what the hell is going on with our stock market

[duke62]

i am pretty much a construction worker who knows about hunting ironwork reefs and sexy time with wife :lol2: i dont understand what the hell is going on with the stock market and how trillions of dollars are poof goodbye.the dow lost over 600 points today with no end in site.im am very nervous as im sure millions of others around the world.what does this mean if hundred of thousands lose there jobs and cant pay there mortgage,is the banks going to forclose on all those homes and take their homes away.does the government help those in need of money.these are scarey times and i hope everyone here will be fine in the next couple of monthsd

 

[morphiii]

The market is unwinding all the nasty trades and a lot of hedge funds are forced liquidated. So everybody has to sell and that means we are going to go down a lot more until everybody is done selling.

All of the Lehman trades, Bear Stern trades all the AIG trades, all the WaMu trades, all the Wachovia trades will have to be unwind and sold.

Brace for a wild ride!

 

[duke62]

but what i dont understand is those companies are not part of the big 30 so why does this mess the market up so bad

 

[dsgray16]

Im not going to go out on a limb and tell people to buy here..BUT, i think if we didnt hit a bottom at close today we will see one in the next few days. The buyers will come back. The world is not ending!

 

[dsgray16]

but what i dont understand is those companies are not part of the big 30 so why does this mess the market up so bad

Blame GM (GMAC) for todays 650 point drop of the DOW

 

[reefman]

 

[skimacka]

I've been blaming GM for over a year now. What kind of company pushes large trucks and SUVs with oil prices the way they are? The same goes for Ford with their bragging about a Focus that gets 35MPG. I had a car 15 years ago that got 40. Is it no wonder that VW surpassed Ford this year for cars sold?????

Bottom line is not to panic. With Ford shares at $2.00 a pop I'm tempted to buy a C-note's worth. What's the worst that can happen?

 

[emmanuel]

how about all the corruption .
The politicians past the 700 billion bailout after there were so many extras put in for their buddies read the news papers why should the tax payers have to pay the price I'm no financial genius but I did buy a house with a mortgage I can afford not the big beautiful house that didn't need any work but the handy man special cause that's all I could afford at the time. After all the BS does anyone here really believe the government that this bailout is going to help the economy I don't . Look at AIG they get bailed out so they could go out and live like kings . Maybe I should refinance my house pull a couple hundred grand out of it and go buy that nice custom 3000 gallon reef tank I want and an escalade with twin turbo and that powered parachute I wonder if anyone will bail me out. It seems like all I see in the newspapers these days is bailout this and bailout that .Remember the 80's some call it the crack era I guess this is the bailout era . Now I'm all heated up.

 

[duke62]

this to me is one of the hardest times of my life.as a construction worker my whole life depends on banks giving loans to new construction steel buildings and bridges.with all this happening outlook for construction jobs look bleak.sure im working today but tomorrow is getting me nervous.with 2 kids and a mortgage my savings are gepending on these guys to fix this mess

 

[joseney21]

I just saw these pics today, posted by some guy that has been calling this kind of a drop on the market for some time now. some are saying it'll go down to 7k, others are saying it may go down further...

 

[joseney21]

how about all the corruption .
The politicians past the 700 billion bailout after there were so many extras put in for their buddies read the news papers why should the tax payers have to pay the price I'm no financial genius but I did buy a house with a mortgage I can afford not the big beautiful house that didn't need any work but the handy man special cause that's all I could afford at the time. After all the BS does anyone here really believe the government that this bailout is going to help the economy I don't . Look at AIG they get bailed out so they could go out and live like kings . Maybe I should refinance my house pull a couple hundred grand out of it and go buy that nice custom 3000 gallon reef tank I want and an escalade with twin turbo and that powered parachute I wonder if anyone will bail me out. It seems like all I see in the newspapers these days is bailout this and bailout that .Remember the 80's some call it the crack era I guess this is the bailout era . Now I'm all heated up.

the yes votes needed to pass the bailout were bought with pork. The average american was never taken into consideration. I believe the bailout is to help out the bankers and foreign investors. i also expect more bailouts to come.

 

[Aqua Pro Builder]

(1)i dont understand what the hell is going on with the stock market and (2)how trillions of dollars are poof goodbye.the dow lost over 600 points today with (3)no end in site.im am very nervous as im sure millions of others around the world.

(1)General Public loose confidence in the financial system and thus pull back their investment, so price of stock goes down. Ths most evident when Bear Stearns failed immediately upon the email "Sent to ALL" by Goldman Sachs. I personally think this incident deserve criminal investigation. And, greed-I will elaborate in the later paragraphs.
(2)As far as I was told in school, the financial system in US was built on a trust(credit) system. At the tme, every dollar printed was to have a 3 times the value in the system if the sytem is running properly. So the economy feels like we have 3 dollars at hand. For example, I wrote you a check of a dollar and you trust me that it will value at the bank, so send me product valued to a dollar immediately. But during the time you put the check to the bank and for the bank to take money out from my account there exist couple days lag. A dollar of business is created out of thin air for the couple of days. So with trillions of transactions going on, we got our money triple or may be even more. Think about buying a house, you promised to pay a certain amount and the house is now in front of you. You did not put cash except the deposit. The same goes for the bank too. The cash they give to the constructor may come from loans of another bank which trust them on a credit base too. This undertanding of mine may be outdated now, as the financial system have evolved.
(3)"no end in site" is ManhattanReefs which I foresee will run for a long. I am just messing with you.

what does this mean if hundred of thousands lose there jobs and cant pay there mortgage, (4)is the banks going to forclose on all those homes and take their homes away.does the government help those in need of money.these are scarey times and i hope everyone here will be fine in the next couple of monthsd

(4)The banks are foreclosing them and the government has no plan on helping those individual "poorly performed mortgage owners." That's what I have been critizing about the government bail out plan and the general media of magnifying the propaganda of the financial institute in putting the blame COMPLETELY on the mortgage owners. They do have responsibilities in this crisis but I think the financial big sharks carry more guilt. The financial tycoons are well educated, and licensed(licensed means they are supposed to know "what the hell is going on" in conducting their business), to know of the risks and they have been ripping the profits when the market is good. So, they continue the gamble. Both the "poorly performed mortgage owners" and the mortgage providers are running their business above their means and gambling. Why only help the rich and big institutes? The bail out plan could have been writen so that the mortage owners can get an emergency loan from the FED to pay the mortgage providers. However, this plan may take time to stablize the market so bailing out the big guys may be the quickest fix. But why not add some accountability build into the bill to make sure the financial tycoons are not running their business above their means, is what I have been questioning all along. Like France's chancellor, I have been yelling about "make the responsible be responsible." Finally, it's not that the private sector totally out of faith in the system but instead they are just waiting for the best chance to make even more money out of this mess. I don't blame them, they got no duty of that. They share no visions of saving the economy for the benefit of the public. Look at the recently preferred stocks sold by Goldman Sachs-private investor get preferred stocks while our government is not requiring the same in the bail out plans to buy ONLY preferred stocks of the failing companies. Why?

I have yet to hear any big shark being stripped of their license in misrepresenting their products, especially the structure ones which I am very against-I felt those products are gimmicks years back.

I bet, there are more tricks to save the economy and I will let the financial genius or tycoon chime in. LOL

 

[dsgray16]

Quote from guy I know that works on the floor of the NYSE:

"This is worse than a divorce, I've lost half my net worth and I still have a wife"

:splitspin

 

[Aqua Pro Builder]

Quote from guy I know that works on the floor of the NYSE:

"This is worse than a divorce, I've lost half my net worth and I still have a wife"

:splitspin

LOL

 

[JHOV2324]

Lmaoooo

 

[emmanuel]

Quote from guy I know that works on the floor of the NYSE:

"This is worse than a divorce, I've lost half my net worth and I still have a wife"

:splitspin

:lol2:

 

[Josh]

Regarding your question about foreclosures, rest assured that if you are making your payments you will be fine. If you don't have a mortgage that was part of the subprime mess, you will keep your house as long as you make your payments.

 

[aaron23]

this is my take on the market being a finance major and going to graduate very soon: in a nutshell i'll try to explain this crisis...

Basically the real estate and the mortgage crisis is the root of this issue.

The banks make loans for people to finance mortgages and homes and these loans are issued to people who for some reason have defaulted on those loans (many many people who were issued loans were unable to pay for them and were still given these loans). Before they had defaulted these loans, the loans are made into mortgage backed securities (these are loans that are pooled together and made into sellable and buyable commodities). These investments were "considered safe" but truely were not. So for those who have purchased these securities (investors) have claims on the principal and interest payments made by the borrowers of these loans (people who are financing for their homes). This insures these loans so the bank is protected and people can have a stake at the interest and such by buying the security.

Along with insuring these loans with these securities many companies have inflated and over valued real estate and mortgages for way more than they were worth. done over and over again prices are extremely inflated and here we are in this real estate bubble and it has burst. Corporations have much invested in real estate and mortgages and their fall is due to this coupled with the frozen the credit market, they are unable to find and fund short term operations since they are very illiquid (dont have much cash on hand and bank borrowing/lending is next to nothing).

So how does this have anything to do with the stock market, well these companies that are bought and traded on the stock market have significant investments in real estate and mortgages. when a crap load of investment banks and such go into bankruptcy because of these bad investments, it brings everything down with them. (This has lead banks to hoard their cash and seize lending). The inability for the federal government to act promptly knowing exactly what and how to do it drags everything down with them affecting everything and everybody.

This rush and downfall of all of these companies plus the inability to receive loans and the companies inability to sell their commercial paper (short term bonds to raise capital) sends these companies down hill because they cant do the short term operations they normally do (payroll or whatever it may be seizing and freezing the corporation and business in its tracks). Society generally not wanting to "lose" their lifetime investment and money want to be secure with their funds. This makes them withdraw from the stock market and this "panic" and selling of these stocks makes others tag along further decreasing and dropping the price of many of these stocks. basically the greater supply of these stocks and less demand drives the prices of these stocks down.

Now everybody (investors) being scared (lack of trust in the financial system) is withdraiwing their money and putting it nto banks for the FDIC now ensures 250,000$.

and here we are.... drop drop drop drop....



also to add, these bailouts are not only for the top cats at wall street and the CEO's at these huge corporations. Whatever happens with the financial sector impacts EVERYTHING AND EVERYBODY regardless if you are in it or not.

So these bailouts are a positive in my opinion.


thats basically the jist of it i believe. anything else to add?

 

[Killerdrgn]

You summarized the exact problems very nicely, but I think it's been said on the board several times now though.
But the million dollar question is though how do we solve the crisis? Identification of the causes of the problem is only the first step on a very long and painful journey.

this is my take on the market being a finance major and going to graduate very soon: in a nutshell i'll try to explain this crisis...

Basically the real estate and the mortgage crisis is the root of this issue.

The banks make loans for people to finance mortgages and homes and these loans are issued to people who for some reason have defaulted on those loans (many many people who were issued loans were unable to pay for them and were still given these loans). Before they had defaulted these loans, the loans are made into mortgage backed securities (these are loans that are pooled together and made into sellable and buyable commodities). These investments were "considered safe" but truely were not. So for those who have purchased these securities (investors) have claims on the principal and interest payments made by the borrowers of these loans (people who are financing for their homes). This insures these loans so the bank is protected and people can have a stake at the interest and such by buying the security.

Along with insuring these loans with these securities many companies have inflated and over valued real estate and mortgages for way more than they were worth. done over and over again prices are extremely inflated and here we are in this real estate bubble and it has burst. Corporations have much invested in real estate and mortgages and their fall is due to this coupled with the frozen the credit market, they are unable to find and fund short term operations since they are very illiquid (dont have much cash on hand and bank borrowing/lending is next to nothing).

So how does this have anything to do with the stock market, well these companies that are bought and traded on the stock market have significant investments in real estate and mortgages. when a crap load of investment banks and such go into bankruptcy because of these bad investments, it brings everything down with them. (This has lead banks to hoard their cash and seize lending). The inability for the federal government to act promptly knowing exactly what and how to do it drags everything down with them affecting everything and everybody.

This rush and downfall of all of these companies plus the inability to receive loans and the companies inability to sell their commercial paper (short term bonds to raise capital) sends these companies down hill because they cant do the short term operations they normally do (payroll or whatever it may be seizing and freezing the corporation and business in its tracks). Society generally not wanting to "lose" their lifetime investment and money want to be secure with their funds. This makes them withdraw from the stock market and this "panic" and selling of these stocks makes others tag along further decreasing and dropping the price of many of these stocks. basically the greater supply of these stocks and less demand drives the prices of these stocks down.

Now everybody (investors) being scared (lack of trust in the financial system) is withdraiwing their money and putting it nto banks for the FDIC now ensures 250,000$.

and here we are.... drop drop drop drop....

thats basically the jist of it i believe. anything else to add?

 

[aaron23]

You summarized the exact problems very nicely, but I think it's been said on the board several times now though.
But the million dollar question is though how do we solve the crisis? Identification of the causes of the problem is only the first step on a very long and painful journey.

lol, answering that question is like answering the question, what the meaning of life. i think only time will tell the answers.

- increasing the FDIC to 250,000 surely gave people greater confidence in the banking system.

its just now they have to act on their passed 700billion bill.