Dow Jones plummets

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Dow Jones plummets

Postby Cobra-D » Mon Feb 05, 2018 11:41 pm

So the Dow jones dropped today by 1,175 points which apparently is a big deal, honestly I don't know much of what this mean and someone smarter then me like avi or creepy should talking about it but apparently it hasn't dropped this dramatic since the 08 financial crisis.

Oh and it's probably Obama's fault or something.
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Re: Dow Jones plummets

Postby Windy » Tue Feb 06, 2018 12:12 am

AHH I'M BLEEDING MONEY MAKE IT STOP
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Re: Dow Jones plummets

Postby Doodle Dee. Snickers » Tue Feb 06, 2018 12:31 am

Cobra-D wrote:So the Dow jones dropped today by 1,175 points which apparently is a big deal, honestly I don't know much of what this mean and someone smarter then me like avi or creepy should talking about it but apparently it hasn't dropped this dramatic since the 08 financial crisis.

Oh and it's probably Obama's fault or something.


From what I've read, and I'll admit that I'm not that knowledgeable about economic matters, this is simply a downturn from a slight strengthening of wages and fears of the feds adjusting interest rates accordingly. I don't think most serious economic types think it'll be a long-lasting trend. I've heard it described as something similar to reverting to the mean. The Dow has been on a ridiculous run for like...the last 36 months, it was gonna have to come down eventually.

Unless it keeps on for like...a month or so, I'm not that worried.
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Re: Dow Jones plummets

Postby Crimson847 » Tue Feb 06, 2018 12:36 am

Wait a month, see what happens. Anyone who tells you they can predict where single economic signals like this one are going to lead should be automatically disbelieved unless they live in a golden palace on the Moon that they bought with their stock dividends.

For the moment, I'm just going to enjoy some schadenfreude at the fact that Trump credited the strong stock market and black employment rate to his leadership, and then both of those things promptly dropped like they were thrown out of an airplane.
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Re: Dow Jones plummets

Postby Cpt._Funkotron » Tue Feb 06, 2018 12:52 am

Who has two thumbs, decided to invest in an index fund for the first time in his life on thursday evening, and has subsequently taken a %7 loss in two business days? This guy!

As far as I understand it, this is coming down to a few different things:

1) The fed is probably going to be raising interest rates in response to the rise in inflation caused by the strong growth we've seen in the past few years.
2) The ever so slight increase in wages brought on by the tax cut is going to harm business profits, and thus share prices, in the short term, and will ALSO slightly raise the rate of inflation, consequently making a stronger case for the fed to raise interest rates.
3) The ever so massive defecit hike brought on by the tax cut is going to force the fed to raise interest rates to keep up with the loss of revenue.
4) Because the interest rates are going up, a lot of investors are shedding their stock to buy up long term bonds.
5) Someone on a reuters video today said that the Chaiman of the federal reserve recently said that the stock market is currently overvalued by %15 or something, I'm not sure if that's correct or if it has any affect on this recent drop, but if I understand it correctly, it seems probable.
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Last edited by Cpt._Funkotron on Tue Feb 06, 2018 1:01 am, edited 1 time in total.
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Re: Dow Jones plummets

Postby Doodle Dee. Snickers » Tue Feb 06, 2018 12:55 am

Cpt._Funkotron wrote:Who has two thumbs, decided to invest in an index fund for the first time in his life on thursday evening, and has subsequently taken a %7 loss in two business days? This guy!


If it makes you feel better, I just started my IRA in January, and I've been made to understand that it's generally better to have them when the stock market's doing poorly and cash them out when it's doing incredible.
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Re: Dow Jones plummets

Postby Cpt._Funkotron » Tue Feb 06, 2018 1:04 am

Doodle Dee. Snickers wrote:
Cpt._Funkotron wrote:Who has two thumbs, decided to invest in an index fund for the first time in his life on thursday evening, and has subsequently taken a %7 loss in two business days? This guy!


If it makes you feel better, I just started my IRA in January, and I've been made to understand that it's generally better to have them when the stock market's doing poorly and cash them out when it's doing incredible.


I'm seriously contemplating throwing more money into it, but I thought the same thing on Friday, thought better of it, and then today it plummeted by twice as much. This probably isn't going to spiral out of control, but it might, and that's holding me back.
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Re: Dow Jones plummets

Postby Windy » Tue Feb 06, 2018 1:10 am

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Re: Dow Jones plummets

Postby Cpt._Funkotron » Tue Feb 06, 2018 1:12 am

Windy wrote:
Spoiler: show
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As much as I'd love to agree,

https://www.snopes.com/did-trump-tweet- ... dow-joans/

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Re: Dow Jones plummets

Postby blehblah » Tue Feb 06, 2018 1:24 am

Lot's of sell-off:

http://www.baystreet.ca/articles/market ... 174/020518

Hard to say what's behind it all. As Crim said, if anyone really knew, they'd be rich. Instead, a few people get rich by pretending they know, and making money off both buys and sells... so, yay for them.

Generally, when the economy chugs along for long enough, inflation tends to kick-in (if people are making more money, on average, shit will cost more money), and interest rates are increased in response (to increase the cost of money and keep inflation in-check). Also, as more and more money is poured into stocks, the price of stocks tends to keep riding upward until a tipping point is reached where the value of any given stock is beyond what is sustainable based on the fundamentals of the companies behind the stocks.

It could therefore be a round of profit-taking, where money is pulled from stocks and sunk into safe, low-yield, things like bonds. Stock indexes are still very high, even compared to a year ago, so I've heard the word "correction" used. The dreaded word, "bubble" hasn't really been tossed around; there doesn't appear to be a shitload of money in a massive market driver/diver like tech (the .com bubble) or real-estate/debt (the 2008 bubble).

The one problem today is rates can't be raised very quickly because the rate of consumer debt is... despite tightening of mortgage rules (at least up here in Canada)... troubling. Tick interest rates up a few notches - and forget about the double-digit rates I remember from a few decades back - all hell breaks-loose.

Here is an article with a bunch of words.

http://business.financialpost.com/inves ... -than-most

Meh. Markets are anything but rational, so who the hell knows?
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Re: Dow Jones plummets

Postby Cobra-D » Tue Feb 06, 2018 1:38 am

Doodle Dee. Snickers wrote:
Cpt._Funkotron wrote:Who has two thumbs, decided to invest in an index fund for the first time in his life on thursday evening, and has subsequently taken a %7 loss in two business days? This guy!


If it makes you feel better, I just started my IRA in January, and I've been made to understand that it's generally better to have them when the stock market's doing poorly and cash them out when it's doing incredible.



You invested in the Irish Republican Army? Seems a bit risky but if they win this time it'll be a huge pay off for you.
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Re: Dow Jones plummets

Postby Cpt._Funkotron » Tue Feb 06, 2018 1:40 am

Cobra-D wrote:
Doodle Dee. Snickers wrote:
Cpt._Funkotron wrote:Who has two thumbs, decided to invest in an index fund for the first time in his life on thursday evening, and has subsequently taken a %7 loss in two business days? This guy!


If it makes you feel better, I just started my IRA in January, and I've been made to understand that it's generally better to have them when the stock market's doing poorly and cash them out when it's doing incredible.



You invested in the Irish Republican Army? Seems a bit risky but if they win this time it'll be a huge pay off for you.


They don't call it the emerald isle for nothing.

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Re: Dow Jones plummets

Postby Grimstone » Tue Feb 06, 2018 9:52 am

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Re: Dow Jones plummets

Postby IamNotCreepy » Tue Feb 06, 2018 2:35 pm

As others have said, the sell-off was likely due to fears over inflation. It was the largest drop points-wise on record, but percentage-wise, it's not in the top 100 of bad days on Wall Street. The Dow was hitting record highs, so a large point drop is not necessarily a large percentage drop.

In 2008, it dropped by like 8 percent or something. In the 80s there was a drop of about 20%. This was only 4.6%. Overall, the market is still up something like 23% over last year.

That being said, I do have some concerns for the intermediate future. The stock market has been going gangbusters the past year or so, because of the "Trump Bump". Investors were optimistic because of promises made to reform taxes and the expectation of looser regulations on the financial industry.

Well, tax reform is over. It was mostly beneficial for Wall Street, but the reality isn't quite as great as some hypothetical benefit that could drive optimism and enthusiasm into market gains. Now that it's a real, quantifiable thing, the market will probably cool off to match what it should be.

That being said, the stock market is not the economy; however, we are basically overdue for a recession. The economy runs in cycles, and we have experienced 10 years of economic growth, so it is likely that one is coming soonish.
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Re: Dow Jones plummets

Postby satan_n_stuff » Tue Feb 06, 2018 3:03 pm

Windy wrote:AHH I'M BLEEDING MONEY MAKE IT STOP

Hold on just a minute, I'll get a bucket.
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