That person is a floor specialist. The floor specialist buys and sells stock out of his inventory to maintain an orderly market in the stock. He’d be exhausted and in the same position if the market was up 300 points that day.
As was recently discussed iin a thread on market cap, the price of shares depends on how much money is chasing them. Over the last 10-15 years, vast amounts of money were borrowed & poured into the stockmarket, bidding up the prices, which in turn was used as collateral to borrow more money to buy more stock & bid up the price further.
It is not an exaggeration to say the stock market was supported by 1 “real” dollar and 10 borrowed dollars. All 10 of those borrowed dollars are being retracted from the market, and in much less than 10-15 years; more like 10-15 months.
The selling under pressure has just begun. This isn’t the beginning of the end of the downturn; it’s probably not even the end of the beginning.
IMO, Dow 1500 is possible. Dow 3000 is all but a sure thing.
That is an exaggeration. The minimum maintenance requirement is 25%.
I agree any given margin account has a minimum.
But there are lots of other ways that borrowed cash gets driven into the market, most of them on industrial scales, not on the level of your or my retail account. The gross effect of all the leverage everywhere is, IMO, well over 90%
I don’t understand this. How can their economies have been destroyed? The governments are still functioning, the garbage trucks still running, the people aren’t starving. So what does it mean that “The economic crisis has already destroyed the economies of four countries…”???
But at what point do people just say “Well it ain’t worth anything anymore so why sell?” If people REALLY THOUGHT 3000 was a correct valuation, it’d already BE at 3000 right now, correct? So what’s everyone missing here?
Bear markets can go on much longer and farther than anyone thinks is “reasonable.” Just ask the Japanese.
Look, all bets are off. This is not a “normal” recession. Heck, one poster in this thread was crowing recently about how this is great times about a month ago and you would be an utter simpleton to not buy GE because it was cheap and had a great yield. Well, it’s gotten about 40% cheaper since then, and if I read my charts correctly the dividend yield is 4% and change (after slashing the dividend 68% for the first dividend reduction in 70 years). And of course, it looks like GE is going to lose it’s AAA rating, thus raising borrowing costs and reducing profit. And, if things get realistically worse, the rating will be cut so far that GE has to refinance a metric buttload of it’s debt. Not that bad yet, but it’s not implausible.
GE is probably not an extreme case, and you can’t get much more blue chip and “safe.”
The only good thing I see out there is that the market volume has been ok. Stocks are a zero sum game - there is one buyer for every seller. Don’t believe this horse hockey about the market went down because “buyers outnumbered sellers.” Anyhoo, it’s one thing if a market falls 10% on very thin volume and a much better scenario if it falls on big volume. Big volume implying that those buyers do see value.
I used to be a derivatives guy, and now I sell “stuff to run their business” to most of the global banks in Hong Kong. Across the board, the optimists are hoping by the end of this year, they will be able to see the light at the end of the tunnel. Eg, only the real optomists think there will be a bottoming of the markets in 2010. Take that for what it’s worth.
The other way to look at this mess, is when are property values and toxic assets be marked to what they are really worth today. The residential property market simply will not bottom until the majority of people that can’t afford their homes and never should have been a homeowner in the first place, lose the home, and the value reset to what the market can bear. And I would say we are what, 25% or 50% from there. And it will take at least 2 years to absorb the repos down to that level.
All we need now is a major earthquake in the San Francisco Bay area 
Mk VIIAll, Please walk three circles to the left and spit.