Bad news for the stock market.

Darin · November 9, 2011 12:37AM

There's a small Pacific island, 1.3 square miles in diameter, suffering an economic meltdown. Mom's diner closed down today, US stock market down 300 points on the news.
Maybe I am stupid to have money in the stock market.
Greece, Italy, this crap gets old day after day.

ricko · November 9, 2011 1:24AM

Europe is on the brink of financial disaster and there appears to be no way out. The coalition was doomed to failure from the start. There is no way those countries can put aside their cultural identity and act as one. Of course, the U.S. is not in a great position right now either. Cheers, RickO

JCMhouston · November 9, 2011 1:32AM

Down days (or weeks or months or years) make for a great time to pick up some excellent dividend yields. SInce the 2008 crash we have picked up Chevron, Dominion, Pfizer, Unilever, Intel, Microsoft, etc. etc. at excellent sale prices. A lot of the stocks we are holding I would not buy at todays prices, but I will pick up more if there is a major retreat.

renman95 · November 9, 2011 2:15AM

Merkel wants a New Europe

Darin · November 9, 2011 3:01AM

<< Down days (or weeks or months or years) make for a great time to pick up some excellent dividend yields. SInce the 2008 crash we have picked up Chevron, Dominion, Pfizer, Unilever, Intel, Microsoft, etc. etc. at excellent sale prices. A lot of the stocks we are holding I would not buy at todays prices, but I will pick up more if there is a major retreat. >>

It makes it a lot more bearable in such a volatile market getting that nice quarterly dividend. I have some money to invest but I don't want to buy at todays prices either so I think I'll buy some more silver this week or next.

ksammut · November 9, 2011 5:20AM

I sold several hundred thousand dollars worth of stock two weeks ago. Except for my precious metals part of my portfolio, the bigger part of my portfolio was already in cash. I see a much bigger drop in equity prices. Do not know if we will see a bottom in a few months or in a year or two but will wait until my gut and experience tells me that it is the right time to get back in. Until then, I will keep adding to my silver and gold stacks each week.

I fear things will get very ugly not only in Europe but here in the States and around the world. For me, too risky to be in now and I do not want to see a loss in principal. Will have that much more to invest at lower prices.

JCMhouston · November 9, 2011 5:31AM

<< Will have that much more to invest at lower prices. >>

I don't want to push any particular investment scenario, but make sure you look at all the opportunities, and opportunity costs. The prospect of very high inflation rates, or the possibility of deflation, has to be taken into account when plotting out your long term decisions. Who's to know what a dollar will be worth a year from now? All of us have different things that motivate us in investing and our situations are all different, so I would expect to see our investment strategies differ.

I remeber when Chrsler was going bust back in the late 70's or early 80's and its share price got down to below $3. My dad borrowed every penny he could to buy stock. He decided the government couldn't let them go bankrupt since they were the only supplier of certain pieces of heavy armor, and even if it did go bust all it meant was he would still have to work until he died which he was going to have to do anyway. I'm not willing to take that kind of all or nothing risk, but for him at the time he thought it reasonable and luckily it worked out since he sold it all in the mid-30's range within a couple of years.

MsMorrisine · November 9, 2011 5:45AM

Warren Buffet said "this isn't 2008"

Well, in 2008, the market was taking major banks out to the woodshed one at a time in a systematic manner... even MS and GS were going down... it just didn't happen to them as much because they were the last 2 on the list.

Now, we have major eurozone economies being taken out to the woodshed one at a time.

Greece gets stabilized and Italy is next.

Italy ain't going to get rescued so easily, however if it gets stabilized then we will see the next country in line to come under fire.

This is quite a lot like 2008. The market is taking countries down. I guess the good thing (?) here is that these guys can ask for """voluntary""" write downs and the country isn't going to go away.

Unfortunately, the spill over to banks and financial institutions is going to get ugly.

I'm not will to go in on any bank or financial stock right now.

johnny9434 · November 9, 2011 5:58AM

its not over yet. theres still spain, portugal and ireland to start. china is complaining as well. be careful out there and keep your powder dry

pf70collector · November 9, 2011 5:58AM

All cash now in my 401K. The danger is inflation will erode it. If I put it all in stocks it could lose half its value. I think the DOW has a better chance at 6-7K than 14K right now. PMs seem safe for me now. I been stacking since 04, buying more PMs than investing in the stock market. Seems to have worked out so far.

cohodk · November 9, 2011 6:53AM

The danger is inflation will erode it

The inflation will be in the value of your dollars.

Dow-30 and SPX trading at 2.8x and 2.5x book value respectively. Your dollar will buy a lot more stock if both indices go to 1.5x BV.

yellowkid · November 9, 2011 6:58AM

I have a large part of my portfolio in the market. Things seldom turn out as we expect them too, and diversification seems to give me the best chance at accumulating worth over a period of time. I had twenty great years of stock growth while the PM market was in the doldrums, and I believe there is still money to be made "on paper" if you invest correctly. I do think the current economic climate behooves one to keep a portion of their assets in metals, but if you put all your money on the nose of that nag you better hope he comes in first.

Spooly · November 9, 2011 7:12AM

I almost bought back in after the market closed above the 200 avg. Glad I didn't...... market seems to have more "risk" than "reward" right now. Buy Gold

streeter · November 9, 2011 9:29AM

Metals have been good to me. I've been taking profits for over a year and am happy to be not so heavy in them.

However, AG land is too cheap to pass on right now and BTW it throws off income.

Certain stocks seem TOO CHEAP so I took some bait...just not much. Stocks where I do business with the companys and have a good feeling that they are oversold right now. Only time will tell.

MsMorrisine · November 9, 2011 1:15PM

first question right off the debate tonight.

Italy!

2 days ago Italy's 10 year debt was about 6.5%, under the feared 7% "unmanageable level."

Now it's over.

What changed???

The market... nothing more.

Sure Burlesconi and the gov't are a bunch of politico bureaucrats, but we knew that all along! Why wasn't Italy's debt 7% months ago???? Italy was supposed to have a "weak but living" economy capable of slight growth. We weren't supposed to be worried. Now? Worry! 7%+ == trouble!

what changed?

now it is a self-fulfilling prophecy.... the debt gets dumped and we are required to worry.... and it spreads thus....

Who is next? I sure wish I could short Spain's debt. (France and Germany's, too, for that matter)

To me this is all a market driven crises in Italy. It seems like a great and sure fire way to make billions.... take an economy that's TBTF then short the crap out of their debt such the yields soar to levels the country can't handle. Then, suddenly, everyone wants to sell the debt. Instant crisis, and instant profits.

My big question is which country is next to go to the woodshed?

pf70collector · November 10, 2011 6:08AM

I would rather invest in individual stocks. My 401k only allows me to buy mutual funds, not metals at all. I only contribute to get the match from my employer and to lessen my income taxes a little.

stevek · November 10, 2011 3:37PM

I keep telling people, this is not your father's recession whre it was always rosey afterwards, just a question of when...this is unchartered waters and not in a good way, and that's what makes it so dangeous.

But I'm an optimist, I still have hope as long as we get the changes that are needed in the fall of next year.

KUCH · November 10, 2011 9:30PM

<< I keep telling people, this is not your father's recession whre it was always rosey afterwards, just a question of when...this is unchartered waters and not in a good way, and that's what makes it so dangeous.

But I'm an optimist, I still have hope as long as we get the changes that are needed in the fall of next year. >>

I couldn't agree with you more. It's the government ie, Government Debt Crisis. The government has NO idea how to create private sector jobs and they no nothing of economics. They just bashed/nixed the pipeline to Canada. (we would have had 20,000 jobs)

Government is like a octopus, with tentacles that suck the life out of capitalism. I like my octopus grilled.

Coyn · November 12, 2011 2:45AM

<< But I'm an optimist, I still have hope as long as we get the changes that are needed in the fall of next year. >>

What change is that?? Maybe a French revolution type event might help but if your thinking that the musical chairs of changing out Democrats to Republicans and back is any real change, that's delusional.

We have a two party dictatorship and changes possible for 2012 elections don't change a thing.

pf70collector · November 12, 2011 8:57PM

But the stock market is at 12, 100. Just 1900 pts away from the meltdown. Is the economy the same as it was pre 2008 bubble? Europe debt is backed up by more debt. Socialism has failed. Nothing has changed. We are so connected to Europe through both Central Banks that we will not be immune do their collapse.

MsMorrisine · November 17, 2011 7:01AM

<< Who is next? I sure wish I could short Spain's debt. (France and Germany's, too, for that matter)

To me this is all a market driven crises in Italy. It seems like a great and sure fire way to make billions.... take an economy that's TBTF then short the crap out of their debt such the yields soar to levels the country can't handle. Then, suddenly, everyone wants to sell the debt. Instant crisis, and instant profits.

My big question is which country is next to go to the woodshed? >>

OK... Spain has hit the radar...

now who is next?? I'm not sure. I wan't following Ireland's and Portugal's story closely enough to know if they will quickly come back on the top of the worry list nor not.

'

If things continue, the pile on trade will fulfill its own prophecy. weaker players in the eurozone will be brought under fire and we'll see more "voluntary" actions on behalf of these countries.

As it seems right now, the winning trade is dumping on these weak countries.

Expect more volatility in the markets and fear of a global economic crisis that will spread beyond europe to asia and the americas.

All that needs to happen in the market is the continued selling of eurodebt. Is it deserved? Who knows. And we may never be certain.

I am certain that if the debt selling continues, it will absolutely cause an economic crisis and further "voluntary" non-defaults.

MsMorrisine · November 17, 2011 7:24AM

I am also certain that enough selling could occur to cause a crisis even if a crisis would not have otherwise happened.

(Ireland was once said to have gotten their house somewhat in order... I'm not sure about Portugal... so maybe Portugal is next??? I'm unsure on the next one.)

cohodk · November 17, 2011 7:31AM

now who is next??

I've been warning of Belgium debt yields in the Econ thread for over a week now. Over 5% in Belgium, and France will go to 4%. Then both make headlines and the vigilanties come out in full force. France will push over 4% on the upcoming downgrade to their debt.

MsMorrisine · November 17, 2011 7:33AM

eventually, even France, Germany and the UK (despite not being in the Eurozone) will be put undwr the magnifying glass to burn.

it's just a matter of the order they will be taken down.

Konahead · November 17, 2011 4:19PM

<< All cash now in my 401K. The danger is inflation will erode it. If I put it all in stocks it could lose half its value. I think the DOW has a better chance at 6-7K than 14K right now. PMs seem safe for me now. I been stacking since 04, buying more PMs than investing in the stock market. Seems to have worked out so far. >>

Wow you sound exactly like me.

fishcooker · November 17, 2011 9:03PM

He decided the government couldn't let them go bankrupt

And then there is GM.

grip · November 18, 2011 2:36AM

Two steps forward,three back.When does it end

Baley · November 18, 2011 4:22AM

Starting Dec 22nd, 2012, (or sooner) we might start moving 3 steps forward for each step back, not necessarily for "the stock market" but possibly for stocks of companies with strong earnings momentum, bullish options sentiment, and aggressive insider buying

Kd5ddo · November 19, 2011 3:08AM

What worries me isn't WHEN greece defaults, its how it gets handled by the Euro zone. Removal from the Euro, kicking the can down the road, austerity, et...

But even with that being said, most of this hoopla has been in reference to fairly small countries with high debt to GDP. Greece at over 160%, Ireland at and Portugal both nearing 110%. But Italy is going to be the biggest test. With an economy 7x that of greece, and 3x of the three above combined, this is going to be interesting player in all of this. Hell, its the 7th largest economy in the world...

How Greece gets handled is going to be an example for how the larger economies get handled by the EU... I don't think its going to be pretty for anyone.

I've been trimming my portfolio of equities and I sit at around 15% unhedged equities, the rest in cash (or equivalent) or Metals... Im bracing for the storm that may still be years away as they continue to kick the can further down the road. The hard thing is that the preverbal 'can' just gets bigger and bigger after each kick...

RedTiger · November 20, 2011 1:00AM

<< eventually, even France, Germany and the UK (despite not being in the Eurozone) will be put undwr the magnifying glass to burn.

it's just a matter of the order they will be taken down. >>

If all those countries go, the U.S. will not be far behind. I started a thread about the point of no return for the U.S. bond market. If U.S. interest rates return to an average level, the current debt is near unsustainable. Shoot to above average as most markets tend to do after a low period, and the U.S. gets to the same place as many of the other countries. $15 trillion times the interest rate is the annual amount to service the debt. At 7% that is a trillion a year. At 14%, as rates once hit, it is $2 trillion or about equal to all the money that the Federal government takes in each year, aka a point of no return.

When the economic house of cards fall down, world war is on the horizon. Politicians rally the populace to blame other countries and sabers come out. Who will fight who, and who will side with who, becomes the third order question. The fourth level is which countries win, how many dead and wounded (25% casualty levels are likely in some countries), which countries get reorganized, or split into parts (Germany post WWII), or even possibly wiped off the maps (many countries after WW I).

Losing a major war is the kind of historic event that can lead to a major currency going to zero. Rarely can economic events alone take down a major currency. Those that like to talk about Germany in the 1920s rarely mention World War I and the Treaty of Versailles as being necessary for that economy to unfold. For those that doubt me, read up more on world history. A focus on economic games alone is folly. Major change, such as a currency going to zero, usually involves much more than economic paper shuffling. Other major catalysts can be a revolution, or a major famine or major plague, each of those three seem increasingly likely, what with the massive protests in many countries, the way crops are grown in modern times, and the increasing ease of making bio-weapons.

As for the original post, it is par for the course that when the stock market hiccups there are threads like this, but when gold or silver have a major down day, or down week, it is either crickets chirping or chatter about a "buying opportunity." Be careful about those buying ops, because when the major bear comes (and it will come to bullion markets for sure), averaging down on every dip is one of the worst strategies. It is parallel to shorting up moves during a powerful bull market. Both lead to the poor house for average people.

cohodk · November 21, 2011 1:07AM

Those that like to talk about Germany in the 1920s rarely mention World War I and the Treaty of Versailles as being necessary for that economy to unfold

I always mention it, but who listens to me?

As for the original post, it is par for the course that when the stock market hiccups there are threads like this, but when gold or silver have a major down day, or down week, it is either crickets chirping or chatter about a "buying opportunity

Couldnt agree more!!! In April, the oldest post on page 1 of this forum was no more than 6 hours old. Now posts from 3 days are still on page one. Human psychology is always the same no matter the asset class. The gold market is no different than the stock market.

Good post RT.

jmski52 · November 21, 2011 1:45AM

RT, you and cohodk have me sufficiently worried not to be out there buying precious metals willy-nilly. This could be like 2008, but it could get worse than that -
The question still remains, precious metals - or paper? Fewer and fewer places to run & hide.

gsa1fan · November 21, 2011 1:48AM

ETF's are stocks

Gold is HEAVY METAL

cohodk · November 21, 2011 2:02AM

<< RT, you and cohodk have me sufficiently worried not to be out there buying precious metals willy-nilly. This could be like 2008, but it could get worse than that -
The question still remains, precious metals - or paper? Fewer and fewer places to run & hide. >>

Dont be "worried". Just be prudent.

PerryHall · November 21, 2011 2:08AM

<< 

<< All cash now in my 401K. The danger is inflation will erode it. If I put it all in stocks it could lose half its value. I think the DOW has a better chance at 6-7K than 14K right now. PMs seem safe for me now. I been stacking since 04, buying more PMs than investing in the stock market. Seems to have worked out so far. >>

Wow you sound exactly like me.

>>

Ditto---there just aren't that many options out there to safely park your assets to preserve what you still have.

pf70collector · November 21, 2011 6:31AM

World War III or world forgiveness of all debt? If there is a war, who do you see the major players to be. China and Russia vs. the U.S. and all of Europe? Another Cold War, Communism vs. Democracy? You can scrap all plans for a global economy.

MsMorrisine · November 21, 2011 7:32AM

<< $15 trillion times the interest rate is the annual amount to service the debt. At 7% that is a trillion a year. At 14%, as rates once hit, it is $2 trillion or about equal to all the money that the Federal government takes in each year, aka a point of no return. >>

If anaconda on the US Coin forum can be trusted to post when we crossed $14trillion in public debt....

that was in January of this year.

We just crossed $15 trillion in the past week.

We're spending over $1trillion a year as it is.

And our idiots can't even get close to "austerity." The best we got is "agree to disagree." Lame !@ers.

MsMorrisine · November 21, 2011 7:38AM

<< RT, you and cohodk have me sufficiently worried not to be out there buying precious metals willy-nilly. This could be like 2008, but it could get worse than that -
The question still remains, precious metals - or paper? Fewer and fewer places to run & hide. >>

I can't believe people are running to Treasuries.

As mentioned some time ago, when the rest of the world realize they don't need to be panicked about their own situation in their own countries... just the US (and Europe) .... they may just stop buying gold and silver for protection. They may think they don't need the protection of a dollar-denominated PM.

Well, that could be starting to happen now. The frenzied panic buying of gold in the face of ecnomic collapse is not happening like it has in the recent past. Of course, that won't stop the collapse from happening. It just means that past buyers have found security in their own country or non-collapse countries.

Perhaps now is the time to start buying other currencies????

MsMorrisine · November 21, 2011 7:58AM

<< What worries me isn't WHEN greece defaults, its how it gets handled by the Euro zone. Removal from the Euro, kicking the can down the road, austerity, et...

:
:
How Greece gets handled is going to be an example for how the larger economies get handled by the EU... I don't think its going to be pretty for anyone. >>

austerity should be welcomed. It is not kicking anything down the road, it is part of the solution.

We Need Austrerity In The US!!!

Yet both sides are too afraid to utter the words.

When the Republicans want large spending cuts the Democratic leadership in Congress acually said they were "starving the government!!!" Do these morons know no waste??? Do they even know the words? Do they even know the words, "cut back" or "austerity"

It makeds me sick to my stomach and it's actually laughably ridiculous to hear them say that. Pathetic.

Yes. How Greece got handled looks to be a road map for the rest.

"voluntary" debt relief seems to be in the works.

I wouldn't hold a financial institution investment vehicle if it were given to me. Well, except leap puts.

cohodk · November 21, 2011 8:19AM

they may just stop buying gold and silver for protection. They may think they don't need protection.

I wouldnt say they dont think they dont need protection, but rather that the protection is not as cheap as it once was. There becomes a point at which the insurance premium can cost more than what you are trying to protect. Gold and silver can be devalued just as easily as fiat currencies. And by this I dont mean that the price drops vs the dollar, although I am sure there are 1000s who are questioning the value of protection of $50 silver.

MsMorrisine · November 21, 2011 8:28AM

Well, I edited it to make it PM specific.

They may seek protection in their own country.

One thing about PM protection is the price. If the dollar doesn't crash, then the price of that PM protection does go up.

And all of this makes me question PM protection as you mentioned. Some may see safety elsewhere besides PMs. If/when that happens.... bye bye PM prices.

Bad news for the stock market.

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