Stock Market: Dow drops 450 points, biggest fall in 2 months, after Trump says he could wait on China deal
Category: News & Politics
Via: krishna • 6 years ago • 118 commentsBy: Thomas Franck @TOMWFRANCK - Fred Imbert @FOIMBERT
S E E D E D C O N T E N T
Photo: Christian Hartmann/Reuters
The Dow Jones Industrial Average fell more than 450 points in morning trading, led lower by trade-vulnerable Apple, Caterpillar and 3M. The S&P 500 slid 1.2% amid losses in chip stocks like Nvidia, Micron and Advanced Micro Devices. The Nasdaq Composite also lost 1.3%.
Both sides have introduced tariffs on billions of dollars’ worth of imports as the disagreement escalated over the last year; additional U.S. tariffs are set to take effect on Dec. 15.
Tuesday’s losses would add to a steep decline from the previous session and by 10:07 a.m. ET were on track to push the Dow to its biggest two-day loss since Oct. 2.
Related: Here's why Warren Buffett's record $122 billion cash pile could be a worrying sign for stock markets
- Warren Buffett's mountain of cash may be a warning to investors that stocks are overvalued and that a crash is around the corner.
- The investing guru's firm, Berkshire Hathaway, held a record $122 billion in cash at the end of June.
- The conglomerate's cash is worth nearly 60% of its portfolio of public companies, the largest proportion since before the financial crisis.
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Both sides have introduced tariffs on billions of dollars’ worth of imports as the disagreement escalated over the last year; additional U.S. tariffs are set to take effect on Dec. 15.
Tuesday’s losses would add to a steep decline from the previous session and by 10:07 a.m. ET were on track to push the Dow to its biggest two-day loss since Oct. 2.
Smart traders have been lightening up on their positions as they realize what Trump actually means when he says a deal may be reached after the Election.
Markets go up, trump did it.
Markets go down, trump had nothing to do with it.
Every time Crooked donnie opens his big fat mouth, he crashes the stock market
Sort of...
Actually what happens is usually when he announces one of his crazy policies, the market moves down (because the "smart money") knows how destructive they are.
But when trump realizes that, then he makes a comment that fools enough naive traders into thinking things are about to get better (usually that "we had good talks about a trade deal"...or "North Korea is getting closer to giving up its nuclear weapons")...or words to that effect.
Not results...just that we are "making progress".
His "base" laps it up and believes his bullsh*t-- but the "smart money" knows what's really going on.
The "smart money" knows destructive policies are unlikely to happen.
The "smart money" buys call options when the market dives on presidential announcements, and buys puts when the market rockets on presidential announcements.
The "smart money" is greedy when others are fearful and fearful when others are greedy.
Why do you think that?
(Because its not true-- for some yes,for others no).
Are you bt any chance familiar with Warren Buffett?
Because I've made a decent amount of money doing it.
Because Donald Trump is all hat a no cattle. He spouts bullshit like a teenager trying to impress a cheerleader. 99% of what he says never comes to fruition. If he knocks the market down with off the cuff comments like "we may postpone the trade deal until 2021", intelligent people know he's probably going to reverse that in a week's time.
You're correct. Huge numbers of smart money investors simply ignore noise altogether.
I quoted him. Intentionally. So yes.
Jack keep in mind you're dealing with someone that up until recently never made a premarket trade and found it to be emotionally draining.
OK, but I'm cool with that. Everybody starts learning somewhere and we're all at different points along that road. Earlier in my career I held multiple securities licenses, and I've been investing for nearly 30 years, so most people I meet are less experienced.
If you're going to pattern yourself after another investor, Buffet is probably the best choice, along with maybe Peter Lynch.
Krishna's cool about it. He doesn't present himself as some authority or anything, (at least he never has to me) and frankly the fact that he's investing at all puts him ahead of the NT and national average.
Yes he has said he trades stocks for a living.
The reason I said that some do and some don't-- and then brought up Buffet is because he doesn't do that. Actually I was surprised to hear it, but while Buffet is definitely "smart money", he doesn't buy call options when the market dives, nor does he buy puts when the market rockets.
Why?
Because he doesn't trade any option at all! What he does , bascally, is buy stocks (he seems to generally have a knack for that)> Mainly buys and holds-- doesn't trade options, doesn't trade in and out (only sells when he seesa need to)> very si9mple, conservative strategy.
(I was surprised to hear it, but apparently he doesn't use options or any derivatives at all-- or at least that's what was reported).
Everyone who trades doesn't do it after hours-- or before the open. (In fact, IIRC there was a time when you couldn't do that at all-- you could only execute trades when the market was open, regular hour).
Just as everyone doesn't trade options. (I used to do a lot of options trades but only buying covered calls-- I did it as a low risk way to generate income. (Covered calls actually lower your risk).
Some people mainly "buy and hold"-- others constantly trade in and out-- buy and hold stocks for a short time. And then there are the real day traders.
I've know very conservative investor who've mainly bought very conservative stocks, and held them for years. The only "trades" they did was put more small amounts into the same stocks at regular intervals. (Those were the days of "Blue Chips"-- and people who mainly put their money into the old AT&T before the breakup-- when the phone co was an actual monopoly!. (When T, GE and IBM were great stocks...)
Some people aren't looking for present income-- they don't care about dividends. Others are more concerned with income, won't buy a stock unless it pays good dividends. Some folks mainly buy small startups, or small biotechs in hopes one will discover an amazing drug. Other buy only ehat they think are "safe" major established corporations.
People have different strategies.
From my experience its usually the case that there are many different approaches to investing that are equally good. The success or failure is based on how smart an investor is, not whether he trades options or not, or what time of day, etc.
P.S; What is your "style" of trading?
Right now I have all long positions mostly index etf's and a few individual stocks. If the market turns to a bearish cycle I will probably sell with stop losses and begin shorting again but with a smaller portion of my overall portfolio than I currently have tied up in equities. I also have treasuries as a safety net and smaller portion of my portfolio tied up in municipal bonds that are paying higher returns than the treasuries but have a small amount of risk. It's just a hobby for me as most of my income comes from rent on buildings I hold in LLC's that I lease to a sub s corporation we own that does advanced manufacturing in aerospace and defense work. We have about six hundred fifty thousand square feet of office and industrial space. This allows me to return all the profits from the business back into the capital investments needed for the business to grow without debt. Our biggest customer is Boeing and we've been doing a lot of work on the mission to Mars and NASA's SLS space launch system.
Buffet does not use options, because options make no sense when you have $120billion in cash and you like to buy whole companies.
But I can't imagine we'll disagree on the idea that Buffet is not a typical investor.
I'm more typical, except I've been doing longer than most people.
On Tuesday, I bought Jan 2020 call options on leveraged exchange traded fund SPXL, at a strike price of $60. I'm selling them today...because the market is up 300 points and it's a good time to take profits. It looks like I'll get about a 76% return in 4 days. Not bad for just keeping my cool and failing to become hysterical at whatever bullshit flows out of Donald Trump's mouth on a given day.
I've got two other options trades still cooking from Nov 1 that are up 95% and 70% respectively, based primarily on the historical data on Nov-Dec market movements. I'll sell those the last week in Dec.
Now, as you correctly point out, if options are used correctly they are a risk reduction tool. I use options for my trading because I can risk a small fraction of what I would have to if I bought the ETF.
Oh No !
The last drop that happened under Trump....I gained 1000 points 1 week later !
Market up or down what ever. Something doesn't add up. Mass incarcerations at the border. Murky trade policies. Unfettered Bank and Market policies. A withering increase of debt. National disasters. Fracturing of long standing alliances. Abandonment of strategic allies. US foreign policy more sympathetic to autocratic regimes and so much more.
And yet---apparently----the economy is the best the World has ever seen. What, just exactly is this great economy based on?
This too, the high number value of The Markets------whose numbers are they and what is the true value of those numbers? Is it over valued? Or, praise be, is it under valued?
The economy is based on actual figures, rather than emotions driven by a particular one-sided view of political events. The markets are based on the expected earnings of the companies being traded.
The optimism over the US economy is based in large part on the largest generation in US history finally "adulting" on a regular basis, and their potential to redefine productivity in a way we've never seen before. Combine that with a tax and legal structure that creates favorable conditions for businesses, and the possibilities are very promising.
Considering some of the meme's I've seen here on NT, I regret not buying stock in an eye bleach company.
I'll take a dozen!
Now that's hilarious, I love it!