Pretty wierd watching the stock market plunge. The bailout legislation, I thought, was supposed to prevent just such a melt-down. Do we have a 90-day guarantee? Can we ask for our $700 B back?
I know from some experience that the stock market is NOT dominated by rationale, sage analysis. Things are not always what they seem (for example, the proposition that the market has lost half its value could be replaced by the statement the market was doubly over-valued and is now returning to its true valuation). Still, you wonder what is driving these changes.
I heard a speculation yesterday that was interesting which I will throw out for consideration -- let the flames begin!
After the second Obama-McCain debate, it now seems likely that Obama will get elected and the stock market is reacting to the forward-looking prospects of an Obama presidency, this is why the market in the US is tanking, and this in-turn is causing other world markets to tank. True? Reasonable speculation? I don't know.
I don't think it's impossible that we'd witness a negative reaction on Wall Street to an Obama election. Most economists, after all, aren't necessarily thrilled with the prospects of a McCain administration but are definitely against an Obama administration. But I don't think such a reaction would be this pronounced, and I don't think it would come this early, a month before the election.
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Politics, it seems to me, all too long, has been concerned with right or left instead of right or wrong. ~Richard Armour
After the second Obama-McCain debate, it now seems likely that Obama will get elected and the stock market is reacting to the forward-looking prospects of an Obama presidency, this is why the market in the US is tanking, and this in-turn is causing other world markets to tank. True? Reasonable speculation? I don't know.
Exactly the market is always ahead of the curve..they see increased taxes,regulation and other government interventionand decreased revenues and adjusting for it. I guess they have a lot of faith in an Obama presidency.
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"Banning guns is an idea whose time has come."
- Joseph Biden
Associated Press 11/18/93
"Be thankful that we're not getting all the government we are paying for." Will Rogers
I'd say thats a pretty good stretch of the imagination. I dont think 'fear' of either canidate being eleected is driving the market, nor do I believe government actions of any kind at this very momenthave the ability todrive the market one way or the other. At this point, its all about fear, fear that things are only going to get worse, and you're seeing alot of scared people bail out of the market, fearing they may loose even worse, and that things wont get better within there investing timeframe. The good news is, once all of the scared people bail out, you'll start seing the logical investors getting back in, and theres going to be a pretty decent bounce, and a more stable market, hopefully, with reasonable growth, not outlandish bounds each year. I honestly believe the whole market drop has more to do with a bubble being popped than politics in washington, the economy itself however, may have a little more to do with politics.
I'd say thats a pretty good stretch of the imagination. I dont think 'fear' of either canidate being eleected is driving the market, nor do I believe government actions of any kind at this very momenthave the ability todrive the market one way or the other
No stretch at all. The market is always ahead of the curve and has factored in who is president. THE MSM telling us how lousy it is day after day is not helping matters either.
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"Banning guns is an idea whose time has come."
- Joseph Biden
Associated Press 11/18/93
"Be thankful that we're not getting all the government we are paying for." Will Rogers
Most economists, after all, aren't necessarily thrilled with the prospects of a McCain administration but are definitely against an Obama administration.
Most economists YOU hear about in the partisan media sources you prefer are against an Obama administration. Hardcore supply siders certainly don't want him in there, despite the total collapse of their economic theory. Economists as a whole support Obama much more than McCain.
Odd that very few economists identify themselves as Republican. So there's your argument out of the hole.
edit: By the way, historically, the stock market almost always does better and is less volatile under Democratic administrations than they are under Republicans.
I'd say thats a pretty good stretch of the imagination. I dont think 'fear' of either canidate being eleected is driving the market, nor do I believe government actions of any kind at this very momenthave the ability todrive the market one way or the other. At this point, its all about fear, fear that things are only going to get worse, and you're seeing alot of scared people bail out of the market, fearing they may loose even worse, and that things wont get better within there investing timeframe. The good news is, once all of the scared people bail out, you'll start seing the logical investors getting back in, and theres going to be a pretty decent bounce, and a more stable market, hopefully, with reasonable growth, not outlandish bounds each year.
MagnumMan308: There is another aspect that is probably involved. A market requires a buyer and a seller. I'm guessing a lot of buyers are being cautious and waiting to see how far the market will fall before cherry picking value buys. If stocks purchased from a 10,000 DOW market look like a bargain . . . how much more so for a 7,000 DOW, a 5,000 DOW? Don't forget that adage -- "buy low, sell high." There is so much truth and wisdom in that, but applying that to the real world is hard. With a scarcity of buyers, the market plunges more rapidly. I haven't looked to see what kinds of volumes are associated with this big plunge, that might be an interesting data point to look at.
"No stretch at all. The market is always ahead of the curve and has factored in who is president. THE MSM telling us how lousy it is day after day is not helping matters either."
So, political news about a 850Billion dollar bailout package, and insane rate cuts have little no no imediate effect on the stock market, but political speculation on who may be the next president has an immediate and continueddownward effect. Pleeeese.
Cause of market plunge
