Most of my stocks has dipped below the purchase value, including my friend, so what is the cause (DJ 1400, recent quarters perfomance??)
2007-08-01 08:51:24 · 4 answers · asked by Carlos H 1 in Business & Finance ➔ Investing
Fallout from Sub-prime and other mortgages is the cause of most of the down market. Treasury and bond yields also took a hit last week further weakening the market. Corporate earnings are looking great however and I think the market will recover and be back near 14000 by the end of August.
2007-08-01 09:02:16 · answer #1 · answered by mth83vt 4 · 0⤊ 0⤋
Which stock is your friend? I want some of that.
The hot money had been ignoring the mortgage default fallout for some time and driven stocks on a nice run. When news hit of more hedge funds failing over mortgages, it brought back memories of Long Term Capital Management's failure in 1997 or 1998, and it gave an excuse to lots of nimble traders to take profits. After the market had gone up most of the year, a downturn like this can feed on itself as people move to protect their paper profits, and short sellers get bolder.
What really drives markets is not news but the psychological reaction to news. This just happens to be one of the times when mob psychology is having a noticeable effect.
2007-08-01 16:25:29 · answer #2 · answered by Houyhnhnm 6 · 0⤊ 0⤋
There is currently a crisis going on in subprime mortgages. A ton of people are defaulting on their loans, and this is affecting other sectors of the economy as well.
2007-08-01 16:10:19 · answer #3 · answered by jon j 2 · 0⤊ 0⤋
Housing market, credit and consumer spending.
2007-08-01 17:39:54 · answer #4 · answered by Anonymous · 0⤊ 0⤋