Monday, October 10, 2011

Stock Market Terrorism

October 7, 2011
'Terrified' of the Stock Market: What Should I Do?

I'm terrified of the stock market these days. I plan to retire in April, but I'm afraid I'll lose everything before then. I want to put my money in a safer place, but I don't know where. Should I sell stocks now or wait to see if they go up in value? What do you think? -- Gerry

I'm shocked that the correct answer was not offered.

Homeland Security: Report Suspicious Activity

If you see suspicious activity, please report it to your local police department.

Surely the Nasdaq being up a whopping 3.50% today but down 50.00% from its all time high set in 2000 would qualify as suspicious activity.

March 10, 2000 Intraday High: 5,132.52
October 10, 2011 Closing Price: 2,566.05
Gain/Loss: -50.00%

In all seriousness, should Gerry sell stocks now to fuel his retirement or should Gerry sell stocks later to fuel his retirement? Those are the only two choices? Stock market investors better hope that the stock market isn't made up of a lot of people like Gerry (soon-to-be retirees).

For what it is worth, I was thinking like Gerry in the fall of 2004. I sold all my stocks to fuel my retirement. I'm done. It's been 7 years. No complaints. One might even say that I thought it best to sell my stocks before Gerry sold his. Go figure.


Source Data:
Yahoo: Nasdaq Historical Prices

13 comments:

Mr Slippery said...

Homeland Security: Report Suspicious Activity

See something, sell something.

MainStreetKate said...

I'm glad I'm 30 and have ADD. I find it all rather invigorating. The stock markets. The protests. The riots in random countries around the world.The constant ideological bickering.

It could be worse. Life could be boring.

Anonymous said...

It might serve Gerry well if he started to think of his broker as one of these.

"a person who determines odds and receives and pays off bets"

Stagflationary Mark said...

Mr Slippery,

It looks like we're going to need a 4th monkey! ;)

Stagflationary Mark said...

MainStreetKate,

There's a bull market in Chinese curses, lol.

May you live in interesting times

May you live in interesting times, often referred to as the Chinese curse, is reputed to be the English translation of an ancient Chinese proverb and curse, although it may have originated among the English themselves (or Americans). It is reported that it was the first of three curses of increasing severity, the other two being:

We do live in interesting times!

May you come to the attention of those in authority (sometimes rendered May the government be aware of you). This is sometimes quoted as May you come to the attention of powerful people. (Alternately important people.)

Hurray for Homeland Security!

May you find what you are looking for. This is sometimes quoted as May your wishes be granted.

Even more free lunches! That sounds particularly awesome! What could possibly go wrong? ;)

Stagflationary Mark said...

Anonymous,

Urban Dictionary: Broker

Someone who invests your money until it's all gone ...

Anonymous said...

"...it may have originated among the English themselves (or Americans)..."

The same could be said of incorporation and stock options but what's the difference, the use and abuse of them has cursed us all.

Stagflationary Mark said...

Anonymous,

Speaking of curses, I think SIV technology was based on SIV technology.

The risks that arise are the same that Banks have always faced: First, the solvency of the SIV may be at risk if the value of the long-term security that the SIV has bought falls below that of the short-term securities that the SIV has sold. Second, there is a liquidity risk, as the SIV borrows short term and invests long term; i.e., outpayments become due before the inpayments are due. Unless the borrower can refinance short-term at favorable rates, he may be forced to sell the asset into a depressed market.

In 2010, researchers reported that SIV had infected monkeys in Bioko for at least 32,000 years. Previously it was thought that SIV infection in monkeys had happened over the past few hundred years. Scientists estimated that it would take a similar amount of time before humans adapted naturally to HIV infection in the way monkeys in Africa have adapted to SIV and not suffer any harm from the infection.

The good news is that in 32,000 years it is possible that structured investment vehicles may no longer harm us, lol.

MainStreetKate said...

I like the idea of curses. Intermittently cursed and charmed, that's the way to go through life. You get the full spectrum of the human experience.

As for free lunches? I just try to be exceptional at everything I do. So that hopefully I won't ever need a free lunch. (Although I will never complain if a coworker offers to take me out for pizza... because it means I don't have to eat the salad that I religiously bring for lunch and inevitably find boring and unfulfilling...)

Audrey said...

I am reading about WWII. Wine families in France. When the war was declared, many hid their bottles of wine in caves beneath France. How's that for security for your life savings!!!

I don't know which is more secure, breakable bottles or bits and bytes.

Audrey said...

At MainStreetKate,

I'm about your age, and find it also quite exciting. What did we do for entertainment before this?

I'm particularly invigorated by the recent bank takeovers in Europe. (If a small bank fails, it fails. If a large bank fails, it's recapitalized.)

I wonder if there will be more excitement in that arena in the next couple of weeks...

Stagflationary Mark said...

MainStreetKate,

You get the full spectrum of the human experience.

This is kind of how I feel about the weather. I like the seasonal changes.

I do think our economy is done being charmed though. I sense more of a toggling between cursed and damned, lol. Sigh.

Stagflationary Mark said...

Audrey,

I don't know which is more secure, breakable bottles or bits and bytes.

Tough call!