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market meltdown
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08-17-2007, 12:06 PM
Some would question the wisdom of the Fed propping up equity markets when they have consistently signalled that inflation is lurking on the sidelines. It seems like they caved in to pressure, but only time will tell if it was a wise decision. I still think that the recent sell-off has been a correction of market values in a fundamentally sound economy, volatility notwithstanding.
Cheers, Jerry
08-17-2007, 01:13 PM
Jerry, I think you are exactly on target. The rate they dropped today was the Loan Rate and not the Federal Funds Rate, which still sits at 5.25, where it's been for about a year. They issued a statement in concert with the reduction which contained no comment about inflation. I'm glad they did what they did, it's about time, this is nothing new, the market needed some relief, I think this will put us back on track, it would not surprise me one bit to see additional cuts in both Loan and Fund rates prior to the end of the year. Most encouraging to me is the knowledge they are willing to step in if need be.
08-17-2007, 04:31 PM
Two thoughts:
Vanguard is usually rated the best mutual fund company. It is owned by the investors and tends to look out for their interests and more importantly, its funds almost always have the lowest managment fees. Higher fees have shown to be inversely related to long term protfolio performance. Second, when the Fed pours money into the markets, it is not actually taxpayer money. The Fed, can just issue new money, which is why such actions are very dangerious from an inflation point of view. The Fed has to be convinced that the danger of a melt down is greater than the danger of inflation before it makes such a move. Ditto the foreign central banks. Aloha, Rob L
Aloha,
Rob L
08-17-2007, 05:15 PM
Aloha,
It takes a real cause to move me to write. How quickly the immediate past dies. When a market hits a big high, and turns - it heads for a big low. It is math, enhanced by gravity (and sharks). Nothing is more certain. If you want to profit, go with the market. Sell it down. The trend is down. You cannot row upstream when the current is gushing down. Do not be fooled by little rallies. They provide great profits for those moving with the market. Do not try to catch a falling knife. You will get hurt. Take a look at the charts. It may be 4 or 5 years before the trend reverses. This is no time to buy. I really am friendly, optimistic, and mellow. But not about being bullish when a market turns bearish. Mahalo, Mling
08-17-2007, 10:35 PM
quote: Mling, I'm so glad you are friendly, optimistic, and mellow, because I have to say it appears you've been hurt by an investment strategy that went south. There's no other conclusion for your apparent lack of faith in the market. Your observations are likely based on relatively short-term market fluctuations, and I can understand that perspective. For those with a longer investment horizon, though, a well-diversified portfolio is a sure-thing. I started investing when I was just out of college and have put money into my portfolio when I could. It's now thirty years that I've had investments and my modest beginnings have blossomed to a portfolio that will guarantee I can live well when I retire. Along the way I've seen the markets "melt down" several times. Each time my portfolio has faltered just like everyone else, but has always come back. I'm not bragging, I'm just saying that your opinion is accurate, or can be accurate, for the short-term investor. But the longer your investment horizon the better the guarantee that these bumps in the road are just that. Mahalo nui loa, Brian and Mary Lynnwood, WA\Discovery Harbour
Aloha pumehana,
Brian and Mary Lynnwood, WA\Discovery Harbour
08-18-2007, 05:29 AM
I concour with Brian. I started investing in the market at 4,000, it's at 14,000 now. I don't invest in mutual funds because I don't want to have tax liabilities when the fund manager decides to sell something from the fund, but index stocks and stocks with low P/E ratio are pretty safe investments.
People jump to conclusions quickly. Countrywide lost like 30% of its stock price this week but how can anyone go wrong with aa 11B market cap company with a 6 P/E. (Yes, I bought 500 shares at $16.00.) Aloha, John S. Rabi, ABR,CM,CRB,FHS,RB http://www.JohnRabi.com Typically Tropical Properties "The Next Level of Service!"
08-18-2007, 05:52 AM
http://www.washingtonpost.com/wp-dyn/con...?nav=slate
Personally, I think that 'negative' views should always be considered. Sometimes you eat the bear and sometimes the bear eats you. april
april
08-18-2007, 05:55 AM
JohnRabi
You are right about needing to be careful about the potential tax exposure investing in Mutual Funds. That is why Exchange Traded Funds (ETFs)have become so popular. In general you can find funds based on the same Index sold as either Mutual Funds or ETFs. An ETF gives the individual investor more choice on when to take the tax liability. Larry Larry
08-18-2007, 08:02 AM
Aloha again,
I regret my comment was viewed negatively; as someone who has been burned. I was questioning the reasoning of going down with the ship. Many investors reverse their positions (short them), or they get out, or buy puts, or hedgefunds, when the bear appears. The average bear market is several years. Calling a low before the bear run even gets started can be dangerous. Many 16 dollar stock become 5 dollar stock - remember Cisco and Lucent. If you buy them, buy puts on them too. Why go down, when you can buy them back at the bottom, and sell them short until then. That is how the market is designed. It is better not to be bull or bear. The market is always right. Just go with it. Diversification (when done right) may keep you afloat. But why go there? Why not realize your gains before the unrealized gains disappear, and you are back to break even for another 10 years? However, I respect all your views and hope your successes continue. Opinions are like noses, everyone has one! Just thought I would share mine! Thats all. Mahalo, Mling |
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