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Market Crash: Christmas Morning

Posted by kdadmin on August 23rd, 2015.

Market Crash: Christmas Morning

The Monday morning Shanghai Stock Exchange opens at 2:15 am, London time. The wait has been as agonizing for me as it is for a child to wait for Christmas Morning. (Image courtesy of CNN.com.)

Will the Chinese government “intervene in” (manipulate) the market to stave off a continued market crash? Will there be some more blathering rhetoric? By the way, has everyone forgotten that economists around the world have, for a very long time, taken Chinese GDP statements with a huge grain of salt? As in, a stated GDP of 6% actually = 0%? In other words, “What will Chinese Santa bring me?” Will I get a cookie or will it be the coal they brought last Friday with their 4.5% plummet? Oooo! I can’t stand it!

By the time you wake up tomorrow …

The result will be old news. You’ll have either a heady dose of bullish, “I told you so,” financial press or, a continued market crash of “AAAAAAAHHHHHHHH!!!!” proportions.

Now, the after hours S&P500 e-Mini futures markets have NOT been good. Starting at 9:30pm London time, it’s been more of the “AAAAAAAHHHHHHHH!!!!” variety. I have to admit, I’m starting to drool, as I look at the wreckage out there. For example, Apple is down 25% in less than 30 days, to a PE of 12. That’s less than McDonalds or IBM. Gee, which of these three companies would you rather own? Remember my blog series about PE ratios, entitled, The Stock Market Warnings? Go read that and see what a PE of 12 means on a company that has a cash hoard of over $100 billion …

Here’s the rub, if we get a bounce on Monday (the market recovers up like a bouncing ball), it will likely be short lived. There is just too much anxiety, panic, and fear, about global economics and the FED MOVE. Which, by the way, will come after their two-day, September 16-17 meeting. Mark your calendars. If you ARE NOT managing your own money (i.e., I do it for you), have something fun planned to take your mind off the market. If you ARE managing your own money, you had better have your investment plan ready to go the instant the Fed meeting minutes drop.

If we don’t get a bounce on Monday, or Tuesday, things could get very unpleasant, very quickly, for equity holders.

Bottom line:

  1. If you’re in cash, relax, go for a walk, enjoy life.
  2. If you still have an equity stake, we need to talk immediately. If there is a bounce, you will have more options to limit your exposure to a further, potential market crash. If not, at least we can talk about damage control.

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