Here is the fifth conversation I had with money manager Andrew Horowitz. This was recorded immediately after the second McCain-Obama debate. A good discussion on the 500 point drop…. new insights for anyone who invests in anything. What to do? This chat is not produced and is presented as-is for anyone who wants to listen in.

click ► to listen:


Right click here and select ‘Save Link As…’ to download the mp3 file.

  1. Palin is a says:

    Nikkei 250 is down 9%+ (950 points on 9200 points).

    God help us on Wednesday.

  2. Jim says:

    I’m curious — does Andrew really look at the various numeric floors and ceilings to determine market sentiment? Think about it — 10000 vs 9000 — that’s a ten percent drop in a NUMBER. The underlying mechanisms are a conglomeration of the 30 stocks, weighted according to market cap and some valuation point in the past.

    So, did ALL thirty stocks drop 10%? Or 5 of them dropped 20% and the rest went up? Or all thirty dropped somewhat random amounts?

    I’ve always been a bit leery of watching indexes, only because I know they are weighted in potentially confusing ways, and that it is likely that even ONE stock can cause the index to take a big hit or a big increase.

    I look at individual stocks usually to get a gauge on my health, and right now I’m in the red on everything for the year. I tend to be a buy/hold investor, unless it is something that gives me above a certain percentage return for the period I hold it, at which point I usually sell. If I’m down, I tend to hold it unless I need the cash for something important.

    My biggest problem was that I HAD to take mutual funds in my 401k account. My sep/sar I could manage myself, which I did and it has done quite well even now.

    But there are many investors that would be looking at the markets and panicking, usually because index X goes up or down Y. A biiiiig number. Round and all that. As opposed to looking at the individual stocks and sectors and determining that the underlying businesses may be sound but that the market is selling off because of biig numbers and not because of physical problems with the businesses themselves.

    How much of the market swings that we have are from such stupid reasonings and the herd mentality? If you’re buying a stock at 22x earnings that returns 0.25 per share, at what point do investors look at that and suddenly decide it’s only worth 12x earnings, even though nothing else has changed?

    I’ve always been curious at the mentality behind deciding a stock price is good or bad. I tend not to overanalyze a stock, I look at whether the products and services have a good cash flow, that the business itself seems to be managed well, that their advertising makes sense, and that they have a good customer following. Not to mention, if they produce goods, that the goods are viable and things that people want/need.

    A lot of what I see in the stock market pricing is a “bet” on whether the valuation of the business will increase over time from profit returns and capital. How much of that bet is based on realistic expectations and how much is based on foolishness?

    John brings up those weird market surveys now and then — like how within five years a market that is worth 5$ million will be worth 8$ billion based on “trends”. The stock market seems to go that way quite a lot at times.

    I think we will have another 3% off today, with a recovery on thursday and friday of 5%. Just a guess lol.

  3. ECA says:

    Im poor now, I will be POOR in the future.

    I see people compare..
    Lets compare.

    Gas was 25cent per gallon and wages $1.
    Gas up 12 times as much and wages ARNT.

    Movies were 35cent and NOW $7..
    Movies went up 21 times…Wages DIDNT.

    Candy was 10cents, have gone up 15 times..Lost size, Lost REAL sugar and chocolate. FLAVORED candy bars that dont taste like CANDY. AND WAGEs havent MATCHED IT. only Benefits are worse.

    YARN? I cant AFFORD yard, even tho its made in CHINA.

    Prices of HOME grown Cotton and WOOL…CANT afford it. Even tho we have Cotton and WOOL, in this nation.

    we used to be able to BUILD/MAKE our own goods cheaper then at the store…CANT now.

  4. Lou says:

    The DOW has support at 8000. I don’t think we will go that low but we are setting up for a rebound. When it turns it will move quick. 48% of all stocks were hitting 52 lows yesterday. The market is oversold right now. + all the guys selling are sitting on a pile of cash just waiting to put it to work.What we are looking for is a double bottom. Thought we may have had one yesterday, but it failed and went lower.
    My fav trade is short oil, it has more pain in it.

  5. Paddy-O says:

    Anyone notice that the stock market responds inversely to Obama’s ratings? Very strange.

  6. J says:

    # 5 Paddy-O

    Too bad it is the other way around.

  7. ArianeB says:

    Fed cut the prime rate to 1.5% and stocks are back up this morning. Stocks always go up when money gets devalued.

  8. Paddy-O says:

    #6 “Too bad it is the other way around.”

    Really? McCain has been gaining in the polls in the last 3 weeks? Link?

  9. ECA says:

    with all the stocks dropping, WHY hasnt OIL??

  10. Paddy-O says:

    #9 “with all the stocks dropping, WHY hasnt OIL??”

    Oil is a commodity. It’ll drop if global demand drops. Otherwise, you’re SOL.

  11. lexpression says:

    Site deconstruction. Great idea guys.

  12. Henry Gandolph says:

    John, I saw the post debate activity of the candidates differently than you. Neither Senator stiffed the other. Mrs. Obama was not oblivious to the other candidate and his wife. You’re such a cranky geek-geezer just dislike Barack Obama so much you’re making things up. Look at the video from C-Span.

    or go to to the Video Library to find:
    Presidential Candidates Post-Debate Activity.
    The video shows something very different than what you remember.

  13. Charbax says:

    You want to stop buying Chinese for Christmas? It’s the Chinese that are currently selling off all of their investments in US and European stocks right now. Trigering the whole collapse of the economy..

    Check this out:

    – Obama will have to make a deal with the Chinese, the Indians, the Europeans, the Russians and the Saudis. Stop financial capitalism, it doesn’t work. Create a social democratic system, nationalize banks, insurance, healthcare, transportation, telecommunications.

    It’s the only way things are going to work.


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