Stocks Fell Like a Rock
The last time I inserted the Dow’s intra-day chart, the benchmark dropped some 400 points. That’s was less than three weeks.
Today is another bloody day for stocks, under similar circumstance as 20 days ago:
- Oil surged past $140 a barrel;
- More writedowns are expected at financial firms Citigroup and Merrill Lynch;
- Car makers are in deep trouble and Chrysler had to come out to deny bankruptcy rumor;
- Technology companies Oracle (ORCL) and Research In Motion (RIMM) issued weaker-than-expected profit forecast;
- Economic data is also disappointing as weekly unemployment rate jumped to the highest level in nearly three years.
After today’s decline, the Dow has fallen 2,711 points from its peak of 14,164 points reached on October 9, 2007. That’s a 20% drop for the index in a little over 8 months. And today’s closing number is the lowest in nearly two years.
Amid the bloodshed, one of my stocks (the only stock actually) did post a gain today. Smith & Wesson (SWHC), the handgun maker, rose 6.65% after the U. S. Supreme Court ruled that individuals have the constitutional right to own guns for the purpose of self-defense. Other than that, it’s red, red, everywhere 
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it’s been so red this past year that i’m actually getting tired of buying more stock at “cheap” prices. i don’t know if i will go broke from buying more stock or from the stock prices going down.
Looking at my investments in Quicken looks like a scene from CSI — red sprayed everywhere. Even those things that are not in the red for the 5+ year period have an IRR about the same as what I’m earning in savings accounts. My high-flyer is now my Series I savings bonds portfolio which is earning 2.44% + inflation.
I’ve been keeping too much in cash reserves lately, so I went ahead and bought into Vanguard’s S&P 500 index. It will be in a taxable account, but I feel like I’m getting a good deal. Now’s the time to buy I say
The carnage on Wall Street has actually presented a buying opportunity as stocks should bounce back, even if they they end up giving back those gains again pronto. For some trading ideas for week of 06/30 visit our blog at http://www.navivest.com/blog/
The actual stocks list for next week is at http://www.navivest.com/blog/?p=19
This is not a long term recommendation. The risks still abound, as the situation for banks and Wall Street firms is actually getting worse and high oil prices are either negatively impacting companies’ production costs or causing their customers to spend less. But with the strong rise in oil prices last week, we should see a breather, which is good for stocks.
Good luck and profitable trading.
Tim: I feel you. Every time when I thought the big drop presented a buy opportunity (I did bought some early this month after the 400-point drop), the market only went even lower shortly after
Nobody really knows where the bottom is and it’s really not fun to see the shares I just bought worth less and less. Now, I try to not buy any extra, though I still make regular monthly purchase. Hope things will get better, but who knows when.
Sun,
This is a tough market. Unfortunately, I think it will keep going down. Bear markets last an average of 19 months and decline an average of 37%. This bear market has a ways to go in both metrics. The market is bad enough that I will be working to short stocks over the next month.
37 % is not too bad, I guess. My preferred stocks have lost 40% of their value in just a few weeks. These preferred stocks are all rated AA or better at Scottrade. They have 35 years to run. They didn’t tell me that anywhere on their web site links about preferred stocks. So don’t lose your money. Go to a real broker.