what the hell is going on w/ the stock market???

[Ender510]

Anyone else seriously in the market right now? I could say that it is a very good time to buy since a lot of stuff is pretty low.. but too bad all my money is already tied up in stocks that have already tanked!! Ever since AMCC split and ORCL, YHOO, etc. have been tanking, I've been dying.. what are you guys in? Any stock pics you see? Of course all my stocks are in technology which is where things are getting hit bad..

 

[Raspewtin]

even the Fed said economic slowdown and not inflation is their number one concern. I thought the problem was no clear pres and that Bush would help the market. I guess not. I wonder if these are temporary, corrections, or signs of economic slowdown.

 

[Midnight Rambler]

In the market? Unfortunately, yes, but I have been through times like this before and am strictly longterm. Still, it has been very painful to watch.

As for a slowdown - yes, recession no.

Problem is somewhat artificially induced. Greenspan got carried away and raised rates maybe 1 or 2 times too many. On top of that he injected loads of cash prior to Y2K, only to see no problems come out of the Y2K event.

We'll see at least 3-4 rate cuts in 2001. But it will take stocks some time to recover from all of this carnage.

Top picks: Cisco, Sun, Corning, Qwest, Global Crossing, Exodus, Applied Materials, Teradyne, AOL

Obviously I like 'Net infrastructure. Considering the exponential growth rate of new 'Net subscribers (worldwide), it's one of the top places to be IMHO.

 

[burnedout]

Hey Midnight Rambler - You really don't think we are in for a recesssion? Why don't you think so? I'm only asking your opinion, not being critical. Curious to hear your view. 🙂

I too am long on stocks and rode out the last recession. And I work for AMAT. Awesome company to work for.

 

[seewhy]

I hope Midnight Rambler is right about not being in a recession.....but I am afraid we are gonna see at least a few more month of slow down, and if nothing comes up to change that, we will be in a recession. Few days earlier, I heard on the radio that most people's 401k is down like 40-50% for the year. I think now a day, people in some way or the other are invested in the stock market, and seeing your investment down 40-80% for the year depending on what you own is gonna have huge affect on your spending pattern. That's why you are seeing all the big ticket item sales slowing this year, car, PC....etc. I have a bad feeling about this holiday season. If retail sales really slowed, compounded with the market mentality right now, another round of decline is gonna come, and the whole cycle of bad stock market -> not spending will start again.

Beside consumer spending, you are seeing all the investment bank tightening their pocket. That means a lot of dot com are not going to make it in the next few month. For those who are in ok financial condition, cut back on purchase, or even layoff may happen as well. So coporate side of the equation is not gonna be any better.

Is Greenspan gonna do something about it?? I hope he will, but from his action last Tuesday, he is not really interested in rescuing the stock market. He is only going to do something about the interest rate when he sees clear evidence that the economy is crashing, and like many time in history, that may be a bit too late.

So what can we do if we still have cash on the side?? I would get company with stable earning while it has low P/E ratio right now just to be safe. But prepare to see stagnent growth or even negative return in the next few month until there are some really good news in the market.

Anyway, that is just my opinion...I am getting butchered with Covad....thought DSL is gonna be the future, and my AMD is not doing too well too these days. So hey, what do I know!!

 

[cxim]

History is repeating itself.

You need to know where we are in the business cycle.. hint... it is close to the end of the cycle..

famous advice... no stock is ever so low that it can't go lower.

 

[StageLeft]

The stock market is in a pretty nasty state 🙂 I wouldn't pick up any tech stocks now, it just keeps getting lower and lower. So many horror stories - even non-tech aren't a great buy, though certainly they are a better one!

 

[Adul]

My 401k is up 30% for the year 🙂 Now I got my funds tied up in safer investments. Boy did I ever luck out.

 

[kranky]

For a lot of people, this is the first time they have had to deal with losing in the market. People should ask themselves why they hold on to loser stocks. Would you buy that stock today? If not, why do you keep it?

It's hard to sell losers because it locks in your loss. Holding on gives you that glimmer of hope that it will come back sometime. But IMHO a lot of these tech stocks are not coming back any time soon - because they were incredibly overpriced at the peak, and it's unlikely they will ever again be valued so highly. It looks like the market has decided that profits really do matter.

I recommend checking out thestreet.com and reading some of the articles by James J. Cramer. His view on what tech stocks will be doing is interesting because of his years of experience. Here's one story of his.

 

[DABANSHEE]

Its just a correction, those shares have been seriously overvalued.

Actually if you were to compare the price to earnings ratio of shares even today, with what they were up till 5 years ago, you'll realise they are still overvalued.

 

[Ender510]

seewhy - I actually remmeber learning in one of my investment classes that when the economy isn't doing well.. that is supposed to be the time when people should be spending as much as they can, buying gifts and larger ticket items. This will spur the economy back into growth and out of that slump. Unfortunately, the opposite happens where people become more conservative.. i wonder how much truth there is in this?

Many people say this is the perfect time to buy.. because everything is such a good deal right now.. but too bad all my money is tied up in the market already! Also, they say it's not good to catch falling knives.. because you never know how much lower everything will go..

 

[Soybomb]

Exactly what kranky and DABANSHEE said, they were overpriced massivley and this is their correction. Now I just have to pick when to hop in with some more cash, I want some AMD action, among others I"m eyeing.

 

[seewhy]

Emder510: Well, there is a difference between what people SHOULD and what people is LIKELY to do. If everyone goes out and buy more stuff, sure the economony will be better and everyone will be happy. But is that what people is likely to do?? I for example, was gonna get myself a DVD player, nice big screen TV, and two P3 850 CPU to replace my good old dual celeron 366A, but after losing like 30k in the stock market, do you think my wife will let me have all those goodies?? Other than milk we are getting for our son, we are cutting back on everything we can think of. I think people's mentality is gonna be the same, except lucky baster like Aduls...maybe he should start a mutual fund and we all give him our money!!

Sure this is correction, but it is not as simple as that. In correction, people are still positive about the market, and think this is gonna be temporary. But now, if you follow the market these days, Wall St. is really negative on every news out there. Palm was punished 30% (good time to get it, if it does the strategy right, becoming a OS/Application/Service company rather stick to hardware, it has the potential to be the next MS in my opinion) even it beats expectation. So it may be dangerous just to say well, this is a correction, everything will be fine after the price is justified.

It is always bad to try and time the market (guessing when the stock is at the lowest). Right now, just find stock which has stable earning and has low P/E compare to its historical P/E, in the long run these investment usually pays off. But be careful with company have problem turning profit. Like I said, many dot com company is not going to make it unless it can turn profit soon. They get money from investment banks, and you wouldn't believe how tight those investment banks are now a day. (These investment banks always overdone themself, when the time is good they give out too much cash and when time is bad, they are too tight) So even some company who has pretty good business model, if they cannot get cash soon, they will go out in business....3DFX rings a bell?? (if they can get some cash in financial market, you think they will sell to nvidia??)

So if you want to buy things on the cheap, you better do your home work. Make sure they have enough cash to ride out of this bad financial market. Other than that, get the stock when you feel it is a good value, don't be afriad that it may fall further. In the long run, they should rebound. AMD for example, is a great buy IMHO, it's been hammered and there is no gurantee that it won't fall further, but I am biting the bullet and gonna get more!!