The stock market lost $1 trillion today. How can $750 billion be such an emergency?

[billyoc]

I mean, really. :eyes:

[Patsy Stone]

1. It's in the wrong place

it needs to go into the banking sector specifically.

[WannaJumpMyScooter]

2. that is not real money

they could make a trillion more... big difference than actual money coming from taxpayers

[BigBearJohn]

3. Great point. I was thinking exactly the same thing!

[TexasObserver]

4. See, that's where you're wrong.

The market is adjusting to reflect TRUE values. That trillion dollars you imagine disappeared today? It was already gone. The VALUE is not real, which is why the DOW has to come down.

Listen to yourself. You're saying it takes a $700 billion infusion to keep a trillion in dollar value in the market. NO. The markets are full of air, which is what always happens when leverage plays too large a role in business transactions and risks.

[prayin4rain]

6. yeah i agree... the market just got a dose of reality today, no more living in fantasyland n/t

[WannaJumpMyScooter]

7. a small dose

there are those who are not insane saying we could be looking at an 8k DOW by year's end... that, they feel is the real value

[TexasObserver]

9. I've long felt 9000 is closer to the real number on the DOW.

I do not think we will see the bottom of this until we get under 10K on the DOW.

8000 seems a bit far to me, but 9000 could happen.

[RollWithIt]

5. Sigh...... the market bet on the bailout happening, and when it failed, the market steamrolled....

Sell orders flooded the floor. Many of them weren't even recorded. Wait until tomorrow. This is a disaster. Anyone with a 401k account (50 million Americans) or any sort of retirement savings account lost at least 4% today. You act like the "market" doesn't equal your neighbor. It does.

[WannaJumpMyScooter]

8. bull shit, it was falling when

the bailout looked like a sure thing... Asian and European markets fell before it failed, explain that

[sixmile]

10. If people only knew how the market really worked

One trillion was not lost today, it simply changed hands.
Every time a stock goes down someone, somewhere is making money!
If your mutual funds or 401K investments have proper hedge bets to protect downside risk you are probably not losing.
If you were short or owned put options, for example, on Wachovia Bank last week, you made a fortune! If you owned Wachovia stock or call options you got wiped out.
It works both ways at the Wall Street casino.

[WannaJumpMyScooter]

11. Exactly right

although, very few get that

[sixmile]

15. I'm trying to convince a guy in another recent thread

It's a simple concept really.

[aint_no_life_nowhere]

12. When there's a massive sell-off and investors are in a full sell mode

where is their money going? Sorry if this is a completely ignorant question but I've been wondering how that works. When institutions and major investors cash in on their stocks in a massive way I assume they receive money for their stock sales, do they not? The stock may lose value and the underlying companies that have issued stock are worth less on their books. But as for the traders themselves (major companies that trade stock in other companies and major individual investors) have liquid cash on their hands. Where do they put it? Do they immediately reinvest it in safer companies? Or are they sitting on it waiting for the market to hit bottom and then buy?

[WannaJumpMyScooter]

14. most of them use that to pay off

their own debts, but some gets saved for another day, some re-invested in the now lower-cost stocks

[aint_no_life_nowhere]

16. I was just wondering if that actually helps short-term liquidity

For example, is this cash that institutions and major private investors are receiving from the massive sales of stocks going into banks for awhile, pending the return of a more bullish market? Is it also going to ensure payment of salaries? I realize it affects the ability of the companies whose stock took a hit to get loans as their assets are now diminished and will affect the long-term ability to borrow. But could it have the effect of a short term injection of capital into banks and lending institutions (for example, if they pay down debt as you mention)? I do assume that some companies might be buying their own stock back as it goes down.

[WannaJumpMyScooter]

18. the biggest problem is all the credit

someone somewhere stopped taking it and wants cash... lots and lots of people, funds, banks, what-have-you don't have it. they have to sell shit to get it

[sixmile]

17. That is the crux of this crisis-plenty of money nowhere safe to put it

Spreads on Treasuries were negative last week. A bad sign. When investors have tons of cash with nowhere to put it, it tends to flow OUT of the country. Which is exactly where much of it is going. Though not necessarily safer, the overseas yields are better. It also goes into old paper (debt), short term real estate plays, and other liquid vehicles.

[OhioChick]

13. Good point. n/t