Stock markets slump around the world after Beijing share price collapse forces China to halt trading


#1

dailymail.co.uk/news/article-3383822/Fears-FTSE-DOW-remain-collapse-China-s-opening-day-trading-drags-European-U-S-markets.html

Fears remain for markets worldwide after massive stock sell off in China
The country’s stocks plunged 7 percent to its lowest score in three months
It triggered drops across all of Europe, the U.S, and the rest of Asia
Last year the country’s share crisis triggered fears of a global collapse


#2

“Fears remain for markets worldwide after massive stock sell off in China
The country’s stocks plunged 7 percent to its lowest score in three months
It triggered drops across all of Europe, the U.S, and the rest of Asia
Last year the country’s share crisis triggered fears of a global collapse”

We have seen bigger drops in 2015, so I don’t know that this particular one will be extended. It was lower for awhile than it was at closing.

Still, I could picture some serious declines in 2016. There just isn’t a whole lot of increased consumption going on, and wages are still stagnant or declining for most people. Commodities are taking it on the chin because of weak demand. Likely most companies have effected all the cost-cutting they can reasonably manage at current production levels.

I’m not a seller in this market because the market always comes back eventually and I don’t want to pay the taxes. But I’m also keeping my powder dry, cash-wise.


#3

If you want to be scared, concentrate on this: Today was the worst first trading day of the year since 1932. Most of the world is in a debt bubble with short term debt at low rates and those rates will have to increase eventually. Our world political leaders include people that are…ask Donald Trump.:eek:

On the other hand, world economies recovered after 1932, but not without huge pain that included a world war.


#4

God forbid another stock market like that of 1932 or world war from happening.


#5

that would be devastating!


#6

As with everything else, tomorrow is another day.

Companies and countries and consumers will adjust to the fluctuations of demand and supply. They always do.


#7

I would say market volatility in 2016 is more likely than not. It takes very little to get people scared nowadays, though there are certainly some bad events going on in the world.

But volatility is not a “crash”, though it might seem like one temporarily. If I had to guess, (and that’s all one can really do) I would say there will be at least one breathtaking dip in 2016. People will think it’s a “crash”, but it won’t be. A nearly flat, lackluster economy has been the “new normal” for going on seven years now, and people who play the market are used to it.

And that foresight, my friends, is worth exactly what you paid for it. :wink:


#8

Every bubble eventually pops. And the debt bubble that is being propped up with easy money will eventually pop. Best preparation people can do is to pay down as much debt as they can and save up as much money as they can. Live within your means and stop borrowing money.


#9

Well people still remember about 2008 and the recession pretty well. A lot of people lost a lot of money.


#10

None of them lost money unless they sold at the bottom, which some, unfortunately, did.


#11

Oh trust me, people lost money in their 401k’s. Not just one person, but thousands.


#12

yep!


#13

Only if they panic and sold, but since 2008, those who held on made back their money and then some. Most of the people who lost money were those who did not understand the concept of risk and return. Those people have nobody to blame but themselves.


#14

One of those risks was and is the use of margin loans at very low rates that made the buying of stocks very attractive and further propped up the bubble. The downside is that margin calls typically force you to sell at or near a low. You really can’t recover if you lose all your capital in those situations.

The market is down again today after the announcement of North Korea testing what may be a hydrogen bomb. A maniac led country with that kind of destructive power is pretty scary to me. Further declines can trigger more margin calls.


#15

Which is just another example of people who don’t understand the concept of risk and return. If you leverage yourself to the max, one of the possible outcomes is that you lose everything. If that is a scary outcome, then use less leverage, or none at all. I am not sure why we should be concerned when people who do foolish things lose everything.


#16

“leveraging to the max” is a relative thing. It’s relative to what you’re doing it for and your ability to scramble if it comes to it. There were a lot of times in my life in which, if the asset purchased by the debt crashed, it would have taken me years to dig out if I could at all. I have seen people take debt risks that would raise the hair on most people, but which paid off massively. But in those cases, either superior knowledge or pure dumb luck saves the day.

As to the first of those, I know a guy who leveraged himself well beyond his ability to pay in purchasing a protein plant that had closed. But he believed he could devise a way to make “human consumable” pet food by inducing some processing plants to slightly change the way their lines operate. The magic of “human consumable” was that the market in the EU for pet food was extremely rich, but it had to be “human consumable”. The processors were induced to simply take the unsaleable parts (poultry wing tips, backs, tails) all the way through the USDA inspection stations instead of diverting them before the end of the line for ordinary pet food as they had always done before. They got a piece of the action for doing it.

He made it work and, within a year, sold a non-controlling interest in the venture to a large American pet food company that had been importing those parts from Italy because Italy requires that all poultry parts be “human consumable” at the end of the line. My friend’s product was massively less expensive. The pet food company assumed the debt and gave him a couple of million besides. And he still owns a controlling interest.

But I have also seen people just plain gamble, trusting to luck in something they didn’t really understand.


#17

We have another big down day today, -369 on the DJIA at the moment. If this continues I may have to change my handle to “poor broke guy formerly known as Trader”.:wink:

Not to worry, I still have lots of credit cards and get free checks from two of my banks.

What is the maximum length of my handle?


#18

This too shall pass.


#19

So will I. “In the long term we are all dead.” J.M. Keynes


#20

It is a good reminder that market volatility is nothing to really worry about in the grand scheme of things. Markets fluctuate, that is what they do.


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