Dow drops over 900 points in two days

Blackmage · Last edited by Blackmage on Fri Nov 07, 2008 11:30 pm; edited 1 time in total

http://www.foxbusiness.com/story/mar...weigh-futures/

largest decline in history
other world stock markets dropped sharply with it

looks like things are going to be fun.

Ming · DOOM! Gender: Joined: 13 Jan 2003

Tobias · *explodes* Age: 38 Gender: Joined: 17 Jan 2003

ouch.

Silver Adept · Otaku Lord Age: 41 Gender: Joined: 20 May 2003

Yep, market correction, the downside of the bubble. We did this before in the dot-com bubble, but this time, people are actually losing important assets, so it's going to hurt a lot more than usual.

Nogrick · Everybody DANCE! Gender: Joined: 30 Sep 2002

Nappa: Vegeta, what does the scouter say about the dow?

Vegeta: It's dropped by over 900!!! *crushes scouter*

GAAZ · MOD Black Sheep Commander Gender: Joined: 14 Oct 2002

What's a "Down" and why did it drop? Razz

I ain't been here in like 3+ months...So that was the summation of what I had to say. Razz

See you in 3+ months!

Kothar_Isk · Shadow Mage Gender: Joined: 22 Nov 2005

Tobias · *explodes* Age: 38 Gender: Joined: 17 Jan 2003

Terin · Huzzah! Gender: Joined: 27 Oct 2003

It's a buyers market! Unless you're cashing out now, there's no reason to be down! Let's take a look at the "buy low, sell high" mentality, in a recovering market (to keep things simple lets assume this all takes place over 3 days)

Day 1 - Let's say you buy 5 shares at 10$ a piece, that's 50$

Day 2 - Your stock falls to 3$/share. This is where most people get pissed because they invested poorly. They feel they've lost money, but you HAVEN'T! until you sell your stock you haven't lost anything! This is the time to buy! OK so now you buy 10 shares at 3$ a piece, bringing your total share count to 15 shares that you've invested a total of 80$ in.

Day 3 - Your stock raises to 7$/share. Breath a sigh of relief. Even though it's still lower than what you initially paid for (on day 1), you can happily sell your stocks for 100$ when you only invested 80$.

The key is when to cash out. Continue to buy more stock at dirt cheap prices (like they are right now) and as the market recovers, purchase smaller amounts until either:

A - you'll come out with more money than you invested, or
B - price of your stock meets or exceeds the initial amount you paid for it.

That's why you shouldn't worry too much about the stock market ^__^
-T

Ming · DOOM! Gender: Joined: 13 Jan 2003

The other reason why you shouldn't worry so much is because the market is cyclical. If your stock drops a few points and you freak and sell, all you're doing is locking in your loss. Odds are, the stock will eventually go back up again. It's this failure to be patient and focus on the long term that gets people into trouble.