Thursday, October 9, 2008

Free Fallin'

The stock market continues its extremely rapid descent. The markets are not behaving like they do, even in "regular bear markets". Typically, there are viscous snap-back rallies even in the midst of a bear market. The price declines are simply remarkable and historic. Look at the chart. I said the other night that the Dow will hit 8500 soon, but I didn't expect it would be this week. People are simply liquidating their 401Ks, and institutional investors are just not stepping in. No one wants to hold positions overnight, as there is just too much bad news that keeps cropping out overnight.

I'm extremely concerned that the market decline will lead to an even deeper recession due to decreased spending. Simply, millions of people who have been piling money into 401Ks, IRA, and standard investment accounts are going to cut their discretionary spending as they have seen their wealth shrink. I know it will cut back my spending...fewer new clothes, big screen TVs, DVDs, expensive dinners. Consumer spending accounts for 70% of GDP. Car sales are plummeting. Did you see that GM's stock is at a 58-year low? So much for buy and hold strategies, right?

People keep calling me telling me to buy stocks now because they are so cheap. Well, you could have said they were cheap 2 weeks ago, and now their 20-30% lower. Let the market show you the bottom. Feel comfortable missing the first 5% rally. It's much better than losing 10% in one day. Please.

Now, to cheer up, go to to watch the videos from the special edition of Thursday night SNL if you haven't seen it. Go play with your kids, if you have children. Tell someone you love them. Watch this video of Dana Carvey on the Tonight Show last night doing some great impressions. He's still got the skills.


julie said...

Thanks for trying to lighten the mood but I'm going to bring it right back down:

Here's an example of hidden inflation ... check out these photos of grocery store packages on the consumerist photo stream.

Anonymous said...

This is like nothing before. Currently working in the market, the thought is that dow 14,000 (seen 1 year ago) might not be seen for 20 years. We just have to hang in there, and keep reading COCOA PUFF's diatribes! Have a good weekend COCOA!

Anonymous said...

Why so slow?


julie said...

Make sure you ask Will for his Barack impression. I think he's nailing it.