It’s a blood bath out there this morning. The S&P 500 is at a four-year low as the credit crisis keeps getting worse, despite the passage of the government’s $700 billion bailout plan. The market is taking tech stocks down with it. Google is down 4 percent to $368, its lowest point since 2006. Apple is down 6 percent to $91. Microsoft is down nearly 5 percent to $25. Amazon, Yahoo, eBay—all down.
Fears of a credit freeze are growing as the contagion spread to banks in Europe. The Fed is already flooding the market with more cash through new powers it was granted in the bailout package. All of this makes you wonder if A) the U.S. government acted fast enough and B) whether the bailout package is going to end up doing any good.
As far as tech stocks are concerned, already as I write this, there seems to be somewhat of a rally going on in some of these stocks (particularly Google) from the lows where they opened. But if the economy falters, tech stocks won’t be a safe haven for investors, even if they are cash-rich and not as exposed to the credit debacle as companies in other sectors. The markets always tend to overreact to systemic risk because nobody knows how far the problems are going to spread. What we are seeing is panic in the face of the unknown. It reminds me of the market panic after 9/11. Investors whop loaded up on tech stocks then ended up making a lot of money.
Does this signal a buying opportunity, or are investors better off running for the hills? Who is buying (or selling) what out there? Tell us in comments.
Is there any reason Apple *shouldn’t* be down? What have they done lately?
“What have they done lately?”
Uh… record profits and market share? iPhone?
Apple may have great profits and market share, but analysts estimates are already built into the stock price. With the economy slowing down those estimates now look too optimistic and therefore Apple’s price will drop to reflect that. The only way to keep your stock price moving upward is to beat analysts expectations, which for Apple are insanely high.
Are u serious or just lacking a Brain… Turn around and tell Bill G. to get off of you..
lol apple fans caught feelings
you should distinguish here. apple is very exposed to a downturn – far more so than goog or msft – and the previous declines in the stock reflect that. apple produces high-end consumer luxury goods that would likely decline steeply in the face of a prolonged pullback in consumer spending. also, apple’s retail outlets sit on some of the most expensive real estate in the united states. major problem if no consumer spending.
I don’t see how the same doesn’t apply to Google ads or Microsoft IIS, Microsoft Office, etc. When consumers stop spending so do businesses. I think for Google it’s more small businesses and for Microsoft medium to large, but the logic is similar.
Also worth mentioning though that because stocks like Google/MSFT are cash rich, they’re likely to be the first to re-gain traction once things smooth out. If you can stomach the next few months…there are still some great buys in tech.
BTW, Apple has about 20 Billion in cash right now, lol. Google is every bit of susceptible. The ad slowdown has already been documented across the web.
I’m buying like crazy! The stock market is the only place where people run for their lives when the clearance rack is full. We’ve got some sales, some stocks are more than 60-70% discounts!
I feel bad for those of you who who are running.
People have been saying ‘buy’ for a year, claiming that they’re brave contrarians who know a market bottom when they see it. Sometimes when the crowd heads for the exit you should just walk with them and not look back. This is one of those times.
Keep walking then…more for the rest of us.
So how did the ” BRIDLED EXUBERANCE” work for everyone this time around? How was that lean & mean start up philosophy change the game? What, you mean we are not going to get anywhere with this cheap yet responsible business plan??
Completely on the sidelines. Tempted but not brave enough to get in.
Neil – I’m so tempted to buy a few things I’m eyeing but at the same time I feel it’s almost safe to just wait a few days, or a week to see how things begin panning out. I personally wouldn’t care if I bought at $1.00 more then what it is today if it means I have a better understanding of what is going on.
Basically what I’m saying is we don’t know when the lowest of the low will hit and I’m not trying to time the market, but just trying to play it a bit safe (currently 90% of my investments are in things like GIC’s, Savings Accounts, etc)
the market will down to 2010
So when will be a good time to start buying stocks cheaply (like under a dollar each) so I can end up making a bunch of money?
Waiting – way too volatile right now. Wait 1-3 days.
It won’t be down too long
If by “too long” you mean “the next five years” …
Sell, sell, sell. Check back in a few weeks once the dust settles
Be glad if you don’t have money tied up in the UK stock market. The FTSE 100 is at the same level as in mid 1997! 11 years ago! Your money would have made more in a savings account (average dividend yield isn’t that great). Shares as a long-term investment? Don’t make me laugh
If you have money in this game, don’t keep it in stocks and shares. Get involved with businesses yourself. Invest in your own projects, invest in your friends’ projects, and make much higher returns.
As always, the question is how long is your long term. Check out Barton Biggs new book: Wealth, War, & Wisdom for a quick overview of how well equities have performed over a longer time-span.
Metaphor Alert: Take it on the chin … Freefall … Blood bath … Credit crisis … Bailout plan … Credit freeze … Contagion spread … Flooding the market … Economy falters … Safe haven … Cash-rich … Credit debacle … Buying opportunity … Running for the hills …
Ha! Thank you Speed. At least he’s not going for an emotional response.
You should *never* bet against the market.
Buying into a market in free fall is horrible advice.
I can’t believe how many times I’ve heard this from people.
Does no-one remember what happened when the tech bubble popped?
It took 2-3 years of hovering around the bottom for stocks to start moving up again. There is plenty of time to hunt for deals. When people are no longer talking about stocks, when they have finally accepted the new reality that stocks aren’t worth scrap, *then* is the time to buy. Now now.
Exactly. The market is almost always a good indicator — i.e. if there is a sectoral decline then it’s almost impossible to make money, even by buying the best companies in that sector. The good buys right now are sectors and companies that are holding firm in the bloodbath.
The Tech Bubble Burst is a different situation entirely IMO. There are plenty of companies out there with very sound businesses that are well run and have good outlooks. With that said, I’d wait a little longer before buying. If you are going to need this money over the next year, I’d say definitely stay away from the market.
Of course it took several years for tech stocks to come back after the tech bubble burst. That’s because the overvaluation was in tech. But most of the real damage here are in the financials, real estate and any credit/insurance company. All other stocks are undervalued and should be the first to recover. It’ll be the FIRE (financials, insurance, real estate) stocks that will take a few years to come back around this time.
With that said, I don’t think we’ll see any serious rallying until some time in ‘09. Shit’s beginning to hit the fan in Europe and Asia.
It appears obvious to me that nobody really knows anything but that does not stop a lot of people from speculating and offering their advise and opinion.
Erick, you don’t know the half of it, take a look at this:
http://farm4.st...dee3fd851_o.png
Ask Mike to set you up with an Ameritrade account for the company.
These are the top movers on NASDAQ
Sun lost over 75% of it’s value and continues to plummet to absolute zero.
I forgot about the picks part of Erick’s question.
“Does this signal a buying opportunity, or are investors better off running for the hills? Who is buying (or selling) what out there? Tell us in comments.”
I’m holding several hundred shares of Red Hat based off of their 2 newest acquisitions.
http://weblog.i...at_buys_qu.html
They also have high paying enterprise customers that would flatline if RHT stopped support tomorrow.
Look at what happened to Sun after the MySQL acquisition and the GPL open sourcing of Java
finance.google.com/finance?client=ob&q=NASDAQ:JAVA
Check the 1y range on the sun link
http://finance....JAVA&ntsp=0
I think Sun may get either acquired or will flat line. I see MSFT as a potential buyer for .NET migration, but who am I?
Now is a GREAT time to buy … GOLD! Physical bullion delivered to your doorstep!
Oh yeah – and a “go bag” … get yourself an emergency backpack that is packed and ready to go. Mine has everything I need to survive the several week hike to the Canadian border.
I’M NOT KIDDING PEOPLE!
JAVA going flat line or getting acquired is a 50/50 split. I dunno. I’m pretty tempted. $4 Sun is pretty nice.
I see some anti-trust problems with MSFT buying, but they could point the finger at the GOOG/YHOO deal if that came up.
I’m tempted….
gold is at record highs and in the barter society you’re suggesting, it becomes nearly worthless. also, do keep in mind canada is being hit as hard or harder
i wonder how your advise reflects on your business sense…hmm…
hi when goog back to 2004 $80 you can buy
I think NASDAQ is weighted more to technology than S&P 500.
i bought AMD $16 current $4. I think it will down to $1
i bought INTC $21 currect $16 I think it will down to $10
Look at it this way, the leftist are actually going to see trickle down economics.
The market may very well continue to slide for a while although I believe tech/growth stock will eventually come back. The possible way to make money at this time is to buy low during big crush day like today, then do not be greedy, sell out when you see a percentage growth greater 4%.
now is time to buy stocks!
http://gatesand...s.blogspot.com/
To paraphrase Mr. Buffett: “When others are greedy be fearful. When others are fearful be greedy.”
I have my traps set for goog and a few other tech stalwarts. If you believe in a company and hold a long term view — you might just do very well 5-10 years down the line.
The market is starting to show the seriousness of the situation. Now, even our big banks are fighting each other in a break neck race to consolidate which is being done for business survival rather than business gain. Unfortunately, the bailout will not help them much. They are suffering and when they suffer, we all hurt. Individual investors should start looking for ways to protect their money. This basically comes down to either taking your money out of the market and cutting discretionary spending or diversifying and investing some overseas preferably in Asia or parts of Europe. I personally use offshore bank accounts and they have helped me with diversification and asset protection. If you want to read more on why offshore investing is smarter, feel free to visit my website.
Best,
Frank Miller
http://www.theo...bankaccount.com
Bought some AAPL, plus some protective puts. There’s no reason it should be this low ($89), but in an environment like this, you’ve got to use protection.
that worked out well. good day in the markets.
Take a look at this video from Cramer – WOW:
http://www.mefe...-risky/11794898
I’ve been making purchases of Amazon and Apple stocks, but think I started making each batch of purchases too close to each other, need to space them out over more time. The next 3-6 months will be bad, I should space them out over that period.
I put money into Goog and Aapl the day of the downturn and admittedly it was too early, but it was still a steal for what their longtern value is. I’ve already put buy orders in at a “doomsday” price as well… Somebody above mentioned longterm and they’re right, this is like a clearance sale for someone who can afford to invest the money and wait 5-years.
I admit that I can’t help from buying everything I can afford right now, which isn’t much, but I still can’t shake this feeling that fear is driving this downturn, and it won’t be long before the markets rebound. Am I crazy for thinking DELL is a steal right now at a 10-year low? And yeah, I still have GOOG from 3 years back (wish I had sold during the $700 days), and I still believe if anyone is capable or riding our economy’s inevitable rebound, be it in 6 months or 6 years, it’s Google, Apple, Intel, etc, as far as tech is concerned.
Yeah, no shit. No Profit = no stock price.
You pansy airhead startups, take notice. NO PROFIT=TRIP TO SHITTER
em… special stage.
However we always concern the stock. We should also think about the personal benefit.
Why not make money online like playing games.
And how can i use personal knowledge and wisdom to get extra money while surfing the internet.
I do not like gambling.
I found some interesting bet sites. Share to you:
1. DotBlu.com ( BluBet previously ), no real money, but big site.
2. Pikum.com – UK Sports Bet Site, can exchange real money
3. Hubdub.com – News Forecast, just share your knowledge and wisdom
4. Aviro.com – Bet on anything, can win the token, and exchange to real
money
5. SocialPicks.com – Investment Site, share stock ideas
6. Predictify.com – readwriteweb’s prediction, go with readwriteweb.com
7. Trendio.com – Bet on trends, new and simple site.
I don’t even look at the public stock I own these days, I know what to expect. Fortunately it is not much, I don’t trust public stock ownership and markets as a way to make money, it is just like casino.
I totally agree with you Loic. I would just add that stocks are actually worst than casino because they look like they can be predicted but they can’t be. At least nobody (or almost) pretends he will predict for sure the result of the roulette. However, just right here, it is fascinating to watch people saying they can predict the future.
So let’s just recall the only two things you can say about stocks :
Stock market is a BOUNDED system. So yes “nothing will go up to the sky and nothing will go down to the hell (except maybe lehman brothers…)”.
Then if you really want to invest DIVERSIFY your risks (companies, and sector of activities). So whatever you do, don’t only buy tech stocks. And beware that even if you diversify your portfolio, like now, when the whole market plunges everyone suffers, including Google.
So why can’t the market be predicted while market laws seem pretty simple ? Thing is predicting the market is essentially like trying to predict the weather. It is possible to predict some trends for the few next days but after that the sensitivity to initial conditions is just too high. Both weather and market are CHAOTIC systems. If you really want to understand what is going on with your shares (and also by the way with the climate) read this 20 year old best selling book : Chaos: Making a New Science, from James Gleick.
So personnally, like Peter Cooper said above, I invest in my own projects (which are by the way about observing and predicting things) and in my friends’ projects.
My two (euro) cents.
H
I read this article which explains what EVERYONE IS TALKING ABOUT. All these stocks are going to follow the market direction and below is why.
http://www.gotoguy.com/?p=402
strike when the blood is running in the streets.
if your a lion and you see a wildabeast, you go for the jugular!!! go for the companys that have been hit the hardest. AAPL, RIM, GOOGLE, ect. the earnings and EPS growth are off the charts.
Now is risky to trade/buy stocks financial crisis will crush you ,IMHO