Dow Enters Bear Market

Finally having lost over 20% from its October high, the Dow has entered into a bear market. An unrelated story about an investor-fleecing hedge fund manager who tried to make his disappearance prior to his incarceration look like he took his own life provides context in a Google Trends graph.

Dow enters bear market as stocks slide [Reuters]

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  1. dragonfire1481 says:

    I still can’t believe no one saw this coming after companies decided to lend MILLIONS upon MILLIONS of dollars to people with crappy credit.

    Add that to record fuel and food prices and you’ve got a market meltdown.

  2. azntg says:

    It’s fairly obvious enough… what goes up must come down eventually.

  3. humphrmi says:

    The job losses suck. But Ben needs to get his head out of his ass and raise rates while he’s still got a chance to run off inflation.

    Ben: It’s not contained to energy. It has spread to everything else. Fix the dollar now, or go down in history as a huge wuss.

  4. humphrmi says:

    Um, am I the only one to notice that these two terms are incompatible and the correlation is purely coincidental? Actually searching Google on the term “suicide is painless” comes up with a bunch of lyrics and M*A*S*H websites. Clearly MASH or the lyrics to its theme song have spiked recently. What does that have to do with the searches for “bear market”?

    If you’re really taken in by graphic eye candy, here’s a chart of the searches for “bear market” vs. “pubic hair”. From this graph, we can clearly see that the stock market follows pubic hair.

    [www.google.com]

  5. gibbersome says:

    @dragonfire1481:

    For the nth time, this crisis is not the result of lenders borrowing to people with poor credit. That has always been going on. Lets get off the back of people with bad credit, quite a few and losing their homes. Even people with good credit have been going into foreclosure at an increased rate.

    It’s really a matter of people trading with capital they didn’t have.

  6. Livardo says:

    SELL MORTIMER.. SELLL!

  7. WraithSama says:

    @humphrmi: Your insightful correlation between the bear market and pubic hair is deeply illuminating. Bravo. You just made my night.

  8. Declining value of the Dollar versus the Euro.

    China pegging their currancy to the value of the Dollar.

    Oil valued in Dollars.

    Trade deficit with China.

    Trade deficit with Saudia Arabia.

    Futures trading of oil.

    Day traders.

    Lack of an US Government energy policy.

    Limited or restricted oil exploration.

    Failure to explore or develop alternative energy sources.

    Home mortgages with terms other than fixed rates.

    Did I miss anything. Bet I did.

    The world economy is sucking really murky swamp water. Correcting one factor is not going to be enough. I fear for some really ugly months or years for us in the futre. But the what the heck, let the good times roll and kick back and drink a few.

  9. Catalyst says:

    @gibbersome: Isn’t a mortgage the very definition of “trading with capital they didn’t have?” When millionaires in California are deciding to walkaway from their mortgages, they will get no sympathy from me. It’s too bad for the hard working people who got caught up in this thing, but there are plenty of housing consumers who are to blame for a part of this as well.

    @Corporate-Shill: You left out “Trillions of dollars spent on pointless war over seas.” I swear to God, if these reports about the United States and Israel attacking Iran after the election are true, I don’t know what will happen to this country.

  10. primechuck says:

    @Corporate-Shill:
    Futures trading of oil.
    Home mortgages with terms other than fixed rates.
    Oil valued in Dollars.
    Most of your list is about right, however, futures in commodities are actually not a problem (just ask Southwest), they provide an additional party to bear risk and stabalize costs for buyers.

    Oil being traded with US Dollars isn’t inherently a problem, but can lead to the situation we have now where oil is become more scarce, we’re too wussy to drill for it, and it inflates the cost of this core good and weakens the dollar.

    Home mortgages without fixed rates are not an issue, but some people get them, and its generally considered silly. In some markets, cheap and easy, money inflated prices beyond what a region could bear. Lenders loaning money to high risk people happens(ed). It isn’t fraud or the countries problem to fix. The problem is between the lender and the borrower. >95% of the US is humming along with their mortgages and most of the country has little to no problems with their housing markets. I don’t see why people are bitching about this.

  11. RetailGuy83 says:

    @Catalyst: Um, I believe gibbersome was referencing institutions lending of money they didn’t really have to be lending in the first place.

  12. RetailGuy83 says:

    @primechuck: The problem with trading oil based on the dollar is that the dollar is in the trash because the government has been spending dollars we don’t have (thats what causes the value to go down, adding more of them to the market AKA deficit spending.) So people with dollars are looking to hedge off the falling value by trading against oil, which is pulling oil off the market and helps it go up in price. Rinse, Lather, Repeat

  13. primechuck says:

    @RetailGuy83: Trade deficits aren’t bad. However, keeping the dollar cheap this long coupled with silly government policies posturing doesn’t help things.

  14. @Catalyst:

    Our fine Congressmen and Prez voted to spend the dollars on the Irag invasion. What have that nice group of politicians done about …… energy policy…. declining value of the Dollar …. etc.

    Congress has been pretty much a do nothing, duck and over, waste of air breathing slime for the past couple decades.

    Forget the Prez election, it is time to clean up Congress (Yes, both the House and the Senate).

  15. Doctor Cathattan says:

    @Corporate-Shill
    From the lategreat George Carlin:

    “Now, there’s one thing you might have noticed I don’t complain about: politicians. Everybody complains about politicians. Everybody says they suck. Well, where do people think these politicians come from? They don’t fall out of the sky. They don’t pass through a membrane from another reality. They come from American parents and American families, American homes, American schools, American churches, American businesses and American universities, and they are elected by American citizens. This is the best we can do folks. This is what we have to offer. It’s what our system produces: Garbage in, garbage out. If you have selfish, ignorant citizens, you’re going to get selfish, ignorant leaders. Term limits ain’t going to do any good; you’re just going to end up with a brand new bunch of selfish, ignorant Americans. So, maybe, maybe, maybe, it’s not the politicians who suck. Maybe something else sucks around here… like, the public. Yeah, the public sucks. There’s a nice campaign slogan for somebody: ‘The Public Sucks. Fuck Hope.’ “

  16. Trai_Dep says:

    @Corporate-Shill: Thank you.
    It annoys to no end when people harp on about an economic topic after hearing one bleating voice on AM radio when they have NO clue of currency markets, the roles of fiscal and monetary policies and balance of trade issues.
    The world’s a bit (just a bit) more complicated than The Fed Guy waving a wand and everything being hunky-dory. Or turning to dross. Likewise, The Fed Guy is stuck playing the cards dealt him.
    It’s the policies of the current administration and his cronies in Congress that set the ship afire; their party had clear running to set the ship exactly where they wanted it to go. And away she went. Bernanke is simply the poor guy trying to put it out before the ship sinks.

  17. Televiper says:

    @primechuck: Drilling for Oil in Alaska, and off the coast will have no effect on the price of oil for at least 10 years. The oil companies already have 70million acres of land to explore. This is nothing more than a land grab for the oil companies.

    [money.cnn.com]

  18. nsv says:

    @humphrmi: Try searching Google News.

    AP headline: Hedge fund scammer surrenders in Massachusetts

    He wrote “Suicide is painless” in the dust on the hood of his car and abandoned it on a bridge. For some reason, nobody believed he jumped and the U.S. Marshals went after him.

  19. u1itn0w2day says:

    I think the US economy never really recovered from the loss of manufacturing jobs in the 70s and 80s to Japan.Detroit in particular was hard hit but alot of other companies slowly but steadily lost out to overseas manufacturing.

    That’s why over the last 10 years you’ve had the internet bubble and the housing bubble burst.If it was a really strong economy there would be slow times but not dead times.The economy of the last 25 years has been built on a house of cards and not a true foundation.That’s why it’s so streaky.

    Blame what ever you want:taxes,labor,immigration,oil,education but it all comes down to not having a serious manufacturing base.What bugs me is all the work going overseas in the name of expanding markets and helping them out but these outsourcing countries don’t have the economy to the point where we can truely export to them.Starbucks and McDonalds open overseas-big whup.The company might have went across the ocean but how much actual product from here went across?

    But the main point:people say buy stock in American companies and be patriotic and yet the same companies these clowns want you to invest in have very little to do with the US economy in the way of manufacturing or support.Many of these companies have outsourced just for their stock price.I guess you’re supposed to work at Walmart selling the stuff that we used to be able to make here in the US.

  20. Televiper says:

    @u1itn0w2day: That’s the thing. In most cases they haven’t outsourced to be competitive. They’ve outsourced to increase their margins and the reward has been ridiculous executive level salaries, with massive job cuts on the bottom. At the same time they are haggling their vendors, growers, and producers down to razer thin margins. A large company here just moved it’s manufacturing base off seas. They were already profitable, and they already had the infrastructure. But, somebody needed to see higher margins.

  21. luz says:

    @humphrmi: Plus it’s funny!

  22. moore850 says:

    I am doing ok, so I was able to recently get a great loan for a house, but they were telling me that up to a few years ago people were getting 20:1 ARM’s! Whoah… that much of an adjustment would bankrupt anybody. Apparently the loans haven’t been bad the last few years, but this correction in the market is slow to materialize as the people who did get bad loans quite some time ago are jumping on the bandwagon of ‘not paying for my house if i owe more than its worth’. That’s stupid … it’s a loan… everyone owes more than the thing is worth. These people didn’t take any finance classes at all. You pay interest on a loan, people! It’s not just exactly the price of the house.

  23. primechuck says:

    @Televiper: Domestic drilling wouldn’t be fixing the supply today, it would fixing the supply later. If they aren’t drilling, they aren’t making money. Under The Outer Continental Shelf Lands Act, the company has between 5 – 10 years to start producing oil (decided at the start of the lease) or they lose the lease. Frankly, 5 – 10 years isn’t a large enough window when dealing with test wells and EPA guidelines.

    Also, the market would react quickly and reduce oil prices if the US committed to drilling and said, “We have oil, we’re going to get it.” It would add some certainty.

  24. JustThatGuy3 says:

    @moore850:

    Huh? A 20:1 ARM is one where the rate is fixed for 20 years – for 99.9% of buyers, that’s a great loan.

  25. Asvetic says:

    I’m all for a good joke and clever correlation, but I find the image/connection between the bear market and suicide offensive and insensitive. I’m also surprised that The Consumerist gang would stoop so low for a cheap laugh.

  26. theblackdog says:

    @Asvetic: Blame that hedge fund manager who tried faking his death. He wrote that exact quote.

  27. theczardictates says:

    @theblackdog: No, blame Consumerist for recycling it. I lost a friend to suicide last week, and I’m not “getting a kick out of these replies” as the kids like to say.

  28. Wormfather is Wormfather says:

    @dragonfire1481: the subprime meltdown and the soaring inflation have a connectedness index of 1.42 Billion.

  29. Wormfather is Wormfather says:

    @Simply_J:

    /clap

  30. Skiffer says:

    I’m putting my money into Frozen Concentrated Orange Juice…

  31. Rectilinear Propagation says:

    @nsv: According to the AP they did search the river. However, if TV is to be believed, if a suicide note isn’t hand written then it’s a fake.

    OT: “Suicide is Painless” is the name of the theme song for “MASH”? Seriously?

  32. primechuck says:

    @Rectilinear Propagation: Yes, Suicide is painless, it brings on many changes…..

    The movie Mash has the lyrical version of the song by Johnny Mendel, and is rather depressing like the Korean war. The theme was then redone to the instrumental, slightly up more upbeat, TV theme you’re probably used to.

  33. barty says:

    @u1itn0w2day: What do you think is pushing manufacturing overseas from a business perspective?

    I can sum it up in two words. Taxes and regulation. Almost any time a company has been polled as to why they moved a plant overseas those two reasons generally come out on top. Simple fact is that our government has created an environment that is unfriendly to manufacturing. Add in antiquated labor unions to the mix, and its not hard to see why some states like Michigan and Ohio are hemorrhaging jobs. Once they weigh in all the BS they have to put up with here, the one time cost of relocating to another country suddenly isn’t as painful. Of course the constant cry is for the government to “do something” when in fact it is the government that is at the root of the problem. Funny how that works out that way again and again.

    FWIW, I’m probably going to bump my 401(k) contribution once it looks like the market has come close to hitting the bottom of this wave. I might as well capitalize on the down market while I can. History tells me that’s not a bad bet to make over the long run.

  34. Notsewfast says:

    @ Corporate-Shill:
    @ Trai_Dep:

    Correct! It makes me happy to see reason around here. I’ve started avoiding commenting only because I couldn’t stand arguing with people with no basic understanding of how markets work.

    To add to your point Trai_Dep, I think the president (who I am no fan of) gets too much credit and too much blame for shifts in the market/global economy. Outside of the war, the president has very little control over the markets and it always baffles me to hear that the economy is #1 issue for people voting for a president. The economy is not a domestic issue anymore, it is global. No amount of tax cuts or tax hikes is going to change the demand for goods and commodities abroad. That’s not too say that problems are not compounded by poorly thought out and executed policies (and they were).

    The problem is that there is no one accountable entity to blame for the situation we’ve gotten into. My hope at this point is that we are able to get through this housing debacle before consumer credit starts to collapse (and it will). If the credit card industry falls apart on the tail-end of the housing slump, we could be in for a long downturn.

  35. savvy999 says:

    @barty: bump your 401k contributions up now, not later. When it hits bottom, you won’t know it until it’s too late.

  36. JustThatGuy3 says:

    @savvy999:

    Or just contribute at a flat rate over time to a wide-spectrum diversified fund with low expenses, since doing anything else is almost certain to cost you money in the long run.

  37. Mikestan says:

    @Livardo: Hahaha great movie

  38. xsmasherx says:

    @moore850: “That’s stupid … it’s a loan… everyone owes more than the thing is worth.”

    Common for car loans, sure. Common for Home Loans? Not until recently, when zero down and puling out every last drop of equity became de rigeur.

    When 10% or 20% down was common, there was little chance that the homeowner would become “under water” and be unable to sell. Many homeowners now *can’t* sell, because the market price would not allow them to pay back their mortgage. This may have happened in blighted neighborhoods and economically depressed areas before, but now it’s happening on your street.

  39. u1itn0w2day says:

    @barty: I agree that taxes might be A reason but let’s face it,alot of these companies are outsourcing or going overseas to avoid those pesky pain in butt regulations like pollution laws,safety regulations and fair wage rules-DARN.

    Unions were and are here for a reason.I don’t always agree with the unions or their philosiphy but they are an advocate for the worker.Corporate management has access to lawyers so why not the employee have access to union-both are basically the samething:advocates for their clients.

    And there’s all the hyperbolie about how the union worker is payed too much.It’s MORE expensive than forgien labor for a reason(apples and oranges comparison by the way).The American worker needs a salary that will not only pay the MINIMUM survival necessities like food and utiliities but for a higher standard of living which requires more money and I’m NOT talking HBO.The American worker has to pay for things like house insurance,car insurance,health insurance,pay LOCAL taxes along with Federal taxes-now there’s where taxes can kill.

    Alot of Chinese workers are probably going home to something like a hut,Is their hut up to code?Do they have to buy hut insurance in China?.Is their capitalist bank raping them for 25% on a credit card that many US citizens need just to participate in the local economy.

    The Chinese are currently the best example of out-sourcing.And by the way their enviorment is being savaged with old factories and out dated or non existant enviormental protections.Many are blaming the current algea problem in the Olympic sailing venue on pollution.

    The out sourcing of many US jobs overseas has not helped the employee or it’s outsourced country in any substantial manor.