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Market meltdown?
Old 08-24-2007, 10:50 AM   #1
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Market meltdown?

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GET A GRIP, folks. We're supposed to be in a market meltdown, a credit collapse, a financial Armageddon. Right?

Uh, not exactly. Just five weeks ago stocks were at all-time historic highs. And now, as of Thursday's close, they're about 6% off those highs.

Meltdown? This hardly qualifies as a correction. Even at the worst of it last week, the S&P 500 never closed even 10% below its highs. If this market move has you freaked out, then you need to find something else to do with your money other than investing in stocks. Ever consider taking up stamp collecting?

Everyone's saying that the financial system is "broken" thanks to losses in subprime mortgages, and the collapse of exotic loan securitization structures like collateralized debt obligations, or CDOs. So how come the financial sector of the S&P 500 has performed better than the overall market during this alleged meltdown?

Guys and gals, take a stress pill and count to 10. This is nothing. At least for most investors.
The section above is quoted from the following URL. I thought it was very encouraging (even reminded me of CFB's "blue light special" comments).

Stock Pullback Is Buying Opportunity, Not Meltdown (Goldman Sachs, Bank of America, Countrywide Financial) | SmartMoney.com


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Old 08-24-2007, 11:00 AM   #2
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Geez... It's so easy to look at the past and make condescending comments. If he were so wise, why didn't he publish this article 10 days ago? I bet he had no idea what was going to happen then. Had the market continued to tank after August 15, his article today would be something else. The more I read, the more I'm convinced that these guys are just as clueless as the rest of us.
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Old 08-24-2007, 11:01 AM   #3
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The financial sector has utperformed because it had already had the crap beaten out of it while the rest of the market was rising.

The stock market didn't really drop that much because the problem is in the credit and MBS markets. Doesn't mean these problems won't have an economic impact that could well reverberate back to stocks.

Having said that, lots of stuff is really cheap now.
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Old 08-24-2007, 11:49 AM   #4
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Originally Posted by Sam View Post
Geez... It's so easy to look at the past and make condescending comments. If he were so wise, why didn't he publish this article 10 days ago? I bet he had no idea what was going to happen then. Had the market continued to tank after August 15, his article today would be something else. The more I read, the more I'm convinced that these guys are just as clueless as the rest of us.
Here's his last article, two weeks ago, called "Turning Lemmings into Lemonade".

Turning Lemmings Into Lemonade (Ahead of the Curve) | SmartMoney.com

It discussed Jim Cramer's meltdown and he says, "anyone who sold after Cramer's meltdown forgot one of the most important principles underlying the way all markets work. You simply can't make any money by acting on the same information or impulses as everybody else. You have to have unique information, or in a panic like this one, the unique courage to be strong when others are weak. Profits go, like they say in the song, to only the lonely. "
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Old 08-24-2007, 11:54 AM   #5
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Originally Posted by brewer12345 View Post
The financial sector has utperformed because it had already had the crap beaten out of it while the rest of the market was rising.

The stock market didn't really drop that much because the problem is in the credit and MBS markets. Doesn't mean these problems won't have an economic impact that could well reverberate back to stocks.

Having said that, lots of stuff is really cheap now.
Good points. I'm still encouraged.
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Old 08-24-2007, 01:57 PM   #6
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Originally Posted by Want2retire View Post
Here's his last article, two weeks ago, called "Turning Lemmings into Lemonade".

Turning Lemmings Into Lemonade (Ahead of the Curve) | SmartMoney.com

It discussed Jim Cramer's meltdown and he says, "anyone who sold after Cramer's meltdown forgot one of the most important principles underlying the way all markets work. You simply can't make any money by acting on the same information or impulses as everybody else. You have to have unique information, or in a panic like this one, the unique courage to be strong when others are weak. Profits go, like they say in the song, to only the lonely. "
Thanks. I jumped to the conclusion too quickly. Donald Luskin does know what he's talking about.
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Old 08-24-2007, 01:59 PM   #7
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Even tho I consider myself still a novice, I read the Wall Street Journal every day for the past year, as well as Kiplinger's (and Money); and could see this coming last December, so I am sure it is no shock for you old time investors out there.
I am not in a panic state, so you could count me in as standing still and remaining with it.
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Old 08-24-2007, 04:38 PM   #8
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Originally Posted by Sam View Post
Geez... It's so easy to look at the past and make condescending comments. If he were so wise, why didn't he publish this article 10 days ago? I bet he had no idea what was going to happen then. Had the market continued to tank after August 15, his article today would be something else. The more I read, the more I'm convinced that these guys are just as clueless as the rest of us.
You've hit the proverbial nail on the head with this comment. The financial press is in the business of getting readers/watchers so they can sell ad space/time. They aren't in the business of giving sage advice. If they really "knew" anything, they'd be making their own personal fortune with their own investing.

That includes Cramer. His great financial background is constantly touted but from what I see he's failed at everything but broadcasting.

The fundamentals are fine so there's no need to worry. The people at risk were the ones with on over-load of derivatives and high risk mortgages. The "credit meltdown" would have worked its way through without the Fed's help but now they are committed to keep things hopping. Get ready for the rate cuts and the market meltup that will result.

Half of the drop has already been recovered.
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