Monday Blood bath for the Dow?

[Basil]

Re: Monday Blood bath for the Dow?

That would be a "deer". A "dear" is a loved one, which one wouldn't want to park in front of oncoming headlights. Come to think of it, neither would one want to park a "deer" in the .... oh, forget it.

Thanks for catching that. Unfortunately, the typo was more accurate than I had intended. Several of my loved ones are screwed. My in-laws used to boast about how they had never sold a mutual fund. I wonder how they feel about that now. My sister is still with the financial advisor who told me how mistaken I was when I withdrew all my funds from the market one year ago. She also just bought a very nice house that borders on a high crime area and has another house she wants rent or to sell. Her retirement accounts have been in index funds. My sister in law finally did a short sale for her house in Florida. Not good.

[Guest]

Re: Monday Blood bath for the Dow?

We need to put such financial advisers in front of an oncoming Mack Truck, so they can discover how many wits they really have about them.

[tsetsefly]

Re: Monday Blood bath for the Dow?

I wonder. The frog cannot be very comfortable at this point. My inlaws certainly agonize about the decimation of their portfolio as they watch the date of their planned retirement recede into the future.

I don't know if steady acclimation is quite the right analogy. I wonder how much of the market's recent motion is driven by small time retail investors (such as my inlaws) versus professional money managers. I think the retail investors are slow to unlearn the "buy and hold" programming they've been subjected to from every mainstream source for the past couple of decades, and are scared of realizing losses. They never thought the market was over-valued to begin with (because the financial industry's captive press told them so), and they see the recent drop as an aberration. Therefore, their expectation is a rapid "return to normalcy", and they are more afraid of missing out on the recovery than they are of sustaining further losses. Further, the buy-and-hold programming prevented most of them from selling in the early stages of the bust, and now the market has fallen far lower than any of them could have imagined. At this point, I imagine the shock of unexpectedly losing half the value of their portfolio is so severe that the psychological perception of losing another 25% is almost equivalent -- in their minds, they have already lost everything.

Rather than frog-in-a-pot, I wonder if a more gradual decline would have caused more retail investors to exit the market sooner (point wise). If stocks had been on a gradual losing streak for a year or two, perhaps fewer retail investors would have felt the drop was an aberration, and fewer would have been psychologically trapped by the shock of the decline.

my new post precisely deals with this, as I had the same question. Who is still in the market?

Financial advisers still think it will recover and they are selling it hard:
http://www.itulip.com/forums/showthr...0658#post80658