Well, we've had a nice drop in the stock market. What's going to happen now? Cramer's rant wasn't cheerful.

Question

http://uk.youtube.com/watch?v=SWksEJQEYVU

I tend to agree with folks who see some danger at the moment. The next month or so will tell, but if we have massive defaults, the Fed might not be able to fix the problem.

Answer 1

Funny, I've been looking for a place to vent this out aside from my usual forums & blogspot.
Without getting too deep,Cramer is on the money(pardon the pun) with this one.This has the potential to get very messy, and I'm not sure Bernanke has the handle on all of it as it sits today.
Financials rule the DOW now as GM once ruled it years ago.The LBO craze has been the darling of finance for years and now even its sails are losing the "wind" they once had.With major corporations having just as much cash as the banks commercial banks needed a new market in order to profit.Enter cheap rates and the ensuing housing boom.The more paper you write (mortgages); the more money you will make. This would hold true save for one thing:where's all the money going to come from? With corporations streamlining through efficiency and automation LESS jobs are needed.More companies moving their operations to CHINA means LESS Blue-collar jobs as well.(blue-collar jobs have been, and still are the backbone of the american economy for years.) Cramer let it out that there's 7 million on "teasers", the most i've heard publicly was 2.5 - 3 million. MORE LIES!
I personally called the housing market "dead" to friends and family (I'm not a FA) in august 2005.In Feb.2007 (feb 9th to be exact),I surrepticiously asked a local FA on talk radio what he thought of the financial sector: He was Bullish.He was holding (NEW) long and was looking to add to it as I was Short (NFI).I called him again in late March after my 52% gain and we chatted. We're friends now.
All that aside Cramers "rant" has merit.With 7 million teasers ,...theres a lot of money in red out there.The scary part of this is that it has a long ripple effect throughout the economy.This is why I think Cramer is saying that the FED is "asleep" and also why there's a link below that says more than I ever could.
What's going to happen now??? Not much.The FED "band-aid" is going to work as it usually does. Here's the credible part:Will the market touch the FED b&b (bactine & band-aid)?? If it does , its going to realize that even though it feels better,if you touch it,it's going to hurt and will take some time to heal.
Its my hope that this market corrects some 8-9% , as this will hopefully offset some of the inflationary pressure the FED bail out is sure to bring towards the end of the year.I don't see the FED rolling over this debt , as it is doing so for debt incurred to the war in Iraq.This will come due about the time the Bush tax cuts will expire, so no matter what party is in office your taxes are sure to rise.
Cramers "rant" was on 8/04 to cut the discount rate, and the link below is dated 8/10, so Bernanke chose the bail-out instead of the cut.

Answer 2

Well if Cramer was not cheerful, what do you think about how cheerful the rest of us are. Heck I do not know what is going to happen now, but certainly some preventive measures are called for such as liquidating your poorest performing positions and building up about a 25% cash reserve for example. Could come in very handy if the market drops another 2000 points and It might.

Answer 3

it rather is furnish and demand... whilst a set of people worry the fee of their inventory will pass down (by another marketplace tension) they panic and sell their shares. in basic terms like with the rest interior the marketplace, whilst it gets flooded with dissimilar furnish, the fee drops because of the fact it rather is way less scarce. many human beings make investments the incorrect way. They see the marketplace is doing properly, so they choose that they want slightly. Then the marketplace starts off to say no and that they panic that they'll lose their funds, so they sell. in fact, you're greater advantageous off to speculate whilst the marketplace is down for the reason which you may get greater shares on your greenback. Then sell whilst the marketplace is severe... you spot?

Answer 4

It's going to go back up because money is plentiful in the economy. Now the FED is pumping more easy money into the banking system. Stocks never go straight up, so the nice drop kept things in check.

Answer 5

There's only 2 things that are going to happen for sure. The market will go up. The market will go down. Stop trying to time the market. Making decent returns is about "time IN THE market." Buy a book about it, preferably "Personal Financial For Dummies." Any one who says he knows what's going to happen, is lying.

Answer 6

it was announced this morning if anyone even bothered to watch the Fox buisiness block, the credit infusion is cancelled. I am expecting a 300 + point drop on Monday.

Answer 7

If we all knew, we'd all have a lot more money. What will happen now??? The market is volatile, it will continue to go up and down from now til forever.

Answer 8

Credit squeeze isn't over yet. I'm expecting (hoping) we'll see a bit more of a drop before things ease.