Fed makes emergency rate cut ...

[mshheaddoc]

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three-quarters of a percentage point!!!

http://money.cnn.com/2008/01/22/news/economy/fed_rates/index.htm?cnn=yes

 

[gstrub]

So perhaps someone can answer this for me...how will this effect ME?

I have over 50K at the 6.8 %.
I have a few thousand at 10.5% (Credit cards)
I have a car loan at 4.9%

Is this cut going to change any of these rates?

 

[mshheaddoc]

car and student loans are fixed, so no.

Credit is variable usually based off of the prime rate which is based off of the fed funds rate so you will see rates decrease. Especially b/c the talk on the street is we will see another cut on Jan 30.

 

[mgdsh]

So perhaps someone can answer this for me...how will this effect ME?

I have over 50K at the 6.8 %.
I have a few thousand at 10.5% (Credit cards)
I have a car loan at 4.9%

Is this cut going to change any of these rates?

I really doubt your credit card rates really decrease much. There's far too many defaults on those out there for the credit card companies to really want to lower credit card rates.

If anything, I bet this hurts the majority of us. Lowering of interest rates will only trigger a weakening of the dollar (and it did), leading to higher commodity prices, aka higher inflation. Through out all this, Gold was still up and Oil was down only a $1.

America's addicted to rate cuts and if anything this just delayed the inevitable pain that's coming.

 

[6655321]

....

 

[Tenesma]

it won't affect our interest rates on debt significantly - the banks aren't that nice

it will affect our ability to get higher-yielding money markets, savings, bonds

it will smooth the transition a bit into a recession and make the ride a bit less bumpy

we are still headed for a recession - as the dollar gets weaker, inflation will go up (because we buy our products including oil from abroad), spending will decrease so that people can start living below their means (imagine that?!), our spending drives the global economy - so you will see big shifts especially in ASIA....

i think the rate cut also sends the wrong signal because it tells the global markets that we are headed in the wrong direction... and what propped our economy after 2001 was our addiction to real estate - and we won't be making that mistake again in the next few years... and to be honest with you, real estate is the only real place that low interest rates have a significant impact on low and middle class families...

 

[773 doc]

Global markets seem to be responding.

Do you think Asia will pick up and continue to grow? What about Latin America?

We should be able to squeeze out a couple of rallies between the next two weeks, but I don't think that they'll last...

 

[Stroganoff]

Didn't see this one coming. Wow.

I predict 0.25% rate cut January 30.

 

[mgdsh]

Global markets seem to be responding.

Do you think Asia will pick up and continue to grow? What about Latin America?

We should be able to squeeze out a couple of rallies between the next two weeks, but I don't think that they'll last...

Growth and market response are 2 totally different things. I'm assuming you're trying to determine if those emerging markets are worth investing in?

If you're looking for safe places to put your money for the short to intermediate term, I can't immediately think of many.

A lot of that also depends on how much you think those world economies depend on the US economy (and other larger global economies).

There is little harm in trying an idea or 2 you think may work, as long as you know what your risk is and what your exit plan is.

Didn't see this one coming. Wow.

I predict 0.25% rate cut January 30.

Just as an anecdote, every time in the past (there had only been 2 prior to today), where the futures markets have dropped 3-4%+ overnight before the open, the Fed has stepped in and cut rates.

It'll be interesting to see what happens. The Fed only has so much crack left in that vial for its addicts.

Is a 1/4 point (or a 1/2 point for that matter) enough to be more than a short fix for the increasing cravings?

 

[773 doc]

Growth and market response are 2 totally different things. I'm assuming you're trying to determine if those emerging markets are worth investing in?

If you're looking for safe places to put your money for the short to intermediate term, I can't immediately think of many.

A lot of that also depends on how much you think those world economies depend on the US economy (and other larger global economies).

There is little harm in trying an idea or 2 you think may work, as long as you know what your risk is and what your exit plan is.

I've decided to sit this quarter out. My defensive stocks aren't doing to well. The market is too jumpy for me right now, I am going to continue to take profits and cut my losses on most of my investments. I will hold mostly cash for the time being and only consider other moves but likely will stay on the sidelines until at least the third quarter... maybe a little earlier depending on the market of course.

I'm going to stay away from emerging markets for now.

Can't wait for the turn around though.

..watching quite a few stocks that are coming down "nicely", unfortunately many are suffering, and it's not those that got us here...

Thanks

 

[mgdsh]

I've decided to sit this quarter out. My defensive stocks aren't doing to well. The market is too jumpy for me right now, I am going to continue to take profits and cut my losses on most of my investments. I will hold mostly cash for the time being and only consider other moves but likely will stay on the sidelines until at least the third quarter... maybe a little earlier depending on the market of course.

I'm going to stay away from emerging markets for now.

Can't wait for the turn around though.

..watching quite a few stocks that are coming down "nicely", unfortunately many are suffering, and it's not those that got us here...

Thanks

Not a problem.

Honestly, what you've just said is basically what most people should be doing right now. Preserving their capital until it makes sense for them to enter the market. All markets contain risk (including housing etc), and managing that risk by preserving capital when it makes sense to and finding low risk entries is what will build the most wealth over time.

Re: the stocks that are coming down "nicely" there are plenty of stocks that will be coming down and setup for perfect value traps. Not all of those stocks will recover, and just because a stock was at X price, doesn't mean it will ever be worth that again.

When those talking clowns (aka blind permabulls): Kudlow, Cramer, Pisani, etc all come out and say you should sell everything... that will be the true capitulation and you probably can buy hand over fist.

Bottoms are a process and not an event. Let those huge institutions manging billions and trillions of dollars step in before you do, and then ride the train up.

 

[The White Coat Investor]

... managing that risk by preserving capital when it makes sense to and finding low risk entries is what will build the most wealth over time...

AKA timing the market? I disagree. I think what builds the most wealth is time in the market. Most investment authorities agree (including Buffett, Lynch etc). Consider this thread:

http://socialize.morningstar.com/NewSocialize/forums/1/120432/ShowThread.aspx

 

[mgdsh]

AKA timing the market? I disagree. I think what builds the most wealth is time in the market. Most investment authorities agree (including Buffett, Lynch etc). Consider this thread:

http://socialize.morningstar.com/NewSocialize/forums/1/120432/ShowThread.aspx

Heh, you can link all the random threads you'd like or get all the mutual fund groupies in the world to tell me, but I know what works for me.

I'm not a fundamental investor, or one who will just allocate among a few funds and plan to leave my $$ there for years on end.

If that's what works for you and that's what you are comfortable with, then please by all means.

Most bull markets last for 39 months on average and most bear markets last for 16-18 months. To hang on to your investments on the way down to me just doesn't make sense, especially when 3 out of 4 stocks follow the direction of the major trend.

Even if I setup my allocations for a bull run 1-2 months after it starts, I'll be ok. But in the mean time I'll hang on to my current returns in safer investments.

To a technician, timing the market or trading off of technical formations isn't nearly as crazy as some of you make it out to be. Some of (and most of) the most successful investors ever are actually more along the lines of traders as opposed to buy and hold forever investors like Buffet.

Also, I'd like to add most American's aren't financially savvy enough to invest in the first place, not to mention know when to sell their investments. How could any mainstream "authority" recommend anything but buy and hold?

 

[Stroganoff]

Didn't see this one coming. Wow.

I predict 0.25% rate cut January 30.

HALF A POINT. Wow.