Why the big swings?

[ziggy29]

And when all the panic is out of the air (some day!) the good companies should bounce back up once some fundamental analysis is being done again.

I believe that when people start doing good old fashioned Ben Graham security analysis on some of these strong businesses -- especially the ones paying strong and secure dividends -- some heads are going to explode about the valuation. This is easily the cheapest many of them have been since late 1974 (which is also a time Buffett really loaded up), and maybe even the cheapest since...THAT time in history which will shall not be named.

 

[shotgunner]

Boomers?

Any possibility it is the result of the Boomers? That large group of folks who just entered or near entering retirement know they don't have the years to make up large losses and are selling under pressure as they flee to what they think is safe?

 

[ziggy29]

Any possibility it is the result of the Boomers? That large group of folks who just entered or near entering retirement know they don't have the years to make up large losses and are selling under pressure as they flee to what they think is safe?

Doubt it, but if it is, I thank them for doing this sooner rather than later, while I'm still young enough to recover from it...

 

[NW-Bound]

Born in 56, so I am one of them Boomers.

But noooo, you won't be buying these shares from me.

The best you can be is my co-owner of these good ole companies

 

[unclemick]

It's a tinfoil hat conspiracy - the big bucks hardware & software cats are trying to wear out the computers rebalancing my balanced index back and forth with the wild swings so they can sell us the new stuff they have ready to come to market.

heh heh heh - and they thought I couldn't see through their nefarious plot - .

 

[slepyhed]

Years ago on this very forum someone here suggested that I read this book:
Amazon.com: The Misbehavior of Markets: A Fractal View of Risk, Ruin & Reward: Benoit Mandelbrot, Richard L. Hudson: Books
The behavior we see in the market these days is consistant with Mandelbrot's observations.

 

[al_bundy]

after 1987 they put in trading restrictions to keep volatility low and these were in place in the last bear. they took them away in the last few years which is why there is so much more volatility.

 

[ziggy29]

after 1987 they put in trading restrictions to keep volatility low and these were in place in the last bear. they took them away in the last few years which is why there is so much more volatility.

They didn't take them away -- they loosened them.

I think the way it works now, they calculate one number of Dow points at the start of the year which triggers the "circuit breakers" -- and that number is used for the rest of the year, regardless what the market does. This year, they don't kick in until the Dow has gained or lost (I think) something like 1100 points in a session. That didn't seem so bad at Dow 14000, but at Dow 8000 that's a pretty steep drop to allow unabated...

 

[Gardnr]

I believe that when people start doing good old fashioned Ben Graham security analysis on some of these strong businesses -- especially the ones paying strong and secure dividends -- some heads are going to explode about the valuation. This is easily the cheapest many of them have been since late 1974 (which is also a time Buffett really loaded up), and maybe even the cheapest since...THAT time in history which will shall not be named.

Agreed. I haven't bought individual stocks in a long time. I became a convert to indexing for the most part (efficient market and all that). But as I looked around in this market and realized that everything was being shot and that panic reigned, I became convinced that picking up some of these good stocks that have been thrown out with the bath water is the way to go with much of the cash I have available. I think that most of the market (institutional and individuals) has a real short term mindset right now. I want some good stuff to hold onto for years. Hopefully they'll perform better than the overall market over the next several years. I won't get into trading and will stick to index MFs and ETFs for the most part after this crazy bottom is put in.

It's still not going to be more than about 10-15% of my portfolio in individual stocks so I'm not going all out. Just most of the new money.

Time will tell if I'm right and I'm trying to keep my head, but it sure feels like shooting fish in a barrel right now.

Greedy while others are fearful.

 

[jazz4cash]

Circuit Breakers and Other Market Volatility Procedures

The major securities and futures exchanges have procedures for coordinated cross-market trading halts if a severe market price decline reaches levels that may exhaust market liquidity. These procedures, known as circuit breakers, may halt trading temporarily or, under extreme circumstances, close the markets before the end of normal close of the trading session.
The circuit breakers provide for cross-market trading halts during a severe market decline as measured by a single day decrease in the Dow Jones Industrial Average (DJIA). There are three circuit breaker thresholds—10%, 20%, and 30%—set by the markets at point levels that are calculated at the beginning of each quarter. The formulas for these thresholds are set forth in the New York Stock Exchange (NYSE) Rule 80B.
For example, on October 1, 2008, the average value for the DJIA for the preceding month (September 2008) was used to calculate point levels (rounded to the nearest 50 points). This resulted in the Level One (10%) circuit breaker set at 1,100 points, Level Two (20%) circuit breaker set at 2,200 points, and the Level Three (30%) circuit breaker set at 3,350 points.

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[FONT=Verdana,Arial,Helvetica]You can find the current thresholds by visiting the NYSE's Circuit Breakers webpage. [/FONT]

[FONT=Verdana,Arial,Helvetica]Circuit Breakers and Other Market Volatility Procedures[/FONT]

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[FONT=Verdana,Arial,Helvetica]Home | Previous PageModified:10/07/2008[/FONT]

 

[al_bundy]

I believe that when people start doing good old fashioned Ben Graham security analysis on some of these strong businesses -- especially the ones paying strong and secure dividends -- some heads are going to explode about the valuation. This is easily the cheapest many of them have been since late 1974 (which is also a time Buffett really loaded up), and maybe even the cheapest since...THAT time in history which will shall not be named.

i read Ben Graham's book years ago and played around with his website. it's a joke. back around 2002 his method said MSFT was a good buy and some growth company i can't remember was not.

guess which stock was dead money and which one shot up?

 

[ziggy29]

i read Ben Graham's book years ago and played around with his website. it's a joke. back around 2002 his method said MSFT was a good buy and some growth company i can't remember was not.

It's not *his* web site -- he died in 1976.

 

[al_bundy]

i guess someone who took up his work or a similar book using the same style

think it was the updated version by Jason Zweig