May 22, 2006

Jittery Investors Nervous About Markets

(New York) US stock futures are down sharply coming into Monday, suggesting the possibility of a sell-off. The Dow is down 4.5 percent from its record high two weeks ago, losing 300 points and 2.1 percent just last week.

Overseas markets took a hit today. Japan's Nikkei index fell 297.58 points today, or 1.84 percent, to 15,857.87, while India's BSE Sensex closed with a loss of 457 points, or 4.34 percnt.

At one point trading on the Sensex had to be temporarily shut down because the index hit an automtic tigger when losses exceeded 10 percent.

In Europe London's FTSE is 0.7 percent lower, while Paris and Frankfurt are down about 1% in mid-day trading.


-Sepp said...

I sold off all my losers and put them in money markets until this blows over. Not everything was effected though. Building materials were still climbing probably due to the weather breaking.

historymike said...

I am pretty diversified, and, truth be told, we have had an awesome first half of 2006 (up 25% so far).

I just hope that the people calling for a repeat of the 1987 crash are wrong.

dusty said...

IF it crashes your all fucked..

Glad I am a member of the working poor,I don't have to worry about my stocks tanking. :P

historymike said...

I hear you, Dusty. My only investments are of the 401-K variety these days.

I used to do some day trading when I was in business for myself, but I have long since liquidated that chunk of my portfolio.

These days I am cobbling together 3-4 part-time jobs as a writer,editor, and history instructor.

dusty said...

401-K is as close as some folks ever get Mike..sad ain't it?

Unless your in that all-hallowed club..the top one percenters.

historymike said...

True, dusty.

And - horror of horrors - 401-Ks are only safe schemes so long as the number of depositors always increases.

This Ponzi-esque certainty may be the undoing of the Social Security system, unless the bean counters in the federal government convince us that taxing illegal immigrants represents a way to keep Social Security afloat.

I'd bet that they retirees would do a complete 180 and embrace illegal immigration if they knew that the immigrants would keep the SSI checks coming.

Hooda Thunkit said...

"And - horror of horrors - 401-Ks are only safe schemes so long as the number of depositors always increases.”

Are you sure about this?

I believe that 401k's are independent accounts, with only the overall management lumped together.

Even if the management ceases to exist, your individual account can be managed by another company, or by you, as in a self-directed 401k.

In the past, I've belonged to work sponsored and a self-directed 401k's. Now, I have a ROTH.

historymike said...

I was thinking in a macro sense, Hooda.

When millions of Americans start withdrawing 401-K monies from the markets, these funds need to be replaced by the contributions of young workers.

If the contributions of younger workers start to become lower than the withdrawals of retirees, the markets will tumble and accounts will shrink.

In a larger sense, the stock market itself is a giant Ponzi scheme predicated on a steady influx of new money. So long as population keeps increasing, this is not a worry.

But as America ages and birth rates drop, we will continue to need new blood to pump up the markets.

Globalization does mean that emerging markets like China and India offer 401-K holders other options, but this opens up the problem of capital flight out of the US.