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

[moejoe15]

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

 

[Greg Bernhardt]

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

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 :)

 

[Ivan Seeking]

Is black Monday coming?

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

If all three major credit rating agencies had particpated in the downgrade, or even if Moodys had followed suit, we would almost certainly be facing another crisis. But given that it was only S&P, and given thay they made a $2 trillion math error, I don't see this being a big problem at the moment.

The real problems have been Italy, and the tea party, not US debt.

 

[moejoe15]

The tea party? You mean you don't believe Fox blaming Obama who would have routinely raised the debt ceiling if he could have?

 

[Greg Bernhardt]

First warning to keep on topic

 

[Ivan Seeking]

The tea party? You mean you don't believe Fox blaming Obama who would have routinely raised the debt ceiling if he could have?

S&P was specific about this. The failure to automatically [as has always been done] raise the debt ceiling was one of the main reasons for the downgrade. That we would even threaten to default, [let alone by choice!] was enough to shake confidence.

S&P isn't even worried about our short-term debt. In spite of the nonsense from the right, now is not the time for draconian cuts in spending. We need to allow more time for economic recovery to take hold. But we also need to damp the trajectory of our debt over the next ten years. That is what S&P wants to see.

They also want to see the Bush tax cuts expire.

 

[QuantumCandy]

Selling out of what you own now would be the worst idea possible! (in my humble opinion) If you have the ability to buy more of what you already own - and if you purchased what you have under some sort of appropriate asset allocation model - then buy more. But... i hate to see people get the gambling fever and start making decisions when things get really good or really bad.

It's been proven that the average person who sticks to their initial asset allocation strategy in a retirement plan typically outperforms someone who changes strategies frequently.

I'm not happy about the downgrade, but i think it's a good thing since it's bringing a real valuation to our economy.

 

[SteveL27]

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

If all three major credit rating agencies had particpated in the downgrade, or even if Moodys had followed suit, we would almost certainly be facing another crisis. But given that it was only S&P, and given thay they made a $2 trillion math error, I don't see this being a big problem at the moment.

The real problems have been Italy, and the tea party, not US debt.

You don't think U.S. debt is a problem? We're running six wars on credit, we have a $14T debt, and $60T+ in unfunded liabilities for social programs. How is this going to end well?

 

[Astronuc]

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.

 

[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.

 

[turbo]

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.

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

 

[Insanity]

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

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.

 

[Astronuc]

Imagine if one had bought GE stock at $7.00 per share during the week of March 2, 2009.

The US credit rating probably should be AA- with China and Japan.
http://www.nytimes.com/imagepages/2011/08/06/business/06sp-ratings-graphic.html?ref=business

That would reflect the current lack of fiscal discipline and debt.

 

[turbo]

Imagine if one had bought GE stock at $7.00 per share during the week of March 2, 2009.

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

 

[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

 

[Astronuc]

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

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

 

[turbo]

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

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

 

[Vanadium 50]

First, whether there will be a market correction (in either direction) assumes that the downgrade was not correctly priced into 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.

 

[mheslep]

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

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.

 

[Vanadium 50]

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.

 

[Astronuc]

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

 

[russ_watters]

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

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.

 

[russ_watters]

Right. The short answer is that as the risk of one investment increases, other investments become more attractive.

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.

 

[khemist]

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

 

[Astronuc]

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.

 

[Topher925]

I'll wait a few days and buy some stocks once I think the market won't dip any further. Dow's now below 11,000 points and doesn't look like it will be stopping today.

 

[Ivan Seeking]

That was about twice as bad as I expected. "Jitters" is the only thing that seems to make any sense. It looked like it might rebound to about a 300 point loss but dropped again at the very end of the day.

I would change my vote to a "buy" now.

 

[jobyts]

If you are in the moving roller coaster, the safest thing to do is to stay there, not jumping in and out.

 

[Ivan Seeking]

If you are in the moving roller coaster, the safest thing to do is to stay there, not jumping in and out.

We just keep buying our mutual funds. IMO, either you make investing a full time job and become an expert, or you leave it to the experts. I've thought about trying my hand as a day trader but can't even begin to justify the time for the learning curve.

I don't have many regrest in life but when I heard a story about Warren Buffet, I felt a twinge of regret. By the time he was sixteen or so, he had read every book they had about economics, at his local library. Now why didn't I think of that?

 

[rhody]

To all who are following this thread, as I have just posted in my https://www.physicsforums.com/showpost.php?p=3442270&postcount=73". I will make it simple for you. Some stocks may NEVER recover to their former values, Raytheon comes to mind immediately. Explain to me how if the stock loses 60% or more in 1998 of it's value and then 13 years later it it is still worth 40% less than it was in say 1998, how that it a good thing ? You have lost your principal FOREVER. You will never make it back up. As I stated I my thread even 10 years out from retirement, I cannot afford to take the chance, because of the scenario I just laid out for you.

My big problem, is if the market starts to come back, do I buy while it is still near the bottom and risk it never coming back to the price I sold it at ? Not an easy call for sure. Myself and at least a dozen co-workers are so glad we did dump all of it about two weeks ago.

Rhody...