OT: Why are we not shutting down the Stock Market for a week or two

Discussion in 'Husker Board' started by scarletred, Mar 22, 2020.

  1. scarletred

    scarletred Nebraska Legend
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    Someone want to give me a rational answer to this?

    If we’re shutting down restaurants and and city’s what is the sense of keeping the market open?
     
  2. dinglefritz

    dinglefritz College Football Hall of Fame
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    I don't think it would matter much. We've stabilized some but I still think as I've said for a year that we could correct below 16,000 just based on long term charts.
     
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  3. scarletred

    scarletred Nebraska Legend
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    I take it you mean the Dow Jones chart as one of them?

    The market reacts to good and bad news, until this virus gets under control, bad news is all we’re hearing at this present time moving forward..
     
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  4. NikkiSixx

    NikkiSixx All-American
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    I have heard that shutting down the markets would actually cause a bigger panic. There could be side markets develop overnight, where your assets in the closed markets act merely as collateral.

    Most markets today are operated electronically anyway. I have only heard some concern about the commercial paper market.
     
  5. scarletred

    scarletred Nebraska Legend
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    Interesting.. Could you explain further the commercial paper market?
     
    5 scarletred, Mar 22, 2020
    Last edited: Mar 22, 2020
  6. huskerfan66

    huskerfan66 Assistant Head Coach
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    They are shutting down the floor and Friday was the last day. All electronic trading moving forward. Most is done that way anyway
     
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  7. NikkiSixx

    NikkiSixx All-American
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    probably easiest explained here:
    https://www.investopedia.com/terms/c/commercialpaper.asp

    I haven't dealt with it in awhile, so this could be old news, but basically commercial paper is a short term investment many small businesses would make with their nightly cash balance, to earn some extra interest.

    An example would be, a business would deposit cash daily into their account and at a certain time, the bank would sweep the cash out of the account into commercial paper, that would mature at some time in the future with interest.

    If you have ever returned something and the company told you it would take them a few days before the funds showed up in your account, those funds were likely deposited in their commercial paper account where they earn some interest on it, before sending it back to you.

    It has probably changed since I last worked with it.
     
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  8. scarletred

    scarletred Nebraska Legend
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    Thanks, I have bought funds and stocks and haven’t had to actually pay in full for a couple of days. It’s more clear to me now...
     
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  9. Suhrreal

    Suhrreal All-American
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    Have a feeling it's going to be a deep dive below 16,000.

    And they are not shutting the market down because it needs to do some serious correcting.
     
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  10. scarletred

    scarletred Nebraska Legend
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    If the market deeps to 16,000 that already is a big time correction in my book, we would be going all the way back to 2008 again...

    That is more than a correction...
     
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  11. oldjar07

    oldjar07 Blackshirt
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    What good would that do? Stocks have been overvalued for a long time now, and it was only a matter of time before something caused it to correct. This isn't going to go away in a couple weeks. The effects will still be here for several months. If you closed the stock market for a couple weeks, it would just go right back down again once you opened it up. I think just letting it play out is probably the best thing to do.
     
  12. Chief Wiggum

    Chief Wiggum Redshirt Freshman
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    im honestly thinking about diversifying my investment portfolio with about 1/3 invested in sports and movie memorabilia...dead serious
     
  13. GBRforLife1

    GBRforLife1 Walk On
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    That would crash it even further. Why should people have their money locked up?
     
  14. scarletred

    scarletred Nebraska Legend
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    I see your point if you don’t have enough cash on hand because it’s all invested If you needed cash..
     
  15. GBRforLife1

    GBRforLife1 Walk On
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    If you close the market everyone would be locked out. The market would not be fluid and it would crash. It wouldn't matter if people needed the cash or not. You'd ruin the integrity of the exchange as well. Would you put your money in a bank if they wouldn't let you take it out? Same with the stock markets.
     
  16. scarletred

    scarletred Nebraska Legend
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    At least some of your money is insured in a bank but not the stock market... Good points you’ve made...Thanks..
     
  17. Suhrreal

    Suhrreal All-American
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    Set the dial on your hot tub time machine back to 2008.
     
  18. spinner4

    spinner4 All-American
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    As long as it stays unrealized, you’ve still got a punchers chance to bounce back after this and really

    if you’re one that panics and “sales”, I’ve got nothing for you.

    gotta think long term now, even if you’re a short term type of person. At least longer term then what maybe you’re use to. Panic is the worst thing to hit Wall Street
     
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  19. dinglefritz

    dinglefritz College Football Hall of Fame
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    I think we've got some more down in the market but I wouldn't want to be the one who started pulling money out at this point.
     
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  20. Suhrreal

    Suhrreal All-American
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    Futures trading just got halted within 5 minutes of open. If there is ever a time to think short-term, it is right now. Holding will get you killed in this market.
     
  21. scarletred

    scarletred Nebraska Legend
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    Depends on what your age is..
     
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  22. huskerfan1414

    huskerfan1414 Graduate Assistant
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    Cant buy if it aint open.
     
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  23. Kleitusbpn

    Kleitusbpn Redshirt Freshman
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    People need cash for whatever reason. That's why crashes happen. If you close it they still need cash and are more likely to sell immediately after it reopens. Plus the cash need moves to other markets.

    If you want some non-licensed (read : not an advisor so don't do what I say) advice. Sell covered calls late on up days to buy puts for the next few days. Limit the downside.

    But frankly with the liquidity they're starting to pump into the system this could go anywhere on any given day. That's what volatility means. It may look ugly... then the fed will take rates ridiculously negative and crush the euro/usd carry trade. An act which would cause a short term dollar crash but spike the markets higher for a short time.

    The markets are a mess. Long term it'll play out better but if you recall from 2008 it took until much later for things to bottom and move truly higher. 6 months or so if I remember right.
     
  24. nebcountry

    nebcountry Junior
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    They need people to think the slide is over and start buying, can't sell if there's no buyers.
     
  25. LouisK

    LouisK Walk On
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    CP is short-term debt (<270 days) that is issued by corporations and governmentals. A company will generally have a set amount of CP outstanding that is rolled over at each maturity. For example, the CP program may be $100 million. Part of this $100 million would mature at various times and amounts but must mature less than 270 days from the sale and the total outstanding would be $100 million. The company would pay the corresponding interest on the maturity and then the CP would be rolled to a for a new maturity and interest rate with still $100 million outstanding. Depending on the market, the CP rollover is going to be at a higher/lower interest rate than what just matured and the term of the maturity may be longer/shorter. In this market, people want very short-term (could be two weeks instead of two months, for example) adn they want a higher rate because they would otherwise just keep cash. A big buyer of CP is money market funds. As people withdraw money from the money market funds, there is less demand for the CP so dealers must try to remarket the paper at a higher rate. As more money is pulled from the market, rates keep going higher to try to attract investors. Nothing may have really changed about a CP issuer as far as risk but it just becomes supply and demand. You may offer 10% for something that may have been rolled over at 1% two weeks ago but investors still may not want it because they just want liquidity. The investor may need to pay their own bills, have margin calls or just want to keep cash until the markets stabilize so liquidity in the market can just dry up and the CP can't be rolled over at any rate. If you can't roll your CP, you need to pay for it with a cash or a line of credit.
     
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  26. dinglefritz

    dinglefritz College Football Hall of Fame
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    At some point we'll probably see a bounce in the market that will prompt some buying and then things will slide backwards to confirm a bottom. Then I wouldn't expect a huge quick turn around. I think it's going to take a long time to dig ourselves out of this hole.
     
  27. scarletred

    scarletred Nebraska Legend
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    It will be interesting how the market reacts when the virus no longer effects the currant situation were in...
     
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  28. dinglefritz

    dinglefritz College Football Hall of Fame
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    The market will reflect the economy and at this point I'm seeing a 2 year drag on the economy because of this. I highly doubt we'll reach the levels the DJIA was at for a long long time.
     
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  29. scarletred

    scarletred Nebraska Legend
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    I’m not expecting to see 29,000 obviously but 22,000 23,000 range would be more like it.. The economy will bounce back some what when we can get our lives back in order and go out to eat and watch movies and attend sporting events..
     
  30. jmliehr

    jmliehr Blackshirt
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    Markets peaked in October 9/10 2007, DJIA at 14,154.53. We found market bottom on March 9th 2009 at 6547.05. In just 19 months we lost 56.8% of the DJIA. It took until 2013 to recover fully.

    We peaked on 2/12/20 at 29,551.42. I think we were overcooked, and combined with what will be an ugly few months of data makes me think we're looking at a bottom of 14-15K come late summer.early fall, expect a few short rallies here and there. Full recovery could look like 2023/2024.
     
  31. husker2612

    husker2612 Graduate Assistant
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    Agree if it hits 16,000 and below I think 2008 level could be very possible.
     
  32. dinglefritz

    dinglefritz College Football Hall of Fame
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    Looking at the long term (decades) chart for the DJIA, I think your numbers are reasonable. That's kind of what I was thinking last night anyway. I've posted on here below 1600 was possible for a year now. Recovering over the next year or more to between 2000 and 2100 is a reasonable scenario.
     
  33. scarletred

    scarletred Nebraska Legend
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    If we’re going to copy the crash of 2008, than yes you are spot on on your Analysis...It’s our response to the virus is dragging down the DJIA which wasn’t the case in Oct 2008..

    But the market peaked before Oct 2009 at 17,671 in December of 1999 and bottomed out at 10,848 in Sept, 2002..
     
  34. jmliehr

    jmliehr Blackshirt
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    I think it's more than that, I think it's driven by fear of huge unemployment spikes. Crashes of the tourism industry, huge hits to retail coming. Follow that up with a potential downturn of real estate prices and the remaining fallout and I think we're in for an extended period of uncertainty and struggles.
     
  35. scarletred

    scarletred Nebraska Legend
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    That is want I meant there is fear in the market in it’s response to Corona virus with unemployment and medical equipment and not enough testing..

    Uncertainty no question there..
     
    35 scarletred, Mar 23, 2020
    Last edited: Mar 23, 2020
  36. jmliehr

    jmliehr Blackshirt
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    Airline industries getting bailed out, the top 6 in the US combined over the past 10 years have spent a combined 47 billion dollars in stock buybacks, Boeing has spent 43.44 billion in that same period, moral of the story for Wall Street? Keep cash flow in improving the stock price for the share holders while suppressing salaries and using contract negotiations to slash benefits repeatedly. Then in a crisis cry that you can't afford to pay employees and get a cash infusion and massive share increase to boot.

    Then the Cruise lines, they aren't registered in the US, they sail under other countries flags to avoid taxes, regulations and to pay employees low wages. But hey, let's bail them out too.

    Meanwhile average American...here's a check, best of luck pulling yourself up by your boot straps.
     
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  37. HuskerHusaria

    HuskerHusaria Senior
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    But the US economy always bounces back :cool:
     
  38. Kleitusbpn

    Kleitusbpn Redshirt Freshman
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    They get bailed out because of the debts involved. The government is trying to stop a debt collapse i.e. 1929. Our debt levels as a society are worse than then.

    Doesn't make it right. But that's why.

    This virus popped the debt bubble. You've barely seen the surface of the problems. It'll probably cost 10-20 trillion to stop this and politicians do it because they dont want to hold the bag.

    Inflation comes after.
     
  39. Kleitusbpn

    Kleitusbpn Redshirt Freshman
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    I should add, structurally speaking, if you want stuff like this to end, make it illegal again to use debt to buy back stock.

    Have to get to where you can let these companies go bankrupt so debts can be cleared. It's possible we've passed the point of no return with that.

    Endgame if that's the case? Currency collapse and a digital dollar. Probably.
     
  40. Lincoln100

    Lincoln100 Recruiting Coordinator
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    Yes. So much debt and only getting worse. Hopeful that if Trump is re-elected, since it’s his last term, he would try to do something meaningful about it. There’s always hope.
     

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