Friday, October 24, 2008

Market plunges more than 400 points; it's headed to 7500 and even lower over next several days

The Dow Jones Industrial Average at this moment is down 400 points following a selloff in the Asian markets overnight that wiped out 10 percent of the value of Nikkei average in Japan.

An increasing number of analysts see this fall positively and negatively. The 400-point drop is viewed as the market seeking a permanent bottom. On the negative side, the final bottom may 1,000 to 2,000 points away on the Dow. That means the unthinkable -- a Dow trading as low as 6300 when it was above 14,000 just last summer.

That's more than a 50 percent correction. Incredible. People will have lost 50 percent of the value of their investments. And that's a tragedy.

What do you do for now? You must determine whether you are going to need the money you lost for at least the next year. If you're not, then leave the money in the stock market. If you are, then you're faced with selling into a downturn. That's not the best situation. But if you sell today and get into cash, you will finally be protecting your money from the damning guesses of supposed experts.

Some analysts say that once the bottom is reached -- perhaps next week -- then there will be a dramatic rally as has never been seen. They are wrong. Investor confidence will be busted by growing layoffs, a poor Christmas buying season and an Obama victory Nov. 4. It means higher taxes on investment profits.

So those are the poor choices for your money in a historic market that also is tragic for mom and pop on Main Street.

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