Stock market discussion

[CAMAROBOY69]

I know we keep being told over and over to leave our money in the 401k, but seeing this makes it very difficult.

At one point it plunged 1,000 points.

http://www.msn.com/en-us/money/markets

 

[Johnnypenso]

The next few days and weeks, perhaps months, will be a rocky ride.

 

[lxmmy]

It is going to get worse with Shanghai index falling 12% this week. And the Chinese central bank devalued the yuan which obviously means global exports are going to be hard hit.

 

[Danoff]

This is not a crisis. If you can't handle a little fluctuation in the market, do not put your money in a 401k and invest it.

 

[CAMAROBOY69]

This is not a crisis. If you can't handle a little fluctuation in the market, do not put your money in a 401k and invest it.

The article listed it as a crisis so that's why crisis was in the thread title. I changed the title to "discussion" to prevent confusion.

 

[Omnis]

This is the market realizing the QE lifeboat has a big ****ing hole in it.

 

[Danoff]

This is the market realizing the QE lifeboat has a big ****ing hole in it.

Actually it kinda looks like the opposite. Apparently a lot of the selloff has taken refuge in US treasuries. Looks like primarily it's motivated by China and Oil, and that treasuries are considered a safe harbor form the volatility. If this were a result of QE eroding the US economy we'd be seeing a weak US dollar and corresponding increases in commodities such as Gold, Oil, and other currencies. Gold, oil, and other currencies are all sinking hard - which means the dollar is doing well despite QE.

I'm not saying QE isn't going to be a problem, but this downturn looks entirely unmotivated by it.

 

[Dotini]

Wasn't QE always intended to stimulate growth and inflation? And hasn't QE run its course of interest rate reduction and deficit spending without achieving its goals? In other words, isn't QE out of bullets?

 

[Danoff]

Wasn't QE always intended to stimulate growth and inflation? And hasn't QE run its course of interest rate reduction and deficit spending without achieving its goals? In other words, isn't QE out of bullets?

QE was designed to prop up the housing market by preventing ARMs from landing on high interest rates. It also does a ton of other stuff that I won't pretend to understand - including enabling massive US debt. Yes it has run its course and is out of bullets. And we should be paying a huge penalty for all of that money except that everyone else in the world is beating us out in a race to the bottom - so we look relatively better.

 

[Dotini]

...everyone else in the world is beating us out in a race to the bottom...

I've heard we have a 20 trillion dollar debt that becomes some kind of death sentence when it reaches 24 trillion. At that point, isn't the only known way out to devalue the currency and join the race to the bottom?

 

[Danoff]

I've heard we have a 20 trillion dollar debt that becomes some kind of death sentence when it reaches 24 trillion. At that point, isn't the only known way out to devalue the currency and join the race to the bottom?

Step 1 - stop running a deficit
Step 2 - use surplus to pay debt
Step 3 - use interest savings to pay debt

 

[Omnis]

We export debt. Interest rates aren't set by the market. They're at 0%. When people get free money and trade on margin, you get these collapses eventually. I don't think the market rate is zero; the market is saying the same.

Jeff Tucker hit the nail on the head when RT asked him about this. That is, we should be worried about the political rather than the economic consequences to these movements.

What's even more interesting is how the price of bitcoin is falling. Looks like the Chinese really need that liquidity. You have to wonder how much of it is finance-driven vs. the hard fork issue.

 

[Sanji Himura]

It is going to get worse with Shanghai index falling 12% this week. And the Chinese central bank devalued the yuan which obviously means global exports are going to be hard hit.

The Yuan, according to some reports, has fallen, fallen mind you, 40% since June. China also has a history of undervaluing their currency in the global markets.

That said, the Yuan dropped today by nearly 10%. You don't do something like that if you are a stockbroker unless you are acting like a criminal.

The USD is the world's reserve currency for a reason. Combine this with the Iran deal, every country that holds US debt would suddenly be in trouble.

For the record, global markets tanked from anywhere from 3% to 5% except for Shanghai (10%) and India (6%).

 

[Mike Rotch]

I know we keep being told over and over to leave our money in the 401k, but seeing this makes it very difficult.

At one point it plunged 1,000 points.

If your investment horizon isn't 7+ years, you shouldn't be exposed to the stock market. There will always be downs, and always be ups. It took a few years for most markets to exceed where they were pre GFC, but they got there.

I aint fussed about this decrease. It will inevitably overcorrect and that's the best time to be piling in with every available dime.

I wonder if the FED missed the boat on increasing rates, or whether they will stick to their guns. Over here in Aus, the 5 year govt bond rates have plunged, so I've selfishly hoping for lower rates - we still have wiggle room at 2.5%.

 

[CAMAROBOY69]

If your investment horizon isn't 7+ years, you shouldn't be exposed to the stock market. There will always be downs, and always be ups. It took a few years for most markets to exceed where they were pre GFC, but they got there.

I aint fussed about this decrease. It will inevitably overcorrect and that's the best time to be piling in with every available dime.

I wonder if the FED missed the boat on increasing rates, or whether they will stick to their guns. Over here in Aus, the 5 year govt bond rates have plunged, so I've selfishly hoping for lower rates - we still have wiggle room at 2.5%.

I have had money invested in the 401k program for almost 16 years. I have seen the ups and downs, especially after 9/11.

 

[huskeR32]

Combine this with the Iran deal

What does the Iran deal have to do with any of this?

 

[Dotini]

What does the Iran deal have to do with any of this?

When trading sanctions are lifted, Iranian oil will put additional downward pressure on global oil prices.

 

[Sanji Himura]

What does the Iran deal have to do with any of this?

Also, our Secretary of State has directly cited any rejection of the deal as a direct cause of the US Dollar no longer being the world's reserve currency. A lot of BS, but it's BS that any economist should pay attention to.

 

[A2K78]

Want to really know whats going? First off don't blame China, Schiff however give a good insight into what's really happening..

https://www.lewrockwell.com/2015/08/peter-schiff/whats-really-going-on

l

 

[A2K78]

Ron Paul masterfully explains the situation with the stock market:



ttp://www.newsmax.com/Newsfront/ron-paul-federal-reserve-congress/2015/08/25/id/671920/