“U.S. stocks plunged on Friday, extending a recent rout, as concerns about slowing global growth continued to pressure investor sentiment,” Evelyn Cheng reports for CNBC. “‘Right now there is a feeling of fear in the marketplace and all news is interpreted negatively and it’s interpreted indiscriminately,’ said Tom Digenan, head of U.S. equities as UBS Global Asset Management.”
“The major averages accelerated selling in late morning trade to fall more than 1.5 percent, on track for their worst week since 2011,” Cheng reports. “‘I think uncertainty about China (and) general negativity is weighing on the market. There’s a lack of positive economic news to motivate buyers,’ said David Kelly, chief global strategist at JPMorgan Funds.”
“The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 23. The index is up more than 25 percent on the day and up more than 100 percent month-to-date for August, on track for its largest monthly gain since 1990,” Cheng reports. “JJ Kinahan, chief strategist at TD Ameritrade, said investors should start paying attention now that the VIX is above 20, and that anything over 25 indicates ‘true fear.'”
“The S&P 500 fell through support levels to below 2,000, off more than 6 percent from its 52-week high. The index is off more than 3 percent for the year so far. All 10 sectors of the index declined,” Cheng reports. “The Dow Jones industrial average briefly fell more than 300 points as nearly all blue chips declined. The Nasdaq Composite briefly lost more than 2 percent, with Apple declining more than 3 percent… The iPhone maker’s stock is approaching bear market territory.”
Read more in the full article here.
MacDailyNews Take: Wall Street, meet the Red Sea.
For those who are curious, they might investigate what typically occurs during the 7th year of a two term presidency.
Others should observe the shiny object in the paws of the squirrel over there.
Also, the market was terribly over-bought and many seen this coming months ago. Politics completely aside, Obama has outspent Bush by a great margin and terribly increased the debt and it’s a wonder that the markets have done as well as they have. Those chickens will eventually come home to roost and we’ll have the mother of all corrections. If Medicare can be used as a model, then Obamacare will be the vehicle that will wreck havoc on the economy in the next few years.
Things started to go down the dumper when AAPL moved to the Dow and got “The Curse.”
People might want to research what happens in the 7th year of a Marxist Presidency.
Some people might want to start again at kindergarten and learn what “marxist” actually means.
His grandfather was a Communist, card carrying. His mentor Frank Marshall Davis, was a card carrying Communist. His professors in college, when he bothered to attend, were Marxists. He is a Marxist. Are you people stupid on purpose or just out of lazineness or are you just short some brain cells.
You might want to research what two syllable words mean before you use them.
Groucho Marx was president?
Wow!
You wouldn’t know a marxist if it bit you in the behind.
Come on everyone, this is entirely expected. What makes you HAVE to buy AAPL TODAY??? Right, nothing. It’s a ho-hum, probably going to get better stock. Nothing emotionally thrilling in the least. Thus, sell. Doesn’t take a genius to understand how AAPL works. It’ll settle down in the mid-90’s and rocket up when everyone understands the fire sale. Prepare to wait 3-6 months for that understanding to sink in.
Man it’s either irrational exuberance or unparalleled fear.
Greed only has those 2 extremes apparently.
That’s my biggest issue with the stock market as a medium for retirement savings. Everyone’s hard earned cash is at the whim of the market.
Didn’t Bush II want Social Security money in the market? If that happened it would all be stolen by now.
Do. Not. Worry.
Warren Buffett has repeatedly urged anyone thinking of investing in the stock market to not do so unless they can stomach seeing paper (not realized) losses of 50-60% over the course of time that they hold an investment in an equity (like Apple stock). Over the course of time, even great stocks like Berkshire Hathaway have dropped by that much, as has Apple stock.
I would advise any investor not to panic on a day like this. It’s bound to happen. The stock market is irrational, often ruled by excessive fear or irrational greed, and the market can gyrate up or down rapidly at one time or another. It’s called volatility.
If you sell your holdings after a day like today, you’ll get clobbered, and Wall Street would be thrilled if you were stupid enough to do so. It’s why the CNBCs, Business Insiders, Marketwatches, etc. of this world will go berserk tomorrow, essentially screaming that the sky is falling.
Don’t buy into their FUD and hype.
If you don’t have to sell stock tomorrow, shrug it off. Investing takes a calm sense and a strong stomach. It’s not fun to see your favorite stock drop, but often, the drop has nothing to do with the company’s fundamental performance. Instead, it can be a stupid analyst report, “fears” of something that likely won’t happen or something else that is completely irrational. It’s when you have to be calm and ride out the storm, even if the next 6-24 months are a gloomy bear market.
On the other hand, when a dividend paying stock like Apple goes down, its dividends usually increase during that time. If you reinvest your dividends, that is a very good thing, as you will earn more fractional or whole shares of stock as a result.
If you’re a buyer like a Warren Buffett, an irrational overreaction by the market is a buying opportunity. Think of it like the market saying, “THERE’S A SUMMER MADNESS BLOWOUT SALE ON WALL STREET!! THESE PRICES ARE INSANE!!!!”
Of course, the media won’t report it that way.
I don’t plan on selling stock for the next 20 years. Unless it’s a stock whose fundamentals have gone south (e.g., deteriorating earnings, cash, revenues over multiple quarters), I’ll roll my eyes and stay invested. My hunch is that 20 years from now, I will see this week as a mere blip on a long-term stock chart, barely a ripple in the growth of a great company like Apple.
As long as a great company continues to grow its earnings and cash, eventually, the stock’s price will catch up.
YOUR HOMEWORK ASSIGNMENT: I highly recommend reading an excellent article I read today on Apple on TheStreet.com of all places, “Why Warren Buffett and Peter Lynch would both buy Apple (stock) now”:
http://www.thestreet.com/story/13258195/1/why-warren-buffett-and-peter-lynch-would-both-buy-apple-now.html
For any investor, the linked article above will give you a clear understanding of how to evaluate a company as an investment. The article shows that if Apple continues to perform, that you can expect to make as much as 500% compounded (with dividends reinvested) on your investment in 10 years. On any investment, that is hard to beat.
And THAT is why I don’t worry about today. Nor should you. Think long-term. Tune out the gloom-and-doom from the media. They want you to lose. I want you to win. And you can.