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Why Are People So Frightened Of The Stock Market?
invite response
2016 Jan 20, 7:54am 9,823 views 17 comments
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zzyzzx
2016 Jan 20, 8:21am
OK, so if I understand you correctly, the real problem is that banks lent oil companies money, under the stupid assumption that oil prices never fall? Correct?
Seems to me that we have heard that one before??
And what oil company needs a loan when oil is already expensive anyway?
Shaman
2016 Jan 20, 9:22am
Might be a good time to buy stocks actually.
I ask you this: if not stocks, where will the money go? Interest on bonds is almost nothing. Real estate is tapped out right now with REITs snapping up anything reasonable and rentable. The wealthy fucks have more filthy lucre than ever, and it screams for investing. This is just another start-of-year stock market dip like every year, except the swing is a bit more wild. I bet we will see 18000 DOW this year.
Y
2016 Jan 20, 9:33am
Round table pizza is driving the economy in the tank with $30+ pies the norm.
How many pepperonis can peter piper pick before the whole thin crust industry gets devoured by some fat fuck...
NuttBoxer
2016 Jan 20, 9:42am
Quigley and Ohomen are representative of the morons who insist the plane isn't crashing while the cabin disintegrates around them.
Investing in numbers made up on a piece of paper, backed by nothing, will always result in a total loss. Their are plenty of tangible investments out there for real entrepreneurs, those who want to build wealth on the back of someone/something else, get what they deserve. Of course you can game the system and get out before you lose your pants, but that requires independent, critical thinking skills.
Shaman
2016 Jan 20, 7:16pm
Quigley and Ohomen are representative of the morons who insist the plane isn't crashing while the cabin disintegrates around them.
FYI I called the last big stock market crash, and bet against the market to win big.
I don't see the same kind of fundamentals right now. They're talking about the national defecit and China and somewhat depressed economy in the US. Like that matters! Stocks are the first place people with money go to get returns and there are more wealthy fucks today than ever. That's a LOT of money sloshing around out there looking for a home. There's just a lot of hype out there by individuals who are either scared or trying to scare other people to get them to unload stocks to cause a dip. You DO realize that the big traders absolutely love stock market dips and surges, right? They skim billions while everyone is panicking. My advice for anyone with stock right now in a company they believe in, or decent mutual funds is let it ride. Worst thing you can do is get out while it's low and have to buy back later at a premium when the traders who caused the dip buy back in and the market rises again.
indigenous
2016 Jan 21, 5:35am
Which is more ridiculous: Dismissing $28 trillion debt as an "internal problem" or proposing $28 trillion debt is indicative of a "savings glut"?
Nice and this from the Chairman...
ttsmyf
2016 Jan 21, 6:47am
Look here
http://www.showrealhist.com/recDJIAtoRD.html
The truth is that price change is dominanted by the coming and going of IRRATIONALITY! (That is ignoring manipulation!)
dcinsd
2016 Jan 21, 9:35am
The Mishiot: losing more money for more people for longer than any other blogger in history (except for Zerohedge.)
Heraclitusstudent
2016 Jan 21, 11:40am
Actually, I have to ask: Which is more ridiculous: Dismissing $28 trillion debt as an "internal problem" or proposing $28 trillion debt is indicative of a "savings glut"?
The most ridiculous in Mish.
There is clearly a saving glut: when you save 50% of what you produce, in a $10T economy, you create a big deficit in demand that then is filled using debt. The savings are then invested in the debts. The 2 are tied at the hip.
$28T debt for a $10T economy is not very different from other economies. Yes there are bad investments meaning losses and pains. But the solution is known: print to replace.
Mish needs to learn: you can't have a collapse caused by debt when authorities are sitting on a printing press.
They are "frightened" of it because they are either overexposed to it and/or their retirement rests on hopes of their 401K account value. Thus, rather than viewing falling prices as "cool new batch will result in more shares purchased" they panic and picture themselves spending their retirement years working at the mall until age 100.
You missed my sarcasm
I was taking a crack at the boards two nitwits who obviously don't have any money or investment experience
NuttBoxer
2016 Jan 21, 2:18pm
FYI I called the last big stock market crash, and bet against the market to win big.
You did it once, hope you used those gains to position yourself for the loss you're about to take this year.
I agree the things you pointed are not as relevant as the inflationary bubble pumping stocks till they pop. Maybe you should read Patrick's famous housing bubble post that set the foundation for this site.
Good Morning Everyone:
We are seeing another selloff with shares dropping in price. What's going on? Employment numbers are great. Company profits are great. The housing market is great. Fuel prices drop daily. So why is everyone scared?
The simple answer is two-pronged. On one side you have dropping oil prices that are cutting revenues at major oil companies and in certain states that depend on selling oil for a big part of their revenues (Russia, Saudi Arabia, Azerbaijan, Brasil, Canada, Venezuela,etc) When times were good in the oil market, these giant oil companies and foreign governments borrowed trillions of dollars. Banks and big investment funds were literally "tripping over their shoe laces" to hand money to these entities. Now there is the serious possibility of major defaults on these loans made in good times. This could mean huge financial losses that could threaten the very existence of some financial institutions and investment funds.
The other prong of the problem is China. Its erratic stock markets are just a part of the problem. The other part is China's huge $28 trillion dollar debt.(Please see below.) If there was a major default on the huge debt it would have the same effect as a a major default in the oil sector.
The astute investors and money managers look out to the edge of the horizon and beyond. They see the real possibility of a "Category 5 storm" hitting us. I do not frighten easily. I am frightened now.
Bernanke: Don't Worry, China's $28 Trillion Debt is an "Internal Problem"
$28 Trillion "Internal Problem"
The blue ribbon award for ridiculous comment of the day goes to Ben Bernanke who dismissed China's $28 trillion debt pile as an "internal problem" only.
This revelation came from the Asian Financial Forum held in Hong Kong where Bernanke Downplayed China Impact on World Economy.
"I don't think China's economic slowdown is that severe to threaten the global economy," said Bernanke at the Asian Financial Forum held in Hong Kong.
Bernanke argued that the global economy was more troubled by a global savings glut, which had long been a drag on investments.
Bernanke also said the $28 trillion debt pile facing China was an "internal" problem, given the majority of the borrowings was issued in local currency. According to consultancy McKinsey & Co., government, corporate, and household debt in China had already hit 282% of the country's gross domestic product as of mid-2014.
Bernanke said the correlation between different markets is higher than that between markets and the economy. He pointed out that worldwide market selloffs in times of distress was natural due to global asset allocations. "The U.S. and China are not as closely tied as the market thinks," Bernanke said.
Contrary to Bernanke's views on the global impact of a Chinese slowdown, the IMF said in its latest World Economic Outlook Update released on Tuesday that "a sharper-than expected slowdown in China" was a significant risk that would bring "international spillovers through trade, commodity prices, and waning confidence."
Savings Glut Question
Actually, I have to ask: Which is more ridiculous: Dismissing $28 trillion debt as an "internal problem" or proposing $28 trillion debt is indicative of a "savings glut"?
Mike "Mish" Shedlock
Read more at http://globaleconomicanalysis.blogspot.com/2016/01/bernanke-dont-worry-chinas-28-trillion.html#cEbs8T6KDkkJVeEh.99