Woohee!! My company’s stock has lost ~25% of its value ($16.xx to $12.xx) since last week, and we’re doing great! We’re primarily a drilling company and we’ve maintained a 95% utilization rate (which is to say we’ve been running the rigs at full tilt) all year. Rig rates are up and we’re building two more. We’re looking at a couple of acquisitions and our exploration program this year has been tres successful. Production revenues have probably not been as high as this year’s in a long time, if ever.
And our stock is dropping like a rock?
OK, I know it’s not just my company. And maybe the dot.commies (who’ve dropped ~50%) would say we’re in a gentle glide. Still, what’s happening? Can plebicitus interruptus (don’t shoot me for that) really be causing the markets to dither and fret? Surely the money knows that there will still be an economy no matter who becomes President.
Or are we really seeing some major downturn in the economy? The Fed’s been tappin’ the brakes every couple of months for fear of the economy overheating. We kind of knew there was a bubble in the tech stocks. Energy prices are higher than they’ve been for a while. We’ve heard reports that the wide open computer markets have hit their first saturation flat spot.
Does anybody have a good handle on what forces are acting on the stock market (and the economy as a whole) right now?
(manny and Chronos - apologies in advance if this, as I can easily foresee, turns into a Great Debate; I am at this point just seeking info from those who follow the market.)
Well the stock market has become a very complex animal these days, especially with sheer amount of people directly plugged into the thing.
Anyways, one thing the market does not like is uncertainty. The uncertainty concerning our next president is an important factor in the current market behavior. One this resolves–whenever that might be–the markets will surely have a recovery. Other extremely important things are earnings, the economy slowdown and the fed.
The overall earnings results for the past quarter were not quite up to snuff which led to a good deal of selling off. Also the earnings forcast for the results next quarter don’t look to be even less stellar. Even more, a lot of the flagship stocks within their sectors–like Nortel, Intel…et. al–have not been performing up to snuff. The market likes leadership, which it is much lacking currently.
Maybe others can elaborate mor on the economy slowdown and the fed. But the fact that the fed, apon their last meeting, didn’t change their bias was only another unfavorable thing for the market.
It’s hard to say what’s going to happen from this point on, but many people have lost their appeal for the stock market, and therefore there has been a lot of “throw the baby out with the bathwater” selloffs, where people are just bailing out of the market selling everything. At least in the somewhat short future, when the presidentcy is resolved, this will be positive for the markets. If you’re looking to get out, a good time may be in the recovery rallies following the resolution of the presidency.
b.) Based on frequency of typos, you’re drunker than me;
I then have to ask, is this election uncertainity really a factor in what the markets have done in recent days? I can see a little bit of investor hesitation, but this prolonged experience we’re having would seem to me disconnected from the Presidential hijinks.
Well I think the presidency is having a good sized impact on the markets, that being combined with all other things equal “Market behavior no good right now.” Like I was saying, the market doesn’t like uncertainty.
Watch the whole presidential matter tomorrow and see how the market reacts to the news. Hopefully the Supreme court will offer some resolution to this thing.
BTW, it’s in popular opinion that Bush becoming President would “best” benefit the market.
Actually one interesting thing I was thinking about:
A lot of people are in Janus funds. These funds are negative for the year. But, ALSO they have adjusted their portfolios and sold long time holdings this year. So that means when people start getting their statements early next year, aside from having lost money, they will have to pay capital gains taxes to Unca Sam on top of that. So I’m thinking when people notice this there will be a good sized bail out of these funds, which are extremely popular. Which means they will have to sell large stock blocks to get cash–hence the stocks in their portfolio will go down a bit. So you might want to look at their holdings and make sure you don’t have them.
Does anybody have a good handle on what forces are acting on the stock market (and the economy as a whole) right now?
To answer your question formally: many “economists” think that they know what forces act on the SM. They are trying to predict their direction but cannot. It’s better to view different classes of stocks (by cap, by industry, by P/E ratio, etc.) and analyze/predict them separatly. The same with the economy. True, the entire thing may behave as a whole (Great Depression) but usually (lately) different industries lag and bloom at different times. And things should be taken in comparison and over long (what?) periods of time. If one industry (not its stock; they may or may not correlate) grows 15%/yr and another 5%/yr, what is your conclusion? Is the 5% one is failing?
Besides pure objective economic and financial reasons, purely psychological ones could influence the SM, far less significant than presidential elections. For instance, the rumor that a tycoon is divorcing his wife…