Dow Plummets 777 - Henny Penny is Right.

[vintner Super Moderator Find all posts View Profile Close vintner]

I think that's a little premature. Right now, the stock market is still higher than it was a mere 5 years ago.

And lower than it was 7, 8 years ago. If you set up a 5 year chart...we are well below those levels. You have to go back to March of 03 (on a 10 year chart) to find lower levels on the $DJI.

It was first at theses levels on the SPX in May of 1997, the SPY in Aug 97, and June of 97 on the DOW. We have been trending sideways since then, little up, a little down, a lot of sideways but never this low since the '02 recession. So...does this mean we have the same money that we did back then?

According to Fast Money, this is the third worse recession. But that was yesterday, today the market is down over 500 points again.

[Elan Senior Member Find all posts View Profile Close Elan]

I'm still net short the market and have been doing nicely, but I did partially close some of my short positions today. I expect a rally (short term, and not enormous in magnitude) in the near future.

[short Senior Member Find all posts View Profile Close short]

Perhaps the market was overpriced.

The housing market in California was overprice. Low interest rates, poor lending practices drove prices up beyond realisic values. The fact that housing is values are dropping is not necessarily a bad thing but just a readjustment(correction) in the market.

This could be true of the stock market also. All we have heard is that you must have money in the market. The market will always go up over time. Now some folks might think they have been given a bill of goods. Maybe they have and maybe they have not.

This could actually be good for the economy. This money coming out of stock market will be going into banks which then need to loan it out to make money to pay people interest. This may actually help the economy in general to improve liquidity and borrowing

Just like the housing market, some people have to lose while other will win.

Short

[vintner Super Moderator Find all posts View Profile Close vintner]

Wish I had been playing the ETF shorts. Some good examples:
Short Dow 30 ProShares DOG
Short Russell2000 ProShares RWM
Short S&P 500 ProShares SH
Ultra QQQ ProShares QLD
Ultra S&P 500 ProShares SSO
UltraShort MidCap 400 ProShares MZZ
UltraShort QQQ ProShares QID
UltraShort Russell MidCap Growth ProShares SDK
UltraShort Russell1000 Growth ProShares SFK
UltraShort S&P 500 ProShares SDS

[Elan Senior Member Find all posts View Profile Close Elan]

Wish I had been playing the ETF shorts. Some good examples:
Short Dow 30 ProShares DOG
Short Russell2000 ProShares RWM
Short S&P 500 ProShares SH
Ultra QQQ ProShares QLD
Ultra S&P 500 ProShares SSO
UltraShort MidCap 400 ProShares MZZ
UltraShort QQQ ProShares QID
UltraShort Russell MidCap Growth ProShares SDK
UltraShort Russell1000 Growth ProShares SFK
UltraShort S&P 500 ProShares SDS

I have QID, SDS and DEE (2x commodity short). Also had SKF (2x financials short), but no longer.

[vintner Super Moderator Find all posts View Profile Close vintner]

That was just a short list of shorts. There are better than double that number that are on my list of easily traded shorts.

[JWC Super Moderator Find all posts View Profile Close JWC]

Is this still a paper loss?

In my case it is still mostly a paper loss. My portfolio is down about $400,000 from the peak last fall. However, my income stream from my portfolio is protected and I haven't had to sell anything at a loss. My portfolio is professionally managed.

We very well could be at the bottom now. One of the things that indicates the bottom of a bear market is extreme volatility in the last few days which we witnessed yesterday. Up until yesterday the market has pretty well been in a free fall for the last several days. Yesterday the market had a swing of over 1000 points on the DOW going down -700 and then back up +300 and then settling at a 128 point loss. I am not saying this is the bottom but that is definitely one of the major signs of a bear market bottoming out.

The market was definitely NOT overvalued and is of course very undervalued at this time. There are no fundamental reasons for the free fall other than fear which is very prevalent and fueled by the media. There actually are some good things that have occurred such as the fall in commodity prices, such as petroleum, wheat, corn, etc, etc. This will result in lower inflation which was gathering steam prior to the fall of the commodities. Now our biggest fear could be deflation.

Next week could be very interesting but we will just have to wait and see.

[3kids4me Super Moderator and Super Mom Find all posts View Profile Close 3kids4me]

However, my income stream from my portfolio is protected

JWC...curious...how is your income stream protected?

I put a third of my 401k in cash very early in the year, which of course is now way more than a third of my total portfolio since the rest has declined dramatically. I'm down about 30% in total from last fall even with that (former) third in cash. I personally don't think we are anywhere near the bottom yet so I'll be leaving that cash in cash for awhile. I have, however, moved some of the remainder out of the higher risk funds into lower risk ones to minimize further losses.

[JWC Super Moderator Find all posts View Profile Close JWC]

JWC...curious...how is your income stream protected?

I put a third of my 401k in cash very early in the year, which of course is now way more than a third of my total portfolio since the rest has declined dramatically. I'm down about 30% in total from last fall even with that (former) third in cash. I personally don't think we are anywhere near the bottom yet so I'll be leaving that cash in cash for awhile. I have, however, moved some of the remainder out of the higher risk funds into lower risk ones to minimize further losses.

You are in a different position than I am. I am retired and therefore I am only interested in protecting my income stream rather than growing my portfolio. My portfolio is designed to provide me with a comfortable living. My portfolio is very diversified with equities, REITs, Variable annuities, bonds etc. I would have to get into details of my investments which I don't wish to do on a public forum. I did not say that the income is guaranteed, only protected.

[Ryne08 Senior Member Find all posts View Profile Close Ryne08]

JWC, thanks I have enjoyed reading your threads. You have a great outlook on the market. Now is the time to invest while the cost per share are down on the stock market.

[Elan Senior Member Find all posts View Profile Close Elan]

I'm still net short the market and have been doing nicely, but I did partially close some of my short positions today. I expect a rally (short term, and not enormous in magnitude) in the near future.

Closed the rest of my Ultra Short ETF's this morning with the exception of DEE. I am net long the market now. It's far from clear sailing ahead, but I want to be long until there's a decent retrace at which point I'll be ready to short again, if warranted. Will be incrementally adding some long term (3-5 yr) long positions (value stocks) regardless of short term market direction.