Its going to be a rough opening to the market on Tuesday, based on the performance of the markets around the world Monday. Check out these one day declines for the leading national indexes:
Pan-European Dow Jones Stoxx 600 index SXXP down 4.3%
French CAC-40 index FR down 5%
German DAX 30 index DX down 6%
U.K. FTSE 100 index UKX down 3.6%
Losses have been attributed to the financial sector, continued recession fears and the disappointing proposed economic stimulus plan from POTUS.
We haven’t seen declines of this magnitude in a long time. Fortunately, for many reasons, I don’t think we will see anything like 1987 when there was a 20% drop in the US market in one day.
The new year continues to be a market freefall and that may be for the best. The market has got to shake out and I would rather see it wrung out quickly and sharply than to drag on for the whole year.
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5 years ago
"The market has got to shake out and I would rather see it wrung out quickly and sharply than to drag on for the whole year."
ReplyDeleteI actually prefer a slow drag. No more quick dip and happily ever after, please. Going down and staying down for an extended period will re-introduce the risk into the market. Disciplined long-term investors will benefit. Otherwise people won't take market risk seriously.
You may be right - a long slow drag would be the best medicine for the market. It would probably demoralize a lot of investors and weed out speculators. As it is, we basically hop from one bubble to the next. New money is always chasing the next thing
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