LIVE CHAT: Stocks Are Down, Again. What's Going On?

Everyone OK?

Stocks took another beating this morning, with the Dow falling more than 350 points. Red has been the norm lately: if stocks hadn't squeezed out a last-minute gain yesterday, and if they finish down today, it would mark one of Wall Street's longest losing streaks in history, including during the Great Depression.

What's going on, and what does it mean for your investments?

First, keep things in perspective. Market averages are down about 10% from recent highs. That's a fairly normal pullback by any definition -- it just might feel terrible because it happened so quickly.

Second, all fear creates opportunity. These pullbacks are what patient investors with long-term views should live for. "The future is never clear; you pay a very high price in the stock market for a cheery consensus," said Warren Buffett in 2008. "Uncertainty actually is the friend of the buyer of long-term values." And how right he was.

Still, we know you have questions. We're here to help. From now until shortly after the market closes today, a team of Motley Fool advisors, columnists, and editors will be fielding questions about the market -- just join the chat below to ask questions and share thoughts about the market's slump.

The Motley Fool has a disclosure policy.


Read/Post Comments (17) | Recommend This Article (32)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 04, 2011, at 2:23 PM, caltex1nomad wrote:

    I did really well with the last market panic, this is more of the same. I will be on a buying spree as long as this continues. Have fun !!

  • Report this Comment On August 04, 2011, at 2:31 PM, sunnyuno wrote:

    I have read somewhere that the S&P is really a reflection of 50% foreign related stocks (primarily overseas) - if that is true and with what is going on in europe right now can that be seen as what is driving the US stocks down so hard right now(as coupled to our own problems)? In other words how much of this is the fault of foreign couplings and could that factro in how and when this will all right itself?

  • Report this Comment On August 04, 2011, at 2:33 PM, STOCKMIND wrote:

    Anybody thinking of buying bargains today or waiting longer?

  • Report this Comment On August 04, 2011, at 2:37 PM, STOCKMIND wrote:

    P.S., I put half my 401K into a gold mutual fund yesterday to hedge against further cratering of the market, and am quite surprised that it's also taking a hit today. Any thoughts on this?

  • Report this Comment On August 04, 2011, at 3:06 PM, TheDumbMoney wrote:

    For what it's worth, here's my take:

    1) Shlit happens;

    2) Only when real market darlings like Amazon start going down 4 and 5 percent per day will we begin to see REAL panic and fear; that hasn't happened yet;

    3) That will be when it is time to start really thinking about loading up;

    4) But that will not be the time to load up; it will take longer for real capitulation, so I'll only be buying a little at a time;

    5) And if the market doesn't tank further, at least by holding cash you still have cash;

    6) Gold outperforms in a flight to safety but not in a liquidity crisis (as fall 2008 showed); and gold miners are stocks that are often bought on margin, just like other stocks; if gold goes up and miners continue to drop like stones they will start to look like real values, but I'm not an expert on that, I think we all know who is;

    7) In general, if you can't stand a temporary 20 or even 40% loss from here, you shouldn't be in the market at all; or you should be a semi-technical speculator and you should have gotten out when the "head and shoulders" pattern became clear last week, and you should be working with an investment advisor. And if you don't know what a "head and shoulders" pattern is and you are a big holder of things like OPEN and TEA and ZIP, then in all likelihood you are the patsy.

    8) In general, consult an investment advisor. I'm a non-expert, as are all the other posters you are likely to see.

    9) As for me personally, I'm selling nothing, but I'm not a buyer today. I blew 1/3 of my wad for August yesterday, and will wait until 8/15 or so see how things look then. If the jobs report is ugly tomorrow, then I suspect tomorrow will be ugly-ugly-ugly as well. But who knows. I'm a pessimistic optimist. Even if we are going into another recession, not all recessions are the end of the world. Instead of "Nobody expects the Spanish Inquisition," I think we are at "Everybody expects the Spanish Inquisition." That said, our big problem is likely whether the Euro survives. If Italy starts to go down, then it's all hands below and batten down the hatches. Based on that risk, for short term traders there is a compelling argument for being all cash, a position that based on my reading of investment bloggers, many traders went to late last week. The other wildcard some other Fed stimulus. I'm a "buy-and-hold" guy, as are many of the Fool writers, but you should know that the vast majority of professional investment advisors do not recommend buy-and-hold. The reason, I suspect, is that they suspect you will "buy-and-hold" today, and then sell thirty percent below today when you become convinced the world truly is ending.

  • Report this Comment On August 04, 2011, at 4:05 PM, minimumwage wrote:

    I'm asking questions, but they never show up on the chat. Does anyone know why?

  • Report this Comment On August 04, 2011, at 4:06 PM, leahgenius wrote:

    I'm going to do what I've always done: ignore the noise and balance my portfolio regularly as stock prices fluctuate.

  • Report this Comment On August 04, 2011, at 4:08 PM, BMFPitt wrote:

    I jumped out of the market early last week, saved myself about 8%, and got back in yesterday. Ouch. I guess 5% down is better than 15%.

  • Report this Comment On August 04, 2011, at 4:41 PM, sikiliza wrote:

    @dumberthanafool

    "Only when real market darlings like Amazon start going down 4 and 5 percent per day will we begin to see REAL panic and fear; that hasn't happened yet;"

    I think you spoke too soon there buddy. Amazon fell 4.04% today. I am not sure how one stock's change in price would signal a massive shift in market trends. Would you care to explain that further?

  • Report this Comment On August 04, 2011, at 4:50 PM, jargonific wrote:

    It seems as if there has been a major misunderstanding going on internationally as to what keeps markets stable. For what its worth, this was due about two months back, due when the Japan quake hit in March...or when news arrived about various EU nations struggling to stay afloat and needing 'bail outs'. It's been a fudge factory since then, and the candy's melting. I'm watching some of the tried and true stocks to see what they do, putting a buy order in here and there for something I know would do well once recovery is in motion.

  • Report this Comment On August 04, 2011, at 4:50 PM, CluckChicken wrote:

    "I think you spoke too soon there buddy. Amazon fell 4.04% today. I am not sure how one stock's change in price would signal a massive shift in market trends. Would you care to explain that further?"

    I am pretty sure he means a group of stocks when he says "darlings". Would suspect that aapl would be part of that group too.

  • Report this Comment On August 04, 2011, at 5:09 PM, TheDumbMoney wrote:

    Cluck, and also I mean for multiple days, not necessarily in a row. Today is one day.

  • Report this Comment On August 04, 2011, at 5:10 PM, pscholte wrote:

    I want to believe that we are headed toward a second incredible buying opportunity in 3 years but I cannot shake the nagging feeling that we have not been this way before. I know many of you are firm believers that markets always repeat themselves eventually (secularity) but I am not at all certain this time. My reasons: (1) massive debt around the world (we think we are bad at 98% of GDP; Ireland is over 1300%, Switzerland around 400; (2) Our leaders are not dealng with this financial challenge competently at all; and (3) we may be entering a period with a social/cultural/economic cocktail no one has ever tasted before. I am genuinely concerned that buy-and-hold will hurt an investor badly before it helps if it helps at all.

  • Report this Comment On August 04, 2011, at 5:14 PM, pscholte wrote:

    PS I forgot to mention that I believe China has no intention of exerting a positive influence during this crisis. From an ethical perspective I refuse to invest in such a corrupt, hypocritical, deceitful economy.

  • Report this Comment On August 05, 2011, at 12:52 AM, gen6tex1 wrote:

    I very much want to add to my positions but will wait and revisit that idea next week. Can't wait to see what happens on Monday.

  • Report this Comment On August 05, 2011, at 4:01 AM, nokea wrote:

    FWIW, next week shall be so called Full Moon

    Week (the about 5 days before the FM Day):

    http://www.freerepublic.com/focus/f-news/1748325/posts

    "We find strong lunar cycle effects in stock returns," say University of Michigan Business School professors Ilia D. Dichev and Troy D. Janes in a research report.

    "Specifically, returns in the 15 days around new moon dates are about double the returns in the 15 days around full moon dates. This pattern of returns is pervasive," they report.

    This time around it might well be a different story...

    hopefully! :D

    - nokea, Finland

  • Report this Comment On August 05, 2011, at 1:08 PM, WINESBYGEORGE wrote:

    In my opinion , the major correction ended with thursday's 500 point drop. Any selling today is "forced" by a million margin calls. It is sort of like a"war of choice and a war of necessity".Many had no choice but to sell today. Once those margins are righted , we'll se an upswing. Watch mid-August. For anyone with some cash , this will be a great time to start buying bargains.

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