Up 900 baby!

Stock market had a very nice jump . . . good news for all!

Maybe there is something to this bailout bill . . . . . . . .

 

Wait until tomorrow...

 

Man . . . I'm just trying to enjoy it for the day. If anything, could this mean the market has found a bottom?

 

Or maybe the bailout bill has nothing to do with it. Investors have seen the market fall a long way, and they probably think this is a good time to buy.

 

Maybe. But there were many economist who were predicting a deep and painful depression without the gov't stepping in and doing something.

Some are saying the huge day today was a result of : With the world's financial markets on a stomach-churning ride, the Bush administration is scrambling to get a $700 billion rescue effort for the U.S. banking system up and running. And Europe's central banks began to take unified actions Monday aimed at easing the credit crisis.

The Bush administration summoned executives from leading banks to a meeting in Washington Monday afternoon to work out details of the $700 billion plan aimed at thawing the credit markets -- the economy's lifeblood.

The Dow Jones industrials gained more than 900 points in a stunning rebound from days of big losses. European markets rallied following Asia's lead in response to the widespread government initiatives.

http://biz.yahoo.com/ap/081013/financial_meltdown.html


I'm going to choose to believe that the gov't had something to do with today and take it one step further to say we beat other countries to the punch by doing this first. At least until I see what happens tomorrow . . .

 

No.

The bailout bill and prior to that, allowing Lehman Brothers to go bankrupt were abysmal failures of government policy.

What has spurred this rally is not the bailout bill as originally proposed, but the government announcing that they are changing their plans to move away from buying toxic assets, into direct capitalization of the banking system, along with assumptions on investors part that the U.S. - like the E.U. just announced - will introduce measures to guarantee intrabanking loans, among the more important of a slew of government actions and planned reforms.

 

Well, in one sense, yes.

If you had purchased market indexes near the lows on Friday - (and really, how many had the balls to do that?) you are up 18%. (S&P 500 was at 850, Closed today at 1,003) And if you margined your purchases, you are up 36%.

Most active stock traders (gamblers) would consider that an excellent rally over a week or a month. It happend one day.

Bottom in the way you mean?

I doubt it. The indexes last week smashed through their long established technical support levels. For the Dow as an example, the next strong support level is not until around 7200.

The previous worst two post war stock market slides (73 & 02) shaved nearly half off the market, which this time would take us near....., you guessed it, 7000. Didn't happen last week. Avoided or just delayed?

Even assuming the government rescue and reforms to the financial system work reasonably well, that will do nothing to prevent a recession, it will only prevent immediate systemic collapse and deep depression. Best case, the economy is in store for some tough months ahead as we go into a recession, which will crush corporate earnings, which will drive the market back down.

And just because the government finally started pushing the right buttons, do you trust them to not make some mis-steps on the way?

And in bear makets, there are always bear market rallys, and retesting lows.

Just my worthless opinion, but I would guess there will be oportunities in the future to be purchasing stocks at today's prices, if not lower, possibly a lot lower.

 

Thanks for the info . . . sounds like you know a lot more about this than me.

I continue to put money in the market through my 401K (so every 2 weeks) . . . don't need the money for a while. Smart thing to do?

 

Yes. Put all you can afford into your 401(k) every paycheck. You'll get the benefit of compound interest over the long haul, and will be richly rewarded when you retire.

 

If by a "while" you mean 20 years or more, then yes, put you money into stocks as you have been. On 20 year time horizons, stocks beat all other asset classes and trying to time the market doesn't improve returns.

Over shorter periods, stocks can be relatively poor performers. If you put an inheritance in stocks 10 years ago, for example, you would be crying in your soup. All those sleepless nights for negative return.

If you use 401ks the right way, they are excellent vehicles for long-term, retirement savings. Do not use them for mid-term savings, or plan to borrow from them if you lose your job. Have additional savings for other purposes. The employer matching and bankruptcy protection are the best features of 401ks. Make sure to use the full limit of employer matching. If you can't swing that - spend less until you can. It's free money.

Here is an article about this subject:
http://asktheexpert.blogs.money.cnn.com/2008/10/13/dialing-back-on-a-401k/