5 Reasons for the stock market drop.

[sinkingfeeling]

http://www.msnbc.msn.com/id/44006076/ns/business-eye_on_the_economy/

Deficit doubts
U.S. slowdown
Eurozone jitters
Corporate profits
Consumer pullback


I have a question for those who have been in the 'market' for longer than 30 years. What happened in this country that the market now acts like a baby? Years ago, the value of the stock was based on how well a company preformed and I don't recall it going on binges and then crashing on rumors and such.

[spanone]

1. american politicians willing to destroy american economy over idealism

[TomClash]

2. It always operated on rumors

Gordon Gekko is what happened.

[matmar]

3. Jobs numbers coming out tomorrow....

Consumer spending is 70% of economic growth and consumers aren't spending.

No demand equals no growth

[rurallib]

4. constipated and needed to take a crap.

[tridim]

5. I would invest in the market if it were based on company performance.

I will never invest in what this market has become. It's way more rigged than casino gambling.

[cbdo2007]

10. Company performance + dollar cost averaging = stock market winning strategy

This is the only formulat that has worked for the past 100 years and has produced the best gains. No gambling involved.

[xchrom]

6. I think the euro zone 'jitters' are very real & spreading.

Stagflation is about the best the u.s. Is going to do in the near term & that ain't good.

[fishbulb703]

19. I agree, Europe hasn't hit bottom yet. nt

[Lochloosa]

26. +1000

[banned from Kos]

7. Answer - speed and access to cheap brokers

volatility reflects the real-time nature of the world today.

30 years ago you had to go home - watch the news and call your broker the next day.

[Yavin4]

8. Markets and Banks Use To Be Heavily Regulated

Banking was a boring occupation. Steady income. Conservative. Buttoned down.

Today, it's like Vegas without the comp penthouse suite, free drinks, and Wayne Newton. Finance has been invaded by quant jocks who believe that by studying past data, one can normalize patterns and predict future events. Problem is, very few things that happened in the past will happen in the exact same way in the future. In addition, they're studying economic data from a far different economy than what it is today.

[napi21]

9. The binges are caused by the Reagan tax rate reductions.

Years ago, the top rate was very high...90%, 75%. Reagan drastically reduced them. When the rates were high, corporations reinvested in their businesses instead of taking all the profits and paying uch high rates. After the reduction in rates, and the addition of hundreds of tax loopholes, the officers just take all the profits for themselves. that causes radical swings in the market.

[Dappleganger]

11. Emotion

It was way overvalued, anyway. I am sorry for those who lost money (we did too).

[Warpy]

12. That was before the flood of easy money to the monied caused

the stock market to be hyperinflated, which in turn caused people to focus more on paper profits than on income potential from dividends. That's the reason for the panic: they've been caught with their pants down, holding a bunch of paper that doesn't generate income and the prices are falling fast.

I haven't been in the market for 30 years, but I've paid attention to what my dad was doing for 55 years. He invested for income, not for paper price, and although he looked like he was playing the ponies when he watched the CNBC stock ticker with the sound off, he didn't base any of his decisions on fear. He dumped stocks because they performed poorly, not because of their face value.

My own feeling is that the market has been overinflated for 20 years and that it will eventually settle out around the 7000 mark in the DJIA.

Right now, people who have counted on paper inflation to build net worth are hitting the panic button and that is likely to continue in the short term. How low will it go? Can't say. However, if you're a very small investor who can't afford to lose a dime, insured CDs might be the way to go. Then again, if you have a stable income, waiting it out might also be a good idea. You never know what the right thing to do was until it's all over.

[JDPriestly]

13. It used to be about investment. Now it is about gambling.

Short-term trades should be taxed.

[FarLeftFist]

14. s p e c u l a t i o n

[cottonseed]

15. Electronic Trading.

All this stuff is triggered these days. Hysteria by software.

[global1]

16. Here's My List Of Five......

1. Boehner
2. McConnell
3. Cantor
4. Kyl
5. The TeaBaggers


We might want to throw Grover Norquist into the mix too.

[udbcrzy2]

21. Yeah, I consider Grover and the others part of the Teabaggers

[JoePhilly]

17. I've only been in for 24 years ... is that ok?

Any drop or jump in the DOW must be examined in a long term context.

So ... if the DOW jumps 1000 points in 2 weeks, you should NEVER use that as your basis for potential "loss" down the road.

As an example ... last summer, the DOW was at 9800. Today, after this "crash", its at 11,300.

The DOW was 14,000 (for 4 minutes in 2007), ~6500 in march of 2009, and 12,500 and more this year.

While Bush was President, the DOW average was between 10,000 and 11,500. The spike to 14k lasted minutes. And we recovered from the crash down to 6500 ... and where did we go?

Right back to the 10,000-12,000 range.

The market thrives on suckers buying in when the market is HIGH, and then taking their money in one of these "crashes" happens, because the suckers sell LOW.

The suckers get in late, and they sell early.

And then, the reason you see these "binges" and "crashes" happening faster is that the internet spreads the "info" faster.

And info about "panic" spreads very fast.

[AngryAmish]

18. Each of the reasons are wrong

Fact of the matter is we do not know why. And anyone who tells you otherwise is either 1)lying or more dangerously 2) thinks they are right.

[Broderick]

22. Thank you!

[Karmadillo]

20. QE2 is over and QE3 has yet to make its appearance?

nt

[MrTriumph]

23. Oh, exporting jobs to Cheating China doesn't make the list?

x

[treestar]

24. Corporate profits couldn't drag it down

Unless they were decreasing.

[silverlib]

25. "Never invest money in the market that you cannot afford to lose"

That's what it was like thirty + years ago - according to my father.