This is a multi-year chart. Notice that it's dropping off a cliff. Also note the volume -- it's huge.
The SPYs have dropped 42% since their highs a year ago.
I've got nothing left to say.
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Think McCain's got a solution for this modern Credit Default Swap razzmatazz?
He could read you on the Internets if he knew how...
sheesh. how low will it go?!?
Well, it's unlikely to fall below zero.
in the great depression, the markets ended up at 10% of their highs...that would be 1,400 for the dow this time around...doubt it'll go that low, but maybe Bonddad has a guess as to the low?
Look at the DOW chart for the past 28 years (since the beginning of the now deceased Reaganomics funny money economy). It was at 1000 when it all started. Figure a 6% return. That should put the DOW around 5000 or so.
If we are lucky.
Why not let the financials burn, but open up the fed for lending to industry?
Dow 3,500?
There's nothing to do but wait for the government to buy up all the bad mortgages to give the housing market a floor.
Until the housing market has a floor, the deriviative-based house of cards built on that foundation cannot be valued.
Until the value of the derivatives are known -- however low that may be -- no-one can trust anyone else's balance sheet.
Until banks can trust each other, there will only be solidity where liquidity is needed.
Until there is liquidity, the economy will continue to tank.
IT'S TIME TO BUY THE EFFING MORTGAGES!!!
Jim,
So we create an "artificial" floor to the housing market. Who the hell is going to buy enough of our treasuries to fund those trillions of dollars. And when our borrowing costs go up because we flood the world with treasuries, what do you think happens then?
We are going down the path of bailing out everything. The end result of that is the US defaulting on its debt. The problem is too big to bail out. We are destroying our future.
You know it's bad when not even a dead cat will bounce. What we're seeing right now is clearly a panic situation where people are just fleeing for the exits. Eventually we'll reach a point where people realize it's oversold and we'll bottom out.
Right now the S&P 500 is at the same levels as it was when it bottomed out during the last recession. So it feels to me like it will bottom out soon. If you took the S&P 500 from back in the 80's and project out 7%/year growth, you'd get to a value of around 800 today. It's at 866 right now.
Now keep in mind, that doesn't account at all for the fact that there's great investment in the market more broadly because of 401k's, etc. So I feel like a bottom around 700 is reasonable here.
But who knows. It just comes down to a question of when people start freaking out. I can't say as I was too pleased to see my 401K had lost 1/4 of it's value. Fortunately I have lots of time to make up for that.
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