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Time To Buy Stock

The stock markets plunged even further today. See the blue line in the chart down there?

Pretty Picture

I think now would be a good time to buy stock. After all, you have all these people selling like crazy, and as long as there are goods of value being produced and consumed, the market will bounce back up eventually.

The problem with the finan­cial system today is that everyone has these little bits of paper and no one is quite sure how much each piece is worth. If the paper is stock, we end up with a volatile market. If it is currency, we end up with infla­tion. Either way, we might be better off with some kind of barter system in which what you see is exactly what you get. Of course, when it comes to the stock market, we have people trying to guess how much the stock will be worth, which makes life even more difficult.

The big question that needs to be answered is: how much is this economy really worth? I wish someone would come up with nice round figure and announce it to the world. If people believe it, then the market won’t slide too much below that point. All we need to do is keep up the pretense that every­thing is hunky-dory. This game is based on hope and wishful thinking.

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This entry was posted on Thursday, October 9th, 2008 at 23:49 and is filed under Daily Rant. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Time To Buy Stock”

  1. Aruna Says:
    October 11th, 2008 at 01:42

    The stock is worth exactly what somebody is willing to pay for it. Willing­ness comes from perceived value, hence you cannot avoid the ‘guess-factor’.
    The thing is, all this produc­tion and consump­tion is taking place because there is credit. Sort of a self-fulfilling bubble.

    As for coming up with a number, that’s what all these banks tried to do. The initial spurt of panic was quelled with a lot of banks coming out with a nice round figure and saying ‘this is the loss we are going to write-off, every­thing else we’ve got is in good shape’. That works for sometime only. So, banks went back to buying bonds sold by other banks/corporates, hedging with CDS’s and bam, cost of buying protec­tion increased again, because, the seller of the market thinks– ‘okay, if there is demand, let me try to take advan­tage and get more premium’ and the rest of the market thinks ‘the cost of buying protec­tion has icnreased, there­fore, that company must be in trouble’ and there you go, a little bit more of that, and the panic is back!

    I’m getting tired of checking Bloomberg news every morning to check which is the latest to go bust :-(

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