Isn't panic the one common ingredient to stockmarket crashes?

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I don't know a lot about stocks or trading but it appears to me that panic is the one thing that market manipulators (Mr. GreenJeans and company) want to avoid at all costs. Is this not true? If people don't panic with fear and dump there stock, there will be no big bubble.com burst or DOW bust. So, if the masses can be kept calm, all will be well...

Any thoughts anyone? -L.

-- Lucy (windsng@***.com), January 26, 2000

Answers

Yes, I've been thinking about that, too. If there are enough investors, who are "in for the long term", then the market will only drop in response to news which affects the shortterm traders.

But for those investors who get news that makes them believe that the future holds a decreased stock price (because of inflation pressures, etc.), they can justify selling to buy back at a lower price. If there are enough investors who hold that view, their exit could drive the prices down, and it wouldn't be due to panic in the emotional sense, but anticipation.

-- Chuck (cestin@aa.net), January 26, 2000.


Lucy Goosey, The most recent stock market declines have been accompanied by analysts' comments that "This is an orderly decline." An orderly decline of this magnitude can hardly be much consolation to the bulls, however. It's my view that a good, strong panic would signal a bottom. The way things are going (down) presently, there's little sign of any end in sight. Maybe Mr. GreenJeans wants to avoid a panic, but it's more likely that global capital flows (i.e.: currency manipulations via Japan's goal of holding down the yen vs the dollar) will direct whether the market sinks or swims. If the international market is scared out of dollar-denominated holdings (for fear of dollar value loss) there will be very little GreenJeans can do but increase rates, yet again, to lure capital back to our shores. Raising rates will scare domestic stock investors...and the cycle goes on...Again, at least a panic would signal an end to the downdraft.

-- (Cashtradr@aol.com), January 26, 2000.

There is usually some trigger (like, maybe an increase in oil prices, planetary conjunctions ... ?), that causes a sell-off in certain (unknown until after the fact) issues, driving prices down somewhat to a certain (unknown until after the fact) level. THEN the panic ensues.

-- A (A@AisA.com), January 26, 2000.

Take any of the recent 200 or 300 point daily/weekly DJIA average drops. Support came in at the lower levels. Suppose just 1000 shares of an important index issue HAD NOT been bought at -200 and the buyuer had waited for -300, but others' panic button turned on at -250. That would then have been the beginning of a free-fall.

You can't predict a bear market's timing -- you just know one is coming from historical precedent. Human nature has NOT changed in at least 6,000 years. Fear and Greed.

-- (A@AisA.com), January 26, 2000.


The thing driving the Markets, is the 401 plans. Most citizens place up-most trust in those places. Remember, during the last crash, 401's did not exist. I have no inside knowledge, I don't even have any out-house knowledge. Just read it, somewhere, on a long voyage. Nuggets of knowledge, for the next life (I Hope!)

-- Read Somewhere (once@longago.com), January 26, 2000.


A,

Hey...there is that big time planetary conjuction on May 5th. ;-)

-- Dee (T1Colt556@aol.com), January 26, 2000.


The whole picture is pretty sick. Think about it, debt is driving the economy. When before in history could anyone with decent credit go to almost any store, sign up for a card and walk out with 3,000-5,000 of merchandise. GenXers don't have a clue about whats going on, spend, life is good.

Debt drives purchases, debt/margin drives stocks, the elderly have been scammed into investing in the market with their retirement accouts.

As for Gambling/day trading, we won't go there.

-- Ride the Wave (Wave@runner.com), January 26, 2000.


Watching the main stream business media like Wall St Journal; Investors News Weekly; Fortune; Forbes etc., one would think that we are in the middle of a long up cycle.

Watching recent announcments after the 1/22/2000 G7 mtg in Tokyo it seem Germany and Japan as well as our OPEC friends Saudis, Kuwaitis, Venezuelans and Norwegians are not happy with our asset inflation and M3 money supply growth. Germany esp appears fearful of a return of inflation. As does OPEC, who see their finite oil wealth being traded for dollars that are loosing value.

IF the recent G7 meeting failed, as it appears to have done, to create a common fiscal strategy; the US may have to raise interest rates more than planned (1/2% next week instead of 1/4%) and again in Feb/March in order to maintain international confidence indollar denominated commerce.

If gold follows oil up due to inflation, there has been so much gold sold short that the margin calls/short covering will force traders and investment houses to pull money from the stock market to cover their losses. When the small investor/daytrader sees that the big money has pulled back from the bubble.com they will be left holding a bag with few if any buyers and that I beleive is when a panic may begin.

-- Bill P (porterwn@one.net), January 26, 2000.


Have any of you scanned what happens to Initial Public Offerings. Jook at the charts...pick any two or three of them. Insanity! Insanity has been described by someone as "doing the same thing over and over and expecting different results" ..so maybe, by that philosophy, they're not insane. We could have all become multi- millianaires in six months by just investing in any of a number of dot coms. There's even a new offering called pets.com. I looked at an IPO today "Caliper" that was issued in Nov or Dec. Opened at something like $26 and is now at $140 and the pros have set a target of $200....No earnings, no Institutional Investors, horrible financials (IMHO) and NO PROFITS. Go figure...maybe I'm the dummy!

-- Larry (Rampon@Dallas.com), January 26, 2000.

Lucy,

Never forget that stocks only go up and down depending on whether or not we want to buy them. Never forget that nobody buys a stock out of love, loyalty or faith.

-- Carlos (riffraff1@cybertime.net), January 26, 2000.



Dee -- so said a guest on Art Bell show just the other night (about planetary conjunctions and pole shifts). I mentioned that because some acquaintances of mine are into astrology (planetary relationships) and commodity market timing. I've got the ephemerides, but haven't got into checking the stuff out re the market, but I can check out 2000-05-05. Maybe next week.

-- A (A@AisA.com), January 27, 2000.

For a retired couple who don't know much about money except how to spend it and how to give it away, are T-Bills a good value in this economy, until something makes the market go down?

We're not gamblers - - never bought a lottery ticket, and are not wanting to make a killing - - just want to be above the rate of inflation, and be prudent so that we don't become dependent on our children - - and perhaps leave them a little.

T-Bills?

-- Connie (hive@gte.net), January 27, 2000.


Hi all ! Got in this one a little late . But as far as panic is concerned ... you NEVER want the sheeple to panic until you have their last ounce of wool , AND , have them heading right up the chute ( with no way out ) to have their throats cut ; THEN , the big boys are happy ! Connie ... I don't know if you are of the " depression " age or not. But may I say , I would not be in ANY paper asset at this time. Government bonds payments can be held up/value drop/or pay you off in worthless dollars when they get good and ready. The dollar is worth about .08 cents in terms of 1940 dollars, and , with all the extra money they keep printing , becomes more worthless every day . If I had the money , I would put it in Swiss francs , which ARE backed by gold, and have silver rounds ( from Sunshine Mining Co. - check toll free 1-800 numbers ) which can be purchasedfor spot price plus a small premium for minting , AND , they are 99% pure silver, not alloyed with other metals to much lower standards . Silver was historicly 10 to one with gold for over 5000 years; only government agreements in late 1890's changed it , because U.S. had too much silver, not enough gold for money with population growing so large . Gold is too large a denomination for everyday use , unless you keep it for purchasing a house/property , etc. Eagle

-- Hal Walker (e999eagle@FREEWWWEB.COM), January 27, 2000.

"Extraordinary Popular Delusions & the Madness of Crowds" by Charles Mackay, LL.D. traces and outlines the huge credit & value scams of France & Britain & Holland.

Panic happened when those in the know pulled out their money leaving the others holding the worthless paper or goods (Britain & Holland). Or (France) the govt just kept on printing money until it was worth nothing, bringing about popular revolt.

Pyramid schemes do not work & are not in the individual's or the nation's interest. Fiat money, stock-jobbing up stock and securities value, credit based upon future revenues, & world economies based upon an ever increasing velocity of money are, all, pyramid schemes which when they fail, & they always fail, will hurt the most those investors, citizens, & gamblers who have the least resiliance.

Another good read: "The Great Crash" by John Kenneth Galbraith

-- Mitchell Barnes (spanda@inreach.com), January 27, 2000.


Good call, Mitchell.

"At last the more prudent began to see it could not last forever and somebody must lose fearfully in the end... "A" agreed to pay "B". "B" was ready at the appointed time; but the price had fallen and "A" refused to pay... Defaulters were announced day after day... Hundreds who, a few months previous had begun to doubt that there was such a thing as poverty... found themselves possessors of a few bulbs which nobody would buy." --- Charles Mackay, "Memoirs of Extraordinary Popular Delusions"; London 1841

-- DeeEmBee (macbeth1@pacbell.net), January 27, 2000.



Did you catch the news wire article about Greedspin's comments concerning the practice of borrowing to buy stocks on margin, using the stocks as collateral for the loans? I can imagine folks with three mortgages on their house, borrowing funds to buy shares of Bubble.com, using the shares of Bubble.com to gaurantee the loans.

No wonder Greedspin is "concerned". Is there any real money involved in such transactions? I'll bet he wonders how bankers, who should be wary of such shenanigans, have gotten caught up in the euphoria over Bubble.com. After all he and the rest of the FED have dropped eough clues for anyone with their eyes open to see the warning signs.

And what's gonna happen to those folks with all the floated loans when the bubble finally bursts? From the trophy house to the streets in just nine weeks?

WW

-- Wildweasel (vtmldm@epix.net), January 27, 2000.


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