Its a massacre

[qcomer]

FINALLY, the much awaited correction that all folks had been talking about, arrives. But nobody expected this. NAZ/DOW/SP500 all got slaughtered today falling by record levels (3.5% average). DOW went down by 200 points in a minute. Everyone wanted out at the same time.

Greenspan said yesterday that world markets are uncoupled and that he expects a recession in US by year end 2007 but it shouldn’t affect global economy. What a joke this proved to be as Chinese stocks plunged by fear of US recession, which spooked stock markets all around the world. China down by 9%, Europe down by 3%, US down by 3.5%. Even so called safe haven of gold got battered by 3.5%. Probably the only bright side was that Fed funds rate cut probability jumped to 90% in August and bonds got major boost.

Yamamoto posted a newsletter on yahoo just a week ago advising folks to buy RYURX (inverse SP500). I bought some (5% of portfolio) to diversify my portfolio but gutted that I didn’t buy more. Where is Poway Seller 🙂

[Borat]

Why did gold go down? You’d think that it would at least remain steady in times like this. I bought GLD and XOM THE DAY BEFORE this stupid crash. I swear, if someone created a fund to short everything I purchase they’d be very wealthy indeed. I just wiped out 6 months worth of CD returns today. Ugggh.

[ucodegen]

Gold is for inflation, not recession. It does not produce anything, just ‘trys’ to keep a constant value. It is also a commodity that depends upon demand from the commercial side as well.

The real question here.. is what is really safe?? Foreign got hit, US got hit, gold took a hit, US Currency has been taking hits…

[an]

Wouldn’t bond be the safest right now?

[gold_dredger_phd]

The yen is undervalued. Look for a Yen ETF. The Economist says it’s undervalued by 30% relative to other currencies. The carry trade will unwind eventually.

[poorgradstudent]

1) The Shanghai market tanked on the Chinese government tightening its monetary policy. It had nothing to do with fears of a US recession. The across the board falls in Europe and the Americas were in reaction to China’s drop. As everyone on this board should know, correlation is not the same as cause.

2) I feel pretty strongly gold was unfairly punished today, especially considering that the dollar fell. Seems like investors threw out the baby with the bathwater, and there may be a huge buy window.

I pulled out about half of my trading portfolio before half of today’s losses had hit. I’m going to be watching closely for a signal to buy back in, but for now I’m happy to keep it on the sidelines.

[gold_dredger_phd]

Stocks, like housing, have reached a permanently high plateau!

The market was overvalued anyway, both here and in China.

[kewp]

Um, my guess regarding gold is that since most folks are buying it via a market transaction it ends up on the chopping block when there is a crash, just like everything else. Don’t underestimate how much of trading is automated these days either; I doubt a computer program has much of an emotional involvement with a yellow metal.

The difference I would hope is that gold has a harder ‘bottom’ than most investments. Still doesn’t mean it can’t correct like everything else.

I’m starting to think everything is in its own bubble to some extent due to all the equity chasers out and about and we are going to see a major correction across the board.

[an]

I haven’t seen a market wide decline like this since 2001. I’ve learned my lesson then, so I’ll stay on the sideline w/ my cash until I see a true turn around. The whole market just doesn’t crash 3-4% in one day and go back up afterward like nothing happened. Rising tide raise all boats, sinking tide… well, you know the rest.

[Anonymous]

>I bought GLD and XOM THE DAY BEFORE this stupid crash. I swear, if someone created a fund to short everything I purchase they’d be very wealthy indeed. I just wiped out 6 months worth of CD returns today.

Actually, Borat, there are people who short everything you buy. They are called hedge funds and that’s how they make their money. For every winner, there’s got to be a loser. Whatever you think or learn today, the professionals thought or learned yesterday. The only way to beat professionals is to do what they can’t do. Namely, find something with good long term value, but currently underpriced and likely to stay underpriced for a long time, then buy this something and hold until the price rises to the true value. Professionals can’t wait years and years to see their investment pay off, the small investor can.

If you lack the ability to spot undervalued assets, or you lack patience to wait a long time (as in many years) for those assets to rise to their true value, then stick to CDs unless you want to keep making the hedge fund operators rich.

As for what is undervalued today, try real-estate in small towns in the midwest.

[Borat]

Yep, you’re right on that one frprovis. In the back of my mind I know this, but every few years I outsmart myself and dip my toe back in with a couple of these “investments”. The story always ends the same… ha ha ha. Okay I’m not actually laughing anymore 🙁

[(former)FormerSanDiegan]

I’m an optimist:
Bonds had a pretty nice rally today !

[Anonymous]

Is there any consensus here about what will happen tomorrow?

[kewp]

“Is there any consensus here about what will happen tomorrow?”

The news is reporting that supposedly a software “glitch” caused the DOW to drop a hundred points in a few minutes, which supposedly caused a panic.

If thats truly the case I can see some big gains tomorrow as traders rally to buy back in.

Unless, its a bunch of bullflop.

[4plexowner]

The meltdown started in China – China is concerned about the rampant speculation occurring in their stock market – poor farmers are hocking their few belongings so they can ‘invest’ in the stock market (can you say ‘bubble’ or ‘mania’?) – China is taking active steps to curtail this behavior

Here are a few quotes from Stratfor’s Global Market Brief today:

> In January, the number of total traders on the Chinese exchanges grew by 1.38 million, an increase of 134 percent from a month earlier

> Third, trading in 800 of the 1,400 stocks on the Shanghai exchange was suspended during the sudden drops Feb. 27; they have a lot farther to fall, even without any engineered drops caused by panicky selling

~

Note in the first quote that the MONTHLY increase was 134%

That last quote makes me expect more declines in China’s market – trading was halted in 57% of the stocks today but there was still a 8.5% decline – what do you think will happen when trading resumes in those stocks?

[Author]

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