Offbeat7 things to remember about a plunging stock market

16:15  06 december  2018
16:15  06 december  2018 Source:   fool.com

First known book about stock market is worth $300,000

First known book about stock market is worth $300,000 The 1688 book "Confusion de Confusiones" gives market advice that is still relevant.

In this world, stock prices would surge until they offered a return closer to bonds and cash. If stocks really had no volatility, prices would rise until they So, if stocks never crashed, prices would rise so high that a new crash was pretty much guaranteed. That's why the whole history of the stock market

It's no secret the stock market has performed exceptionally well over the past few years. In the past 14 months, investors watched – and grew increasingly Remembering these facts about financial markets when things inevitably turn south can position investors to more capably ride out the storm

Batten down the hatches, because we're in the midst of another market sell-off.

On Tuesday, Dec. 4, the iconic Dow Jones Industrial Average(DJINDICES: ^DJI) dipped nearly 800 points. Meanwhile, the broader-based S&P 500(SNPINDEX: ^GSPC) and tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) shed 90 points and 283 points, respectively. In terms of nominal declines, it was one of the steadier red days of 2018.

Here's why the stock market is plummeting

Why the investing train wreck, you ask? Part of the answer could be the inversion witnessed on Monday between the three-year Treasury yield and the five-year Treasury yield. Normally, we would like to see short-term bonds paying a lower interest rate than long-term bonds. But when this yield curve flattens or inverts (i.e., the gap between short-term and long-term rates shrinks or goes negative), it can discourage lending. That's because banks make their money by borrowing at short-term rates and lending at long-term rates. Every recession since the end of World War II has been preceded by a yield curve inversion, so it clearly has the market on edge.

A rare batch of selling suggests the stock market may have just hit ‘rock bottom’

A rare batch of selling suggests the stock market may have just hit ‘rock bottom’ If recent market action feels extraordinary, that’s because it has been. In fact, we’re seeing something that hasn’t happened since 2008, and, according to Dana Lyons of J. Lyons Fund Management, has only occurred a scant 11 times since 1960 — four straight sessions delivering intraday declines of at least 1.89% on the S&P 500 (SPX) A rare streak of selling pressure, no doubt.

Investing in a stock market is a great option for many OFWs better than savings account due to high inflation rate. Being an investor for over two years, I must say anyone can invest in the stock market Here are the basic yet important things to remember if you are planning to invest in a stock market .

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Another issue is that the market is always forward looking, and frankly, it's tough to see how things can get any better than they are now. Corporations and taxpayers have almost fully realized the impact of tax cuts tied to the passage of the Tax Cuts and Jobs Act, and historically, we've not seen the unemployment rate stay below 4% for an extended period of time. This suggests that growth will likely slow in 2019, with the unemployment rate destined to rise.

There's also no surefire solution to the trade war between China and the United States or to Britain's exit from the European Union. A 90-day tariff cease-fire is a Band-Aid that Wall Street cheered earlier this week, but it's no guarantee that China and the U.S. can come to a new trade agreement that's amicable to President's Trump and Xi. As for the U.K., a so-called hard Brexit could push its economy into a recession, which would be bad news given its importance to global trade.

This simple year-end stock-picking strategy tends to beat the market

This simple year-end stock-picking strategy tends to beat the market Stocks that lag throughout a particular year tend to rebound in the beginning of the following year, according to analysis from Jefferies. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); "Lagging groups in one year do not tend to lag in the next," Jefferies Equity Strategist Steven DeSanctis wrote in a note to clients Monday.

Stock market crashes do happen (as we saw in the global financial crisis of 2008–09), and there can be a long, slow path to full recovery, but if you’re patient, have assessed your risk carefully Shares go up in price, and also down. If you buy shares at a high price and the market falls, you may lose money.

As Forbes contributor Judith A. Stock pointed out, phone interviews are a lot like open book tests. The thing to be careful about here is to keep it natural and not make it sound like you're reading from a script. As Green suggested, use your notes to prompt you to remember information you want to

In other words, there are plenty of reasons for investors to be worried right now.

7 things to remember about a plunging stock market© Getty Images A smiling married couple reading the financial portion of a newspaper.

Seven things to remember about stock market corrections

Then again, there are also reasons for long-term investors to be genuinely excited about this decline in the market, as it gives them an opportunity to buy into businesses they believe in at a reduced cost. Before you consider heading for the exit, here are seven things you'll want to keep in mind.

1. Corrections occur more often than you realize

To start with, you should understand that stock market corrections are actually a normal occurrence. According to data from market analytics firm Yardeni Research, there have been 37 corrections -- i.e., a decline of at least 10% from a recent high -- in the S&P 500 since 1950. That's one about every 1.8 years.

How the rich get richer in every type of stock market

How the rich get richer in every type of stock market When prices fall, someone is buying up those shares. Who’s buying? People and institutions that take a longer view. They’re absolutely right to do so, according to new research from the National Bureau of Economic Research (NBER). You might know the NBER as the group that determines the official beginnings and ends of recessions. But they do a lot of other work, much of it deep-dive statistical studies of economics and markets. In this case, researchers looked at the performance of groups of investors in the Indian stock market.

The recent turbulence in the U.S. stock market no doubt has a lot of investors searching for a strategy to navigate the volatility and protect their capital. The good news: The best tactic most investors can take is easier than they may expect. In fact, according to one adviser, the important things to keep in

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Now, understand that this doesn't mean stock market corrections adhere to the averages. We could go years without one, or, as we've witnessed in 2018, we could have two corrections in less than 10 months. The point is that we shouldn't be caught off guard by stock market corrections.

2. They generally don't last very long

Another thing to realize about stock market corrections is that they usually aren't long-term events. Not counting our current correction, 22 of the previous 36 corrections in the S&P 500 found their bottom in 104 or fewer days, with just two corrections lasting longer than 288 days since 1982. Since 1950, the stock market has spent close to three-quarters of all calendar days in expansion mode, which certainly favors bullish investors.

7 things to remember about a plunging stock market© Getty Images A frustrated stock trader yelling at his computer screen.

3. Emotional investors overshoot in both directions on short-term events

A plummeting stock market almost always involves emotional trading. Even if you have a sound head on your shoulders, there are more than enough short-term traders out there capable of whipsawing the stock market lower (and higher). You should know that investors have a long history of overshooting to both the upside and downside based on short-term news events. Rarely, though, do these short-term events have any long-term bearing on the outlooks of publicly traded companies.

Apple's stock holds the key to the end of the bear market, Jim Cramer says

Apple's stock holds the key to the end of the bear market, Jim Cramer says Jim Cramer says that the stock market won't be able to break out of its bear mode until Apple's stock gets some positive catalysts.

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Market milestones like Dow 22,000 are a good time for Main Street investors to reassess their portfolios and to remember what history says about these 5. Monitor valuations. When stock prices relative to corporate earnings get super frothy, like they did in in 2000 when the Nasdaq composite was trading

4. The market's best days often occur near its worst days

You might also be surprised to find out that the stock market's best trading days typically occur within two weeks of its worst days. This suggests that if you head to the sidelines in order to avoid some of the market's biggest down days, you'll also miss out on some of its big gains. According to an analysis from J.P. Morgan Asset Management, missing just the 10 best trading days in the S&P 500 over the 20-year period between Jan. 3, 1995, and Dec. 31, 2014, would have slashed your aggregate return to 191% from 555%.

5. In real terms, this decline isn't a big deal

Investors should also be aware that Tuesday's stock market "plunge" was only a plunge in nominal terms. While I agree wholeheartedly that we're not used to seeing the Dow fall around 800 points or the Nasdaq shed close to 285 points, these declines weren't all that impressive or worrisome on a percentage basis. The Dow and S&P 500 would need to plunge by roughly 7% in order to qualify for a top-20-percentage decline of all time. In other words, focus on percentages rather than points -- it'll help calm your nerves.

7 things to remember about a plunging stock market© Getty Images A magnifying glass being held over a corporate balance sheet.

6. Corporate fundamentals probably haven't changed

Extreme stock market volatility is never fun, but it's important to realize that it has virtually no bearing on the underlying fundamentals and long-term strategies of publicly traded companies. A 283-point drop in the Nasdaq Composite may be unwelcome, but it's not going to change Amazon.com's focus on the cloud, halt Facebook's desire to improve average revenue per user in international markets, or slow Netflix's international streaming expansion efforts. There's a good chance this correction hasn't changed one thing about your initial investment thesis in the stocks you own.

Microsoft tops Apple to become most valuable company in US

Microsoft tops Apple to become most valuable company in US Microsoft is the most valuable publicly traded U.S. company, surpassing Apple for the title. Microsoft passed Apple in market cap again during intraday trading Friday, after jockeying for the top spot for most of the week. Microsoft surpassed Apple for seconds or minutes at a time all week, but Apple consistently beat out Microsoft in market valuation at market close. At Friday's close, Microsoft held an implied market valuation of $851.2 billion, based on an outstanding share count of 7,676,218,736 shares as of October 19, 2018, according to the company's most recent SEC filing.

The good times can’t last forever. After the stock market was on a tear in 2017, it now appears that “volatility” lies ahead. USA TODAY.

1. The intrinsic value of the stock market as a whole increases by about 1% every six weeks. That's what you'll get over the long term. Remember Pascal's wisdom: "All man's miseries derive from not being able to sit in a quiet room alone." 3. The single best three-year period to own stocks was during

7. Long-term investors are batting 1.000

Finally -- and this may be the most important point of all -- long-term investors have a perfect track record of success. Sure, the stock market may undergo a correction every 1.8 years, on average, but the variable of time has proven long-term optimists successful each and every time. Every one of the S&P 500's 36 corrections has been erased by a bull-market rally, and that'll almost certainly be the case with the current correction. Buy high-quality stocks, stay the course, and reap the fruits of your patience over the long run.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Facebook, and Netflix. The Motley Fool has a disclosure policy.

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How to prepare for the next bear market.
Financial pundits say economic and market history shows that a bear market (and possible recession) are likely to be much milder than most investors fear. The bad news is that eventually a recession/bear market will happen, which is why good risk management is essential. That doesn't mean investors should try to time a bear market, experts say. Studies have made it clear that it's nearly impossible. In fact, attempting to sit out a bear market could sink any long-term financial goals.

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