Stock market crashing

[Benihana]

Down as much as 900 points as of 2:45 ET on Greek-debt concerns.


Crazy.

[bucksfan2]

Lost some serious money today.

[oneupper]

Market had been rising without much money flowing into it.

That will produce air-pockets such as this.

[Cyclone792]

I've been expecting a correction, but I didn't expect one to happen as quickly as what we've seen this week.

There's much more to say about all this, but it likely belongs in the Peanut Gallery.

[bucksfan2]

Market had been rising without much money flowing into it.

That will produce air-pockets such as this.

Can you explain without getting too technical and not breaking any rules?

[oneupper]

Can you explain without getting too technical and not breaking any rules?

Sure. Investors haven't been committing a lot of new money to the stock market, but it has been grinding higher. The same cash was just being recirculated. The market kept on going higher because of the expectations that it was going to continue higher. (side note)

Once that expectation was broken, there wasn't a steady incoming flow of cash ready to buy the dip generated by a little selling pressure. And it escalated...like this week and particularly today. Lack of buyers rather than excess of sellers.

(side note - Investors buy for two main reasons: because they think its cheap or because they think its going up)

Nothing textbook here. Just many years watching the markets.

[jredmo2]

Can you explain without getting too technical and not breaking any rules?

I think what he basically means is that the stock market had been steadily rising faster than actual GDP growth, resulting in overvaluation and then a correction today.

While that's true I wouldn't ignore widespread fears that we are on the precipice of an international debt crisis. A very scary and unknown chain of events would transpire should a major international default occur. That's not exactly what is happening here, but it's frighteningly close.

[BuckeyeRed27]

Details are still coming, but it sounds like this had a lot more to do with trading error and incorrect electronic pricing of P&G stock than anything else.

[Will M]

I think what he basically means is that the stock market had been steadily rising faster than actual GDP growth, resulting in overvaluation and then a correction today.

While that's true I wouldn't ignore widespread fears that we are on the precipice of an international debt crisis. A very scary and unknown chain of events would transpire should a major international default occur. That's not exactly what is happening here, but it's frighteningly close.

FYI - the earnings of large cap stocks can rise faster than GDP growth because there are a lot of multinationals in the S&P 500. they can benefit from the current growth in foreign 'emerging markets' (think China) that is greater than the US growth. they are also currently 'tightening the belt' so to speak by doing things like layoffs, cutting excessive salaries & getting their debts in better shape. some of these latter issues are one offs in terms of profitability but the exposure to higher growth markets is not.

[muddie]

If you're in for the next 5-10 years this is good stuff. The market has been moving up on fairly light volume and that has concerned me. There is a ton of money sitting in bonds, money market, and pillow cases that will eventually find its way back to the market.

It does look like there was some screw up creating the plunge.

[Blimpie]

Greece might have started the economic death spiral due to their contribution to the European debt, but it will likely end up being the messes in Spain and Portugal that seal the deal.

[bucksfan2]

Yikes! One big error led to a 600 point sell off. The mistrade of PG for $39 produced a spiral of events that led to some S&P 500 stocks going to $.0.

[Kingspoint]

Lost some serious money today.

You can only lose if you sell.

Did you sell?

If not, you didn't lose anything.

[bucksfan2]

You can only lose if you sell.

Did you sell?

If not, you didn't lose anything.

No I didn't sell anything. More of a shock to see the market plunge nearly 1000 points. Reminded me of 2008 for a second. Actually I wish I had more funds available to double down.

[redsfandan]

I'm really glad that my investments have been (for the most part) pretty conservative the last few months. Just not a stable market right now.