrade was not correctly priced in to begin with. I can't believe that this was a surprise to anyone - there were explicit warnings, after all.

That said, classical economic theory says stock prices should move up in response to a debt downgrade, not down.

19. Aug 7, 2011

mheslep

Eh? The theory being that money would flow out of debt into equities? Even so, I can imagine some counter arguments to equity prices going up.

20. Aug 7, 2011

Staff Emeritus
Right. The short answer is that as the risk of one investment increases, other investments become more attractive. A longer answer is that to compensate for the increased risk, rates have to go up, which means prices go down, and bond and stock prices are inversely correlated.

21. Aug 7, 2011

Astronuc

Staff Emeritus
Asian makets: Nikkei 225, Hang Seng, Straits Times are all down Monday morning. So watch what happens the rest of the day.

22. Aug 8, 2011

Staff: Mentor

I meant to buy some stock on Fri afternoon, but was thwarted by what I think was a software bug. Glad I didn't, but I'll be placing an order for tomorrow when I get home tonight.

23. Aug 8, 2011

Staff: Mentor

Last week, despite all the talk about the debt being a problem, the money went in the wrong direction for debt to be the perceived problem, based on that conventional wisdom. IMO, that doesn't necessarily mean bonds got more attractive, but rather that stocks got more less attractive. And I think the reason is that debt isn't a self-contained problem, affecting only bondholders; it is a long-term drag on the economy that people are only now starting to take seriously.

...However, it is also possible that the debt talk merely came in second to a larger concern about a double-dip recession.

24. Aug 8, 2011

khemist

Dow is down over 300 points already. Almost every index is down over 4%...

25. Aug 8, 2011

Astronuc

Staff Emeritus
Hold the stocks that one didn't sell two weeks ago, and buy stocks that have dropped ~10%, or wait to see if they fall a bit more.