The Stock Market

With the Stock Market bottomed out, is now a good time to buy stock? Isn’t this how a lot of millionaires made their money during the great depression?

It hasn’t necessarily bottomed out. With the way things are, I feel they could still fall further.

But if you feel that they’re not going to fall any further: buy, buy, buy.

What makes you think it has bottomed out? It may well fall another 10, 20, or 40%.

If you have enough money to get a bunch of diversification, buying now may well be an excellent decision, when viewed from the hindsight of Dec 2020. But it may well look positively awful when viewed from 2012 and neutral when viewed from 2015.

And if so, you’d do a lot better to wait until 2012 to get in.
To paraphrase the great philosopher Yogi Berra… Predictions are hard, especially about the future.

One problem is that you don’t know when exactly the market will have “bottomed out”. If you had bought stock between Sep 1929 and Oct 1930, thinking that the market had bottommed out, it would have taken you at least until 1945 to see a return on your investment.

The other problem is that companies are trading at the values they are trading at because that is what people currently think they are worth.

Ooops, I should have said bottoming out instead of bottomed out.

I read an article a few months ago stating that now would be a good time to buy stock in companies like Fannie Mae. The last I looked, FNM shares were selling at around 70 cents. Two years ago they were up around $70.00. Washington Mutual is hanging around 3-5 cents, from around $45.00 two years ago.

Is it smart to invest a few thousand dollars into companies like the two mentioned above or are they a lost cause? Will it really take 10 years to see any improvement? Is it possible for the stocks to return to where they were two years ago? Would I be better off to invest my money in something like a trip to Vegas? :wink:

Financial stocks will remain extremely risky for the foreseeable future. Many banks are still going to fail, and then you lose everything. I personally know someone who lost $120,000 when Downey Savings and Loan went tits up.

That’s a concern of mine. The article did say that Fannie Mae will always be around, but is this true?

I’m from the UK, so I’m not well qualified to comment on US stocks, but I do think that here, with most of our banks semi-nationalised, they are a safer bet than most. But not so safe, I must add, that I’m actually going to invest any more in them at the moment!

I don’t know about ten years, but several years, yes. I’m not looking for an upturn until 2010/11 at the earliest.

I started investing in the mid '70s, and based on experience: very definitely yes, it is possible. But for that to happen, we need to get out of our currrent downturn, and for your national economy to recover and grow. Things go in cycles. What goes down will go up. And bear in mind that the growth since the mid 70s has been huge. Even in today’s market, it’s still way above what it was then.

The trip itself no. :slight_smile:

The few people who were clanging the warning bell on sub-prime mortgages long before the crash have not stopped ringing it. There are still some weird ARM instruments that are going to continue to wreak havoc with the markets for the next couple of years (at least); they just haven’t made their impact known yet, according to these folks, but when the banks start applying the higher interest rates to these mortgages, the foreclosures are going to start again.

Are you going to base your investing on what random strangers on a message board are saying about an article they didn’t write? Seriously, no one knows. Anyone who says they know for sure are either lying or ignorant. There are no absolute factual answers and this is General Questions.

IMO, this would do better in IMHO.

I agree. Off to IMHO.

Colibri
General Questions Moderator

It’s possible to make money even at this time. My mother bought Ford a few weeks ago at $1.29 (although even that’s above its 52-week low of $1.01) and it’s up to over $3 now. She’s still holding onto it, because she thinks it has more to go up.

Of course not, I would never trust my money to random strangers or an article in a financial magazine, but that doesn’t mean I can’t ask for input and opinions from others, especially those who may have more knowledge on the market.

You are correct, I should have put this in IMHO. IMHO, I don’t think anyone here has stated that they know what is going to happen to the market and I certainly wouldn’t take their word if they did. Give me some credit here. :cool:

One thing to remember - unless you are a brave speculator (and if you are - good luck to you!) - is that stocks are for the long term. Movement over a few weeks doesn’t mean very much.

I know. I really do. But I’ll only tell you if you pay $1,000,000 in to my bank in Nigeria.

A week or two ago, FNM got down to 30-something cents. A couple of days later it went up to a little over a buck. That would have been the perfect time to spend $10 grand on 30 cent shares.

True. I have long term stocks that have been doing okay for the past 20 years (TSP federal government stocks). Thankfully, I moved all of my stocks into the less risky account a year ago, before they dropped.

But in all honestly, after watching the FNM trend over the past few months and seeing how it fluctuates between 50 cents and around a dollar, I am really kicking myself in the ass for not buying in when it dropped to 30 cents then selling a few days later at more than a buck.

If I would have bought 35,000 shares for .30 at $10,500 then sold at $1.00, that would have been a nice little chunky profit of $24,500 a few days later.

Sure, but I will first need your bank account number, PIN, Social Security number, and three forms of ID.

Hey! That’s my line.

If I had $1 for every time that I’d said that, I’d be very rich. :slight_smile:

When I was younger, I used to have two investment strategies. The bulk of my investments were of the reasonable safe variety, and I allowed myself a small tranche to use for high risk investments. It was an amount that I wouldn’t be hurt by if I lost it all. It was fun and exciting to deal in penny shares; some I lost, but fortunately I generally came out on top. But I’ve got old and staid now. And today’s market is a lot riskier.