Jim says:

I’m curious — does Andrew really look at the various numeric floors and ceilings to determine market sentiment? Think about it — 10000 vs 9000 — that’s a ten percent drop in a NUMBER. The underlying mechanisms are a conglomeration of the 30 stocks, weighted according to market cap and some valuation point in the past.

So, did ALL thirty stocks drop 10%? Or 5 of them dropped 20% and the rest went up? Or all thirty dropped somewhat random amounts?

I’ve always been a bit leery of watching indexes, only because I know they are weighted in potentially confusing ways, and that it is likely that even ONE stock can cause the index to take a big hit or a big increase.

I look at individual stocks usually to get a gauge on my health, and right now I’m in the red on everything for the year. I tend to be a buy/hold investor, unless it is something that gives me above a certain percentage return for the period I hold it, at which point I usually sell. If I’m down, I tend to hold it unless I need the cash for something important.

My biggest problem was that I HAD to take mutual funds in my 401k account. My sep/sar I could manage myself, which I did and it has done quite well even now.

But there are many investors that would be looking at the markets and panicking, usually because index X goes up or down Y. A biiiiig number. Round and all that. As opposed to looking at the individual stocks and sectors and determining that the underlying businesses may be sound but that the market is selling off because of biig numbers and not because of physical problems with the businesses themselves.

How much of the market swings that we have are from such stupid reasonings and the herd mentality? If you’re buying a stock at 22x earnings that returns 0.25 per share, at what point do investors look at that and suddenly decide it’s only worth 12x earnings, even though nothing else has changed?

I’ve always been curious at the mentality behind deciding a stock price is good or bad. I tend not to overanalyze a stock, I look at whether the products and services have a good cash flow, that the business itself seems to be managed well, that their advertising makes sense, and that they have a good customer following. Not to mention, if they produce goods, that the goods are viable and things that people want/need.

A lot of what I see in the stock market pricing is a “bet” on whether the valuation of the business will increase over time from profit returns and capital. How much of that bet is based on realistic expectations and how much is based on foolishness?

John brings up those weird market surveys now and then — like how within five years a market that is worth 5$ million will be worth 8$ billion based on “trends”. The stock market seems to go that way quite a lot at times.

I think we will have another 3% off today, with a recovery on thursday and friday of 5%. Just a guess lol.

Lou says:

The DOW has support at 8000. I don’t think we will go that low but we are setting up for a rebound. When it turns it will move quick. 48% of all stocks were hitting 52 lows yesterday. The market is oversold right now. + all the guys selling are sitting on a pile of cash just waiting to put it to work.What we are looking for is a double bottom. Thought we may have had one yesterday, but it failed and went lower.
My fav trade is short oil, it has more pain in it.

J says:

# 5 Paddy-O

Too bad it is the other way around.

Paddy-O says:

#6 “Too bad it is the other way around.”

Really? McCain has been gaining in the polls in the last 3 weeks? Link?

Paddy-O says:

#9 “with all the stocks dropping, WHY hasnt OIL??”

Oil is a commodity. It’ll drop if global demand drops. Otherwise, you’re SOL.

Henry Gandolph says:

John, I saw the post debate activity of the candidates differently than you. Neither Senator stiffed the other. Mrs. Obama was not oblivious to the other candidate and his wife. You’re such a cranky geek-geezer just dislike Barack Obama so much you’re making things up. Look at the video from C-Span.
http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=281621-101&showVid=true

or go to C-Span.org to the Video Library to find:
Presidential Candidates Post-Debate Activity.
The video shows something very different than what you remember.