Seriously. Don’t forget about the weak dollar. I’m no economist (its not like they are ever any good at predicting recessions, anyway), but neither is he. I assume Paulson “reassured” him about how solid the fundamentals are, but that is a guy who said, not more than 3 days ago, that the problems in the housing market are “contained”. Awesome.
Well, I know that the price/earnings ratios of the German companies I’m invested in are still perfectly fine (10-15 mostly). US companies are valued higher, as usual, but still not outrageously so. And most companies other than banks aren’t directly tied to these dead loans. There’s no global economic collapse in sight, although the stock markets will certainly overreact for a while as they always do…
I do recommend that the Federal Bank drop the dollar and adopt the Mexican Peso as the new American currency, though. 1.3683 dollars for one euro? Yikes!
Hmm the markets still in freefall. The Japanese, Australian, Indonesian, Filipino and Malaysian Central Banks have all intervened today in some way or the other.
I’m in for an operation today, but my Blackberry is still going crazy. August is meant to be a quiet month, but there’s alot of nervous guys down on the Credit desks.
Yeah, the credit chicken is coming home to roost. It’ll pass.
Those central banks don’t intervene because of a universal economic crisis but because some specific banks that were heavily invested in bad credits need saving, and to ease the transition as credits are suddenly tightened all around.
There’s also supposed to be a summer drought each year (“sell in May and go away”) which was canceled this spring, and now returns with a vengeance. The stock market indices actually aren’t really dropping all that much, either, if you look at percentages – it’s just that the absolute numbers seem so high because of their previous levels.
Yeah, the thing about the market is how short term emotive it is. That first came home to me when I was just starting to invest my 401K and Reagan got shot and the market dropped. I asked a broker friend of mine how GE could be less valuable because Reagan was in the hospital and he just laughed and we had drinks and he told me how the market works. Of course, it was his drunken years-in-the-game cynical view, but it wasn’t far off of reality.
A French bank decides it can’t really value 3 (was it three) investments in areas that are strongly tied to sub-prime idiot mortgages, and everyone starts screaming “SELL!!! SELL!!!” Suddenly biotech firms, electronics firms, etc. are all worth a lot less than they were a few hours ago? If you watched the market hour by hour, it dropped, then after Bush’s speech it leveled out, then it triggered down and everyone panicked.
Again, the percentage drop is not so great. And who would have thought we’d be panicked at a market today that is up in the 13,500 range? Its a good time to buy some stocks today that are artificially undervalued by some bad subprime mortgage companies.
I haven’t been investing all that long but I’ve already given up on trying to figure out what the market does or why. Forget it.
Apple comes out with new products, the stock price drops. O-K… Next day, it recovers and continues on as normal. Whatever.
I’ll just keep steadily investing money and watch the market news as an observer only - never to act on what is being reported, only read it for entertainment value.
Apple’s stock dropped because new products = less profit in the bizarro world marketplace that Apple has created. Getting away with selling their computers for 2x-3x their hardware cost is a pretty nice boost to their profit margins.
But that’s not even consistent. Introduce new computers - price drop. Announce that Leopard is being delayed - price drop. Introduce the iPhone - no drop. The market is, essentially, insane.
The market is a bit insane, but probably not as much as you think. Keep in mind that Apple does not keep the date (and often the content) of announcements secret in advance so the stock has already probably seen the rise for the announcement well in advance of the actual announcement. Then when the announcement isn’t as huge and exciting as people thought the stock droops a little bit because the inflated expectations weren’t met.
This can happen to any publicly traded company with any kind of announcement. It’s sort of funny to see a company announce 197% jumps in profits from last year and still have a price drop because the analysts had predicted 198% growth.
insane or not, if I had some spare cash sat in an investing account, I’d buy some stocks right now. big safe ones, that aren’t going anywhere, power companies, long established retail etc etc. There are bargains to be had. Today is a good day to Buy*
*As the klingons say.
They’re awesome with a little BaconSalt.
Seriously though dude, way to over-react. That’s the kind of thinking that could end up becoming a self-fulfiling prophecy if enough folks buy into it.
The market is a bit insane, but probably not as much as you think. Keep in mind that Apple does not keep the date (and often the content) of announcements secret in advance so the stock has already probably seen the rise for the announcement well in advance of the actual announcement. Then when the announcement isn’t as huge and exciting as people thought the stock droops a little bit because the inflated expectations weren’t met.
That’s true.
New computers are more expensive to make, cost the same, and aren’t particularly compelling over the old model. Higher manufacturing costs, basically same sales rate = less profit = drop in stock price. (again, though, because Apple was selling year-old hardware at the same year-old price, they had an inflated profit margin on their previous products).
Announce that Leopard is being delayed - price drop.
Obviously a delay in a new product means less money in short term, higher production costs = drop in stock price.
Introduce the iPhone - no drop. The market is, essentially, insane.
New product, in a new product line or genre = increased stock price.
I’ve seen a couple of reports of a small pizza chain taking pesos in addition to US dollars. It’s coming.
I’m not convinced stocks are actually undervalued at this point. I think there’s still some settling out to come. Cheap credit was driving up the stock market via leveraged buyouts and stock buybacks. With tighter credit and the return of risk premiums those drivers disappear. And like others have said, the drop really hasn’t been that big.
The only way stocks are undervalued now is if they were correctly valued at their recent peak. I don’t think they were. However, like Warren I don’t try to guess where the market is going except as an academic exercise, I stick with my asset mix, make automatic contributions and let dollar cost averaging take care of volatility.
THAT’S EXACTLY WHAT HE’S COUNTING ON.
Because he’s HUNGRY for a little WHITE MEAT.
I lol’d.
Watching the market in the last week or so, I’m reminded of my freshman sociology course, and talking about Collective Intelligence, and then walking across the hall to my Interpretive Programming course and having practically the same discussion, but this time in the context of modeling a collective intelligence through parallel processing and walking tree structures.
You see a good example of this group-think behavior every day: We call it traffic waves. Ever been in bumper-to-bumper traffic, and finally get out of it, only to discover that there was absolutely no apparent reason for it? No construction, no accidents, no hot women on the side of the road sweating through their t-shirts and …wait, what was I talking about? You and everyone on the road just participated in a collective intelligence – a slow moving intelligence that made you late for your appointment, but a collective nonetheless.
Every time the market takes a dive because Bush blew his nose on camera in front of the delegation from Pakistan, just think of that guy on the highway in front of you who jams on his breaks because he thought he may have seen an orange rabbit and then the guy behind him jams on his breaks, and then the guy behind him does the same, until you’re stuck in traffic 2 hours later at the same spot in the road and you end up late to your gynecological appointment and that rash is really starting to itch.
So, basically, Wall St. fluctuations == Jock itch.
What? You think there there are times when there is just “no reason” that traffic gets held up except “collective intelligence”? Could it have perhaps been that the vehicles involved in an accident had been cleared by the time you reached where they were?