Ouch
Posted by Michael.
For those not paying attention this afternoon, consider yourself lucky. The markets were not fun to watch, with the worst loss since the post 9/11 restart.
One interesting element of the selloff was an instantaneous 200 point drop in the Dow at 3pm, a result of trading blocks being removed and queued-up sell orders taking effect. Since the market recovered a little from that point, and it looks as though global markets are keeping losses to a (relative) minimum, we should be able to “look back on this and laugh”… but it’s kinda interesting to think about how such an “equipment glitch” could have stimulated the kind of panic that we saw 80 years ago. (Maybe not too much a stretch since China’s margin situation is similar to what we had back then?)
</nerd> sorry, i just thought it was worth mentioning.
February 28th, 2007 at 10:18 am Using
I have a feeling that this is just pretty normal profit-taking. The market needs corrections every now and then to force people to re-evaluate their positions.
Remember the best investing advice: if there’s a stock that you think is a good investment, you should buy when it’s price goes down. In order words, do your homework and then stick to your guns.
Of course, it doesn’t help at all if you do your homework wrong.
February 28th, 2007 at 12:17 pm Using
yeah, this morning there were a whole lot of bargains on the table. took a little guts to plunk down some $$ in light of yesterday, but no pain no gain? After all, if you like a stock at $75 you’ll really love it at $45. I’m curious to see if this morning’s rebound continues or if we’ll get another few percent correction. 450 points is a lot, but 3% isn’t a lot.
February 28th, 2007 at 12:21 pm Using
and really, the interesting thing about the 3pm drop was now everybody has been talking about the new electronic systems and the “hybrid trading system”, and wondering how it would respond to a volume crunch. without sounding all luddite, maybe going all-tech isn’t (Yet) the way to go? had things turned out differently, we could have talking about a machine-induced 2,000 point crash instead of a 200 point blip.
February 28th, 2007 at 2:06 pm Using
Well, it sounds like there was no problem with buying and selling stock at the correct prices. The problem was just in computing the value of the DJIA. And, while it’s the most quoted index, I think it’s one of the least meaningful since it’s only based on 30 companies. (Someone can correct me there if I’m wrong.)
Anyway, I’m not expecting to regain all of yesterday’s lost value in a day. The decline was based on lower economic growth and some problems in China after all. (As opposed to market changes resulting from rumors alone.) I give it a month to climb back up.
February 28th, 2007 at 5:23 pm Using
The only stock I really follow at the moment in Danaher since Kirsten has options and all of my retirement money is in index funds. Anyway, it’s very interesting to see what DHR’s volume has done in the last day or two. It’s been at a pretty constant 74 with basically no trading. Then you see the market tanking and the volume going up significantly as people sell to keep their profits. This morning though, there’s a big volume spike that I assume corresponds to a buy of over 200,000 shares and the price heads up to close about a dollar higher.
Of course, that means that someone out there shoved something like $14 million into DHR stock this morning and now has an extra $200,000. Given that Danaher’s growth has been outpacing the rest of its sector by around 12% and the rest of the industry by about 2%, I’m guessing that the $14 million has some more room to grow.