Is This Stock Market Downturn For Real?

The market has been in a downward spiral for much of the last several weeks, losing over 10% of it’s value.

I’m curious as to what people think, whether this is for real.

I personally think the market has overreacted several times over the past couple of years.

When it tanked back in 2008, I thought it went down more than it should have.  I think we were due for a correction especially with the recession and the downturn in housing.  However, I felt that the Dow should have probably went down to around 8,000 when in fact it went down to about 6,500.


Similarly, when it went back up over 11,000, I thought that too was drastic.  I thought going back up to 9,000 or 10,000 was probably right.

We’re in that range now but unfortunately we’re in another downward trend?

Will the market overreact again? Probably.

I’m actually betting that it will.

I transferred about 60% of our retirement fund from an aggressive blend to a stable market fund.  I did this the day of the big ‘glitch’ when the market lost 10% in a matter of minutes but recovered over half that back.

Since then, I’ve been looking pretty smart as I’ve avoided a pretty big hit on the amount I pulled out.

We’re actually in a lockdown period for our 401(k) at the moment because they are transferring our plan between investment companies, so even if I felt that the market was due for a rebound (I don’t), I am unable to get back in for at least a couple of weeks.

What do you think?  Are we headed further down and if so, will the markets correct to where they ought to be or will they overreact?

1 thought on “Is This Stock Market Downturn For Real?”

  1. It is so hard to predict. I know a lot of people pulled out when the market started diving a couple years ago. I left things alone because I am still very far off from retirement. Fortunately, the market bounced back quite a bit last year.

    I think there is a lot to worry about right now. Europe, oil spills, banking here in the US, etc. But our market doesn't seem to have acted really rationally the last year. Just when I think things might be getting better, the market dives.

    Personally, I have left my investments alone. As a matter of fact, I will probably buy a little more as this market dips.

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