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The Stock Market Is In The Toilet. When Should You Buy?

Read more articles on Finance and Movies, visual media and Investing.

January 20, 2008

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

The Dow finished over 14,000 for the first time on July 29, 2007. It reached its all time high of 14,164.53 on October 9. It is now closer to 12,000, a difference of 14%, officially a correction, but really more of a bumpy ride since investors have begun to lose money.

How bad are things? Well, from the end of July to January covers a six month slide. On Thursday, twenty-five stocks hit highs on the NYSE, while four hundred seventy-three hit lows. On Friday, the toll was thirteen new highs and six hundred thirty-four new lows. See how the odds stack up against you in a down market.

If you study stocks by comparing their performance over time you begin to get deeper insight into how the market operates. To start, when I wrote about Ford, F, and General Motors, GM, in September, 2006, Ford was around $9. It is now $5.92. General Motors had a range between $18 and $33 then. GM is now $23.52. If you think they will recover and whenever you think the bottom of this correction happens to be would probably be a good time to buy since both stocks, like many other equities in this market are both comparatively low and should recover as a normal part of their stock cycle. If Federal Reserve Chairman Ben Bernanke puts liquidity into the economy by lowering interest rates, it should help some.

Blockbuster, BBI was $5.40 in November, 2006. It closed at $3.05 on Friday. Netflix, NFLX, its big competitor, was about $29 then. It is $21.85 now. Unfortunately, it appears the video business is going to follow in the footsteps of the music business in the form of on-line streaming so that should complicate the business just as it has changed the way consumers have approached cds and downloads.

Eastman Kodak, EK, was $26.45 then. It is now $18.21. The conversion of the photo business from silver acetate to digital format has increased competition and created problems for a company that was once the dominant picture company.

So following stocks over time is worthwhile for the insight it gives and the option to earn money by investing, if you think the time is right. If Federal Reserve Chairman Ben Bernanke lowers interest rates at the end of the month, that should be a stimulus to the market. Of course, Hillary Clinton has said she wants to freeze rates, which would cause problems, since she has a lot of clout, but is capable of talking nonsense. Keep in mind that Mr. Bernanke only got cream puff questions in his recent testimony before Congress. “Now, Hillary,” is a far more demanding approach that I, of course, believe is a far, far better approach than has be3en taken before. After all, despite the empty rhetoric from Washington we still live in the here and NOW.

Last 5 Entries by neillevine

• Tax Cuts Follow The Bouncing Interest Rates - November 3rd, 2008
• Fund Raising, Jobs, The Future Of The Economy - October 24th, 2008
• Term Limits, Debates, Speaker Pelosi Investing - October 17th, 2008
• Economics=Dismal Science. Budget Deficits Balance Of Trade - October 14th, 2008
• Cam Getting Osama Bin Laden Boost Confidence - October 8th, 2008

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