Question for Kim:”When do you think the stock market will stop dropping?”
If the market is closed now, the market will have stopped dropping. On a more serious note, my answer is whenever there is an equilibrium. Remember that we had a stock market where people overreacted and we had quite a boom period. We are getting the ricochet effect because people now are saving their money and running away from the markets in droves. Nothing wrong with that, you just need to factor that into your decisions if you are deciding to actually purchase stock.
If you are going in for the long haul, you need to do some due diligence and look for companies that will be around and have cash. Cash is king these days. Research what they do, what they develop and what their expectations for the future are. Remember that people are investing or even betting that a certain company or stock will be going up in the future. Some are betting that the price of the stock might go down as well. Prices react to market news and situations based on how people think it will changes things in the long haul.
Companies that are providing services that people need on a daily basis and are cash rich and low or debt free are good candidates to research.
That all being said, you still may want to sit on the sidelines for a bit. Trying to pick a stock that will go up in a market that is falling is like trying to catch falling porcupines. Yikes.
The markets may go up a little bit at the Presidential Inauguration. The markets may go up for the holidays.
Or, they may continue dropping like they just heard of gravity.
Warren Buffet’s portfolio is down just like everybody else these days. Unless you have a very long view for the future, you may get scared for the next few months, if not years.
Getting back to the original question, people usually talk about when the market recovered AFTER the fact. While you are living through it, you generally don’t know what will happen. The people who make money have done their research, are willing to take a calculated risk and they get a little bit of good luck.
People are also jumping on shorting the market and eventually there will be a time that they will be called on their stock. There tends to be a ricochet effect from that kind of behavior but there is no guarantee.
Questions I would ask for you are:
1. What are you planning on investing in?
2. Are you holding onto investments and just worried?
3. How is your stomach for handling losses? If you are young, you have time to watch it recover. If you are in retirement, you may want to think it through.
4. Is there anything else you can invest in that would be profitable that you can make more money in?
The last item is very important because people need to remember that the stock and housing markets aren’t the only investment game in town, though they have made – and lost – a lot of people money.
Make sure you aren’t gambling bread and egg money either. If the money isn’t in a 401K or IRA, make sure you have a cash pad in case you get laid off, have emergencies or anything else unexpected happens.
Confidence will be the key. Whenever people feel confident that things in the future will be stable, conducive to making money, safe for companies to operate without fear of being taxed too death, fear of starving, etc, the market will go back up. It may not go up fast but those are definite feelings that people will have to have for the stock market to change, in my opinion.
If anybody tries to show you graphs or charts to predict the future, use a grain of salt because a lot of past indicators or chartists are about as accurate as fortune tellers.
Now, if you have cash, and I mean a LOT of it laying around-
How about starting up a manufacturing business? I know that is the subject of another blog of mine but if it is money you are after making, how about thinking about other ways as well?
Disclaimer Stuff For You:
I am not a financial advisor and at the time of this article all my positions were in king cash. I do know a thing or two about making money, tax preparation, dealing with people, project management, making it through bad/hard times and running a business. Check out my book and see if it inspires you to greater things! I am also available for hire or contracting if there is a good fit.
Kim Isaac Greenblatt
Hey Kim, when do you think the stock market will stop dropping?
Tags: Business, money, stock market
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