Will stock markets crash again?

binarysoul

This is a tough question, but what are the chances of the stock markets crash again, like the Great Depression or the crash of 1987?

Would you buy shares now in the hope that they will go up again?

Not a big fan of profiting in the crisis of other people, but hey that's business

Plantwiz

binarysoul wrote:

This is a tough question, but what are the chances of the stock markets crash again, like the Great Depression or the crash of 1987?

Would you buy shares now in the hope that they will go up again?

Not a big fan of profiting in the crisis of other people, but hey that's business

Probably not, but why would you want single stocks anyway? There is a great deal of risk in them.

And investing in honest markets isn't profiting off people, it would simply be investing. If you are doing something unscrupulous....well...that's up to your conscience.

I'm guessing you're looking at the US markets?? Diversify.

Besides, Germany has turned things around. I don't live there, but they had a pretty rough ecomony for a while and people survived.


We'll all do what we need to do. Gold is NOT the thing to invest in. When times get tough, people trade stuff. They don't trade gold because you cannot eat it nor use it.

Do your research and you should do fine. If you are looking for the 'get rich quick' method....well....that's up to you but there isn't really a plan like, sorry. Back in 2001-2004 when people were losing money on investments....mine were not. They didn't grow as they once did, but they didn't tank either. The media will lead you to believe to sky is falling. Look at the Sub-Prime issue that still plagues our media. SubPrime loans were loans issued to people who never should of qualified for a mortage. AND SubPrimes only made up about tiny percentage of mortages and considering the size of the population....wasn't even a misquito bite to those who have mortages.
http://www.daveramsey.com/etc/askdave/?intContentId=8514


The markets always cycle. They are up, they are down....but even when they slump in these past few weeks....they shoot right up again. How many 'highs' have we broken in the past year?

Still curious how you think you'll profit at someone elses expense though? What sort of thing are you planning?

silentc1015

binarysoul wrote:

This is a tough question, but what are the chances of the stock markets crash again, like the Great Depression or the crash of 1987?

Would you buy shares now in the hope that they will go up again?

Not a big fan of profiting in the crisis of other people, but hey that's business

I sure hope so, it would be a great investment opportunity. Obviously I don't hope that it crashes in such devastating fashion as the great depression, but a small recession is a great opportunity to get in the market. I am advising all my friends to save up some cash for investment because the market does look like it's going to turn down. The same is true for the real estate market in many areas. It is also a great opportunity to buy a home and will probably only get better.


I just edited to say that I don't think the market has sunk low enough to make me comfortable investing yet. I believe it's going to go a bit lower. I won't invest until it drops another percent or two.

Tesl

Expect things to get worse before they get better, then expect some good investment opportunities to appear.

I also suggest you don't take investment advice from people on this board, including myself of course

dtlokee

It all depends on what your goals are in investing. If you're looking for the long term investments you will have ups and dows but as long as over the next 30-40 years you get a good return that is the goal. If you plan is a short term get rich quick scheme then yes it's something to think about before investing and highly unlikely. There are some sectors to avoid but there are ones that are doing well at the moment. My portfolio has increased about 350% since 1999 (I don't do all my own investing I pay somone for advice, I figure if that is somone's full ime job then they can do it better than I can part time). For much of that time the tech stock were doing poorly, so don't invest in them.

binarysoul

Tesl wrote:

Expect things to get worse before they get better, then expect some good investment opportunities to appear.

I also suggest you don't take investment advice from people on this board, including myself of course

You can't take investment advice from anybody, but from you own luck and insticts

Plantwiz

binarysoul wrote:

Tesl wrote:

Expect things to get worse before they get better, then expect some good investment opportunities to appear.

I also suggest you don't take investment advice from people on this board, including myself of course

You can't take investment advice from anybody, but from you own luck and insticts

There is more to it then 'luck and instincts'. There is actually good data available and very easily to anyone willing to look. In years past, Financial people relied on the data companies provided, but now there is much, much more including all that material.

It's more then luck.

Schluep

As others have indicated, this is not a good lace to look for investment advise. I will give now such advise.

As for the economy going forward and the possibility of a large depression I can comment on that. Demographics in the U.S. certainly aren't in favor of a strong economy here going forward. Look at the ages and sizes of the Baby Boom in relation to the size of Generations X and Y. Probably the best source of information on this would be the lead demographic based economic forecaster with information at www.hsdent.com. I would highly recommend checking out the .pdf file on the main page and some of the key concept that are available for free. He has been entirely accurate in his economic predictions since the 1980's including the tech bubble. Prior to the year 2000 he was predicting an economic depression in starting in 2010 based on demographics and said we would start feeling the effects of it shortly into 2008. He expects it to last approximately 10-15 years.

I can't find good evidence of a time when in the U.S. the auto manufacturers, banking industry, and housing industry were all on a serious down-turn except the Great Depression. Obviously if anyone can point out such a time I would be curious to read about it and am VERY far from an economist.

Just because there is an economic down-turn does NOT mean that you should not be investing and saving your money. The best way to weather a depression be it a business or individual is to be without and with investments that can be traded (as Plantwiz said, this is not gold) or cash savings. Banks and lenders are not going to be your friends during a depression if we do have one.

I'll agree with Plantwiz again. Luck and instincts are not a factor. Even if you are only lookin at big plays that brought in lots of money those didn't take luck. It didn't take luck for those that invested in the cell phone industry early on when everyone was laughing at them. Similarly it didn't take luck during the hardware race to recognize a company like Microsoft focused on software could have potential. It took vision and good research about what was available and where the world could go. It seems very easy to see from this side of things but that is not always the case from the other side. It also wasn't bad luck that people invested in thousands of tech companies lost millions when nearly all of them tanked and everyone was investing in companies growing far faster than their demand and in competition with everyone.

Darthn3ss

this thread is tl, dr; but, i am considering putting a few hundred dollars into ford right now. They're stock is around $5 i belive, an all time low. If they go under, i won't be hurt too bad, and i'm young so it really doesn't hurt at all, and if they start doing better, than all i can do is profit, right?

silentc1015

Darthn3ss wrote:

this thread is tl, dr; but, i am considering putting a few hundred dollars into ford right now. They're stock is around $5 i belive, an all time low. If they go under, i won't be hurt too bad, and i'm young so it really doesn't hurt at all, and if they start doing better, than all i can do is profit, right?

That's true, and I think there's a good chance the government will aid them in ways that they wouldn't such other struggling companies because they are Ford.

silentc1015

Schluep wrote:

Just because there is an economic down-turn does NOT mean that you should not be investing and saving your money. The best way to weather a depression be it a business or individual is to be without and with investments that can be traded (as Plantwiz said, this is not gold) or cash savings. Banks and lenders are not going to be your friends during a depression if we do have one.

I disagree with this point. I think a depression, as long as you can afford to feed and shelter your family, is a perfect time to buy stock in safe companies that you know will weather the storm. This includes most blue chips or those that have the cash to survive (microsoft, ibm), those that have a partial monopoly (utility companies), and any others you know will survive. I think parking capital in a low interest savings account is the worst way to handle such an event.

Tesl

Plantwiz wrote:

Probably not, but why would you want single stocks anyway? There is a great deal of risk in them.

I'm guessing you're looking at the US markets?? Diversify.

This is fine advice for people who know nothing about stocks and probably shouldnt be investing in the first place. If you understand what your doing and are capable of analyzing companies, you are best putting your many eggs in a few baskets. Nobody ever gets rich with indexes.

We'll all do what we need to do. Gold is NOT the thing to invest in. When times get tough, people trade stuff. They don't trade gold because you cannot eat it nor use it.

This is just wrong, completely.

Look at the Sub-Prime issue that still plagues our media. SubPrime loans were loans issued to people who never should of qualified for a mortage. AND SubPrimes only made up about tiny percentage of mortages and considering the size of the population....wasn't even a misquito bite to those who have mortages.
http://www.daveramsey.com/etc/askdave/?intContentId=8514

I didn't check the daveramsey link because I'm not a huge fan of his. With the way the markets have reacted world wide over the last three weeks compels me to say you are wrong though. My company lost $10bn, not exactly a mosquito bite. But what is more important are the knock on effects, as being experienced both in the states, europe, and the asia pacific.

The markets always cycle. They are up, they are down....but even when they slump in these past few weeks....they shoot right up again. How many 'highs' have we broken in the past year?

You aren't incorrect in that cycles happen, but there have been big lows in the past. With the way the US economy looks these days I would almost expect there to be a long recession some time relatively soon. Probably not now, but within the next decade maybe.

Turgon

Some interesting reposts by tesl on money matters. If folks have cash left over to invest in anything these days they are increasingly in a minority. The way ahead looks rough by all accounts so look after your money and try not to overextend. The price of just about everything is going up and for many people what is coming in just isn't keeping up. Thankfully at the moment this doesn't affect me adversely unlike so many other people.

silentc1015

This is fine advice for people who know nothing about stocks and probably shouldnt be investing in the first place. If you understand what your doing and are capable of analyzing companies, you are best putting your many eggs in a few baskets. Nobody ever gets rich with indexes.

Well, this just isn't true. You can get rich off treasury bonds, a much lower yield investment vehicle, if you invest large enough for long enough. Compound interest is powerful. A very conservative estimate puts index funds at 9% growth long term. In all likelihood, it's more like 11%. Play with some compound interest calculators and see how quickly you can be come a millionaire with some consistent and very modest investments.

This is a valid way to get rich. Trying to find that perfect stock will most likely result in failure for most people unless you have a tremendous amount of dedication to the craft.

Schluep

silentc1015 wrote:

I disagree with this point. I think a depression, as long as you can afford to feed and shelter your family, is a perfect time to buy stock in safe companies that you know will weather the storm. This includes most blue chips or those that have the cash to survive (microsoft, ibm), those that have a partial monopoly (utility companies), and any others you know will survive. I think parking capital in a low interest savings account is the worst way to handle such an event.

Personally I don't trust even those large companies alone. ENRON seemed like a great investment to many and some people had their entire financial future tied to that company they thought could whether the storm (and ended up falling from a puddle of mud without the need for a storm).

Bonds are usually great during any type of depression or economic downturn. At the same time though having some cash available is a nice thing to have. My comment you quoted was more a jab at people who are in debt or don't have any savings going into a depression. They are always the ones who will be hit the hardest. A lot of small business with large debt go under during this time while the ones with strong capital usually control the market for whatever good or service they offer by the end of it.

Vogon Poet

Great time to invest!
Buy low, sell high.
Don't bet the farm.
Follow and manage your investments.

Tesl

silentc1015 wrote:

This is fine advice for people who know nothing about stocks and probably shouldnt be investing in the first place. If you understand what your doing and are capable of analyzing companies, you are best putting your many eggs in a few baskets. Nobody ever gets rich with indexes.

Well, this just isn't true. You can get rich off treasury bonds, a much lower yield investment vehicle, if you invest large enough for long enough. Compound interest is powerful. A very conservative estimate puts index funds at 9% growth long term. In all likelihood, it's more like 11%. Play with some compound interest calculators and see how quickly you can be come a millionaire with some consistent and very modest investments.

This is a valid way to get rich. Trying to find that perfect stock will most likely result in failure for most people unless you have a tremendous amount of dedication to the craft.

I'm not familiar with Treasury Bonds, but if you are saying that I can make 11% year on year risk free, then I'd be very interested in hearing more.

I should probably clarify my point a little more having re-read it though. A lot of people who know nothing about analyzing companies choose to invest, and for them diversification is probably a necessity. People who do that are just gambling, nothing more and nothing less. Spreading your risk is wise here.

For others, if you are willing to spend a lot of time looking around and researching, then you can call yourself an investor and not a gambler. Now it starts to make more sense to put more money into investments I think are really really good, rather than just diversifying to spread risk as much as possible.

For me right now, I'm putting away maybe $2000-$3000 a month and am not invested in anything. I'm waiting to see some more falls before investing, and I suspect real estate will be my vehicle of choice

garv221

binarysoul wrote:

This is a tough question, but what are the chances of the stock markets crash again, like the Great Depression or the crash of 1987?

Would you buy shares now in the hope that they will go up again?

Not a big fan of profiting in the crisis of other people, but hey that's business

Good time to invest in the stock market. Good time to be buying up foreclosed houses or properties as well. Just saw a home in my sub that was bought for 280k, foreclosed and sold for 190k.

silentc1015

Tesl wrote:

I'm not familiar with Treasury Bonds, but if you are saying that I can make 11% year on year risk free, then I'd be very interested in hearing more.

I should probably clarify my point a little more having re-read it though. A lot of people who know nothing about analyzing companies choose to invest, and for them diversification is probably a necessity. People who do that are just gambling, nothing more and nothing less. Spreading your risk is wise here.

For others, if you are willing to spend a lot of time looking around and researching, then you can call yourself an investor and not a gambler. Now it starts to make more sense to put more money into investments I think are really really good, rather than just diversifying to spread risk as much as possible.

For me right now, I'm putting away maybe $2000-$3000 a month and am not invested in anything. I'm waiting to see some more falls before investing, and I suspect real estate will be my vehicle of choice

Treasury bonds don't yield anywhere near 11%, so, sorry if what I said was misleading. To get that kind of interest, you must invest in inherently risky ventures like stocks. Treasury bonds are 3-4.5%, but earnings are tax exempt. You're beating inflation and earning a small return. But don't underestimate compound interest. For example, starting with $0 principal, investing $20,000/year (not unreasonable if your career is developed), in a 4% yield treasury bonds for 30 years paying interest quarterly will yield $1,161,695.38. That is a very impressive figure and a very substantial retirement. That is on the low end of what I call "rich". Play with other compound interest calculations here:

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

It seems like you are already aware of these things, but I'm posting them here because I think many new investors underestimate these forces.

If you're saving money, not investing, before choosing an investment vehicle right now you may want to consider an EmigrantDirect savings account. It is FDIC insured which means it's completely safe up to a very considerable amount of money. It is also highly liquid. You can transfer the funds between their savings account and a checking account within 5 - 10 business days with no hassle. It's all a secure online web interface. If you're saving a substantial amount of money for a year or more, like a downpayment on some real estate investments, you may earn some substantial returns by parking it here instead of elsewhere.

Just some food for thought.