Is the stocket market going to crash? or is that what people think might happen?why?
- Anonymous1 decade agoFavorite Answer
Crash is a strong word. And, an easy answer -- "No".
The market has gone down, even worse than now.. before... and it wasn't called a "crash". They call it a "correction". (As if something was WRONG, and now it's actually made more "right" -- laughable, when you think about it...)
There's trips & triggers in place, automatic now.. that slow trading and make it impossible for a crash to happen.. per hour or per day... 400-600pts a day would be bad news, for certain.. and that can happen if and ONLY if people get really, really afraid and sell, sell, sell.
One thing that can HELP that to happen.. is all these online companies & accounts, where you click "sell" overnight and in the morning and a massive sell-off happens automatically, before it can be slowed -- like it happened on Tues. morning, although the dweebs writing/editing at Yahoo/AP can't see simple facts! lol... In fact, the Fed WORKED to slow this in advance EVEN when Fed. offices were closed and the Markets were closed and Banks, too for MARTIN LUTHER KING day.. that's how important it is, for the Guys in Charge to make sure nothing crazy happens... they worked, on a Holiday!!
Always keep in mind, that you have MANY people that make MILLIONS for telling you that "nothing is wrong" and that there's every reason to Buy now, and paint a Blue Skies on the hoirzon picture -- just flip around the TV dial, and see... there would be no reason for a Money Honey if the money is gone.. and no "Mad Money" show, if there was nothing but mad viewers... and so much $$$ is tied from savings & 401k's that 1,000s of people are sweating it, right now.. to pull out ANY stop to make SURE that people in the country don't think it's "bad" out there... certainly not candidates that are trying to convince you about "hope" and that they can turn everything around, and grow pink roses across America... if you vote for them.
- Net Advisor™Lv 71 decade ago
Technically, a crash by definition is not likely.
"A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market."
By this definition, which I would agree, not all stocks are plunging in tandem. Today (01-22-2008) it's technology stocks, who had huge runs in 2007, and when your stock is above the clouds and earnings no longer support the lofty prices, one miss and you'll see a plunge (example: AAPL).
Financial stocks have been moving higher over the last few days, esp since the FED .75 BP rate cut on 01-21-2008. Don't know yet if this is a bottoming process yet. Financials have been hammered over the last 9 months. This could be sector rotation.
2007 correct strategy: long tech, long commodities, short financials.
2008 possible strategy: short tech, short commodities, long financials.
No guarantees of course.
The market is in a corrective phase to factor in a recession. We are likely to enter in a Bear Market - a decline of 20% or more in a major index which the Russell 2000 (small cap index) entered last week, and NASDAQ is entering this week.
We experienced a "Sliding Crash" (Bear Market) last in the 3rd week of Mar 2000 to Oct 2002, when the majority stocks across the board tanked.
A Bear Market can last as little as 1-2 years to 16 years as it did from 1966-1982.
There is nothing the FED or any politician can due to fix this. These are normal corrective phases. The markets NEVER go up in a straight line forever nor down forever.
I have to disagree with the slow growth idea. If it weren't for the rapid growth in overseas markets such as Brazil, Russia, India and China ("BRIC Countries"), the US would already be in recession in 2007. OK, yes US corporations are making money (many of them anyway), and yes growing, albeit slowly, but regardless the projected corporate earnings for the S&P500 has continued to be revised downward over the last year.
Further, if you take a look at where US Corporations are making money it's overseas, not in the U.S. so much, and it's largely due to the strong local foreign currency. When strong foreign currency is translated back into US Dollars, many major corporations have been reporting currency gains from their earnings. This is well documented. Read the corp reports.
Note: I am predicting that if the US sustains slower economic growth, or a recession, the rest of the world, especially China will also reduce growth.
We buy everything from the rest of the world. We import more than we export. If US consumers buy less, which they are (see December 2007 retail sales), there will be less demand to import foreign goods. Less US demand for foreign products means foreign factories will produce less, hence slow growth in those foreign countries.
The US was/is experiencing Stagflation = Recession (real estate related industries) and inflation in commodity prices due to high demand from China hording commodities.
The "Credit Crunch" is the banks own causing by their tightening lending standards after 6 years of lax lending standards.
When US consumers cut spending, the US economy will slow. The US is a consumer (consumption) driven economy.
Main Cause: Real Estate Speculation and higher interest rates from 2004-2006.
See my prev blogs for details.
- mrrosemaLv 51 decade ago
You can call it what ever you want, but it is a loss of >10% of market value in a fairly short amount of time due primarily to short term investors concerns regarding a reduction in consumer spending. The ratio of price to earnings for most stocks are not historically high so some real bargains will be available over the next months as consumers resume spending and stock prices go back up. Unless you are a short term investor with bad picks or a retiree with a risky portfolio you just have to wait until the markets resume the upward trend.
- john kLv 61 decade ago
check the real news look at the market indexes going back a few months it has been going on for a few months now but regular news organizations as always start reporting it when its almost finished falling; the markets are already almost 20% off the highs, so its getting close to time to buy. last year of a president is usualy a lacking year, as well as the 1st year of a new president so you got time start saving your money to buy in, as it will probably settle not to far below where we are at now.