Crashing market

chaser

Well-Known Member
Maybe, but the market is very high, after following the market for ions it seems to me just normal ups/downs for a market in the 24600 range and some big companies not hitting their quarterly mark, there will be more companies reporting earnings next week , many are doing very well. And the stock market does not like it when %rates go up. I am not a professional money manager and did not go to school for financial investing, I do not give advice, just a private citizen that has studied and learned about the stock market/financial companies and being an investor in stocks and money markets since the mid 1970's. 40 years ago I had a CD that paid over 14% for 1 year :woah Back then I think the Dow was at 1000 or slightly under, it is 24 times that now. I am not wealthy, just an average joe getting by, by the grace of God and not living above my means and not keeping up with the Joneses , and 0 credit cards ;). Since we are in the last days(possibly moments:rapture) I expect lots of volatility in markets and in everything connected to $ and societies, remember our $ says In God We Trust, trust Him not your $ or what you have/own it could/will all be gone in a blink.
 

Kem

Citizen
Thanks Chaser, I expect you are completely correct but it did seem interesting that we had that sudden, rather large drop just at this time. As you say though, the market has been too high for a while now and was due for a drop. As for that 14% interest rate.....Wow!
 

Tall Timbers

Imperfect but forgiven
One issue for the stock markets are the rising interest rates. They're still too low to be a concern to long term investors but they'll eventually get to the point where enough investors will transition some of their holdings to bonds or some other thing, and from the stock markets. That's always good for a correction and creates an opportunity for others with cash sitting on the side to buy into their favorite companies at a discount.

The financial markets don't like surprises and we've had a lot of those lately... that could be making investors a bit jumpy. The whole thing with the "trade wars" is causing a lot of short term unknowns and that can't be helping the markets though long term it'll be good for the USA and for USA companies that restructure to favor more manufacturing in the USA, I think.

The large numbers involved in the daily "downs" aren't all that significant when considered as a percentage of the DOW or their respective exchange.
 

chaser

Well-Known Member
One issue for the stock markets are the rising interest rates. They're still too low to be a concern to long term investors but they'll eventually get to the point where enough investors will transition some of their holdings to bonds or some other thing, and from the stock markets. That's always good for a correction and creates an opportunity for others with cash sitting on the side to buy into their favorite companies at a discount.

The financial markets don't like surprises and we've had a lot of those lately... that could be making investors a bit jumpy. The whole thing with the "trade wars" is causing a lot of short term unknowns and that can't be helping the markets though long term it'll be good for the USA and for USA companies that restructure to favor more manufacturing in the USA, I think.

The large numbers involved in the daily "downs" aren't all that significant when considered as a percentage of the DOW or their respective exchange.
Very true TT and there are many more stock/market traders(Day Traders) today than say 15 years ago, and back in the 80's it was not glamorous like present day. Some of them bail on their stocks at the slightest hic up and we must not forget we are in the digital age and millions of shares are trading daily/hourly on computer generated programs, buying/selling at preset numbers by computer programs, makes it more volatile IMO.
 

TRex2

Well-Known Member
I agree with Chaser and TT, and like Chaser: "I am not a professional money manager and did not go to school for financial investing, I do not give advice, just a private citizen that has studied and learned about the stock market/financial companies."

I will add, though, that if you are not a "trader" but an investor, I wouldn't watch the stock markets at all (or as little as possible). They bounce all over the place. Watch the bond market, and specifically the spread between the 2yr treasury and the 10 year treasury bond. Right now that is running 25-30 "points" (100 points in a full percent) and slowly declining. When it declines to zero, the markets will begin to decline massively. Within a few months after that we will be in a recession.

At least that is the way it always happened in the past. Since that is a known factor, the markets will probably begin their decline a little before the interest curve hits zero. The recession happens after that because the market losing a lot of money equates to no investment in things that keep our economy gaining. The engine gets shut off, and we begin to slow down...

All of this assumes that no one starts a war, or other such disaster (and I mean bigger disaster than a hurricane).
 

TRex2

Well-Known Member
The back to back increases in the interest rate by The Fed caused an inversion, starting a couple weeks ago, in the 2 to 5 year bond interest rates. The 2 to 10 year rates haven't inverted yet, as I had thought they would but it appears there is a lot of money pouring into both 5 and 10 year bonds.
I said: "the markets will probably begin their decline a little before the interest curve hits zero"
That seems to be happening.

Gold will rise, as people start looking for safe places to park their money. Although I don't think it will go up like it did in the past, I wouldn't be surprised to see it go up double digit percents. If you see silver go up, that will be a sign more of political instability, since preppers, Patriots, 3%'ers, and Oathkeepers tend to put money into silver when things get bad.

So, what else do you think I should look at?
 

chaser

Well-Known Member
TRex2 do you think the rate hikes are intentional, as in an attack on Trump, make him look bad? Or do we really need the rates higher? It will cost companies more $$ if they need operating capital, higher mortgage rates, etc.
 

Kem

Citizen
My 2 cents and that is all it's worth, is that it is yet another attack on Trump. The Fed does not care about the people who can't get any kind of interest rate on money in the bank. It would appear at least on the surface as if raising rates at this point will help bring the US economy to a crashing halt.
 

chaser

Well-Known Member
The economy is still strong, oil is low and Gas is at good price for the working man and if the Fed did not raise rates maybe this slide in the market does not materialize this severely ? When they continue to tighten on rates they are fearing inflation so they raise rates a little to slow the economy a little, at least that is how I understand it. I am curious to see the first week in 2019 and what the market does. Some talking heads on the business channels keep equating this with how bad the market was in 1930, I think that is a little overblown. The market in 1930 was trading between 250 and 390 and our market now is in the 21,790 range down from it high of 26,616 which shows there is still much strength. I'm not worried, my faith is not in the market, the market goes up and it goes down, and it has had a very long run UP it is the end of the year and I suspect people taking $$ profit, all just opinion.
 

TRex2

Well-Known Member
I don't know if this is an attack on Trump or if (as one economist said) the Fed simply always makes the wrong call. (He also said the only two jobs you can keep even if you are wrong more often than right are meteorologist and economist)

As for the interest rates affecting the economy, they do it indirectly. Raising interest rates,and fiscal tightening (both of which are being done right now) both reduce the amount of reinvestment back into our businesses and manufacturing. Reduced investment will lead to a slowing of economic growth, or even a recession, but it takes a while to happen.

As for "the economy is strong" vs "the market is as bad as it was in the 30's, you can't just look at raw numbers. In fact, I try (unsuccessfully) to ignore the stock market. But here are some numbers (Chart from Wikipedia, but I don't know if I linked it right or not) showing the Fed Funds Rate, and the Manufacturing capacity utilization from 1955 to 2015.
https://en.wikipedia.org/wiki/Federal_funds_rate#/media/File:FedfundsCAP.png

Now, manufacturing is what I like to look at, and this chart shows that capacity utilization in the past was always over 80% except during or right after a recession. Until 2000. Since then, it has never gotten above 80%. Our economy is stronger than it has been since 2010, but weaker than at any time before 2000. Some would say we have been in a recession since 2000, but I think that might be overstating it.
 

Tall Timbers

Imperfect but forgiven
TRex2 do you think the rate hikes are intentional, as in an attack on Trump, make him look bad? Or do we really need the rates higher? It will cost companies more $$ if they need operating capital, higher mortgage rates, etc.
I've been concerned ever since Trump became President that the Fed, whose members tend to be at the very center of globalist ideals, might use their positions to thwart President Trump. If that is the case, then they might have pulled the trigger a year or so early... If they are acting poorly, it'll become obvious over time, at least I would think it would become obvious.
 

Tall Timbers

Imperfect but forgiven
The economy is still strong, oil is low and Gas is at good price for the working man and if the Fed did not raise rates maybe this slide in the market does not materialize this severely ? When they continue to tighten on rates they are fearing inflation so they raise rates a little to slow the economy a little, at least that is how I understand it. I am curious to see the first week in 2019 and what the market does. Some talking heads on the business channels keep equating this with how bad the market was in 1930, I think that is a little overblown. The market in 1930 was trading between 250 and 390 and our market now is in the 21,790 range down from it high of 26,616 which shows there is still much strength. I'm not worried, my faith is not in the market, the market goes up and it goes down, and it has had a very long run UP it is the end of the year and I suspect people taking $$ profit, all just opinion.
I think massive inflation (deflation in the actual purchasing power of the US dollar) that began back when oil prices went crazy high is responsible in large part for the DOW and other market numbers. Relative to true inflation, I wonder what the correlation between a given value in the 1930s and today might be.
 

TRex2

Well-Known Member
I've been concerned ever since Trump became President that the Fed, whose members tend to be at the very center of globalist ideals, might use their positions to thwart President Trump. If that is the case, then they might have pulled the trigger a year or so early... If they are acting poorly, it'll become obvious over time, at least I would think it would become obvious.
It will be obvious for about 16% of us.
 

Jonathan

Well-Known Member
Maybe, but the market is very high, after following the market for ions it seems to me just normal ups/downs for a market in the 24600 range and some big companies not hitting their quarterly mark, there will be more companies reporting earnings next week , many are doing very well. And the stock market does not like it when %rates go up. I am not a professional money manager and did not go to school for financial investing, I do not give advice, just a private citizen that has studied and learned about the stock market/financial companies and being an investor in stocks and money markets since the mid 1970's. 40 years ago I had a CD that paid over 14% for 1 year :woah Back then I think the Dow was at 1000 or slightly under, it is 24 times that now. I am not wealthy, just an average joe getting by, by the grace of God and not living above my means and not keeping up with the Joneses , and 0 credit cards ;). Since we are in the last days(possibly moments:rapture) I expect lots of volatility in markets and in everything connected to $ and societies, remember our $ says In God We Trust, trust Him not your $ or what you have/own it could/will all be gone in a blink.
That is amazing. I remember my dad telling me a long time ago that back in the early 80s (I think) you could get (through bonds, cds, or whatever) 10-15% secured yearly interest. I'd take that sure thing over any gamble on a stock any day! Of course, interest rates were a lot higher back then, over 20% at one point.
 

Carl

Well-Known Member
Before we get to involved with the market at $20,000 shouldn't we consider inflation? I mean back in the depression when the market was at 250 to 390. Somewhere seems to me we have to look at how many hours I have to work to purchase an average share? Gold in 1965 was $35 an ounce. Today it is around $1300. that is an increase of around 31 times. Which would yield a share at $800.
 

TRex2

Well-Known Member
I've been concerned ever since Trump became President that the Fed, whose members tend to be at the very center of globalist ideals, might use their positions to thwart President Trump. If that is the case, then they might have pulled the trigger a year or so early... If they are acting poorly, it'll become obvious over time, at least I would think it would become obvious.
I think Trump got it right (assuming the Fed isn't acting out of Trump Derangement Syndrome), he said "The Fed is like a powerful golfer who can’t score because he has no touch - he can’t putt!"

The earlier increases in interest rates were necessary and good. The one in Sep was questionable, and this one is bad. The Fed did the same thing the last time, in 2005-2008 they raised interest rates too late, and then too much. The result was an asset bubble (housing) when rates were too low, followed by a crash when interest rates got too high.

It actually looks like they are working off of outdated data.
(That would still not account for this last raise, as there is no data in the past 5 years to support it.)
 
Top