Wednesday, February 28, 2007
Dow down 416 pts! - Why?
As a result of market plunges in China, Japan and Europe, stocks in the us market are INCREDIBLY low. Experts are saying now is a good time to buy stocks in healthcare and financial services while they are relatively cheap. Shanghai's goverment thinks that the chinese stocks were way too high so they needed to level things out. Things arent so bad though because consumer spending is still up. The great depression is totally different because that effected our market horribly. I think this plunge is okay because its helping to level stock prices out. The prices in China were way too high.
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Why? Who knows for sure. There are many more people with money involved in the market then there were decades ago. Many of these people today are not always long term investors. Some are short term and when there is bad news they sell to minimize their loss. This is true for individuals as well as mutual fund companies.
Historically, the market has performed well. I would expect the market to continue its historical trend. Sometimes it will rise other times it will fall. Yesterday happened to be in the fall category. Today will probably be in the rise category.
Who knows for sure!
Check out my blog for more economic and other insight.
Thinking at Doe Valley
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